When a company hires employees in Japan, procedures involving social insurance, labor insurance and taxation are required. Hiring foreign nationals also requires checks of residence status and notifications concerning foreign employment.
1. Main procedures after establishing a company
- Company incorporation registration with the Legal Affairs Bureau
- Corporate establishment notifications to tax authorities and local governments
- New coverage procedures for health insurance and employees’ pension at the Pension Office
- Labor-insurance establishment procedures at the Labor Standards Inspection Office
- Employment-insurance establishment procedures at Hello Work
2. Items to prepare before hiring
- Employment agreement clearly stating working conditions
- Work rules when regularly employing 10 or more workers
- Article 36 agreement when overtime or holiday work will be performed
- Payroll ledger, attendance records and other labor-management systems
- Notification concerning establishment of a salary-paying office
When hiring a foreign national
- Check the residence card, status of residence and permission to work
- If permission for activities outside the status is required, confirm its scope
- Prepare explanations of working conditions in an appropriate form when necessary
3. Procedures at the time of joining
- Health insurance and employees’ pension qualification acquisition notification
- Employment insurance qualification acquisition notification
- Workers’ compensation coverage after establishment procedures are completed
When a foreign national is hired
Submit the required notification of foreign employment status to Hello Work, including the employee’s name, status of residence and period of stay.
4. Ongoing obligations after hiring
Handle monthly payroll, withholding income tax, social-insurance deductions and payments, and special collection of resident tax. For foreign employees, continue to monitor residence status and expiration dates.
5. Annual procedures
Annual procedures include salary payment reports, statutory reports, annual labor-insurance renewal and the social-insurance standard remuneration calculation.
In addition to labor, social-insurance and tax procedures common to all employees, foreign employment requires additional checks such as residence status, foreign-employment notifications and, where relevant, tax treatment of non-residents.