Global coverage
Available in +150 countries
Employer costs, taxes, minimum wage and leave rules for hiring here, plus the faster route: hire a contractor with Ontop, no local entity needed.
2026
Currency
JPY ¥ (Japanese Yen)
Employer contributions
~14.5% pension (employer half) + ~5% health (employer half) + ~0.6% employment + ~0.3% accident
Minimum wage
JPY 1,055/hour (national weighted average 2024; varies by prefecture)
Payment frequency
Monthly
Calendar year (Jan 1 - Dec 31)
Capital
Tokyo
Timezone
JST (GMT+9)
Employee or contractor
If the work is project-based or you need to move fast, a contractor gets you the same talent with a fraction of the paperwork.
Employee
~JPY 572,500 total
/month
For a gross salary of
JPY 500,000 gross/month
Setup
Local entity or employer of record, plus tax and social security registration
Employer contributions
~14.5% pension (employer half) + ~5% health (employer half) + ~0.6% employment + ~0.3% accident
Mandatory extras
Bonus (Shoyo)
Monthly admin
Monthly payroll - year-end adjustment (nenmatsu chosei) - social insurance by last day - withholding tax
Contractor with Ontop
No local entity
$49
/contractor/month
The agreed rate, plus Ontop from $49 per contractor per month.
Sign a contract, yours or an Ontop template. No local registration on your side.
No employer contributions: the contractor handles their own taxes and social security.
One payment per invoice, in one payroll run.
Paid into their Ontop Global Account in USD.
See the full side-by-side comparison
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A contractor's rate usually covers their own taxes, so compare total cost, not just gross pay. Run your numbers in the contractor vs employee calculator.
Hiring here: the full breakdown
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Payroll guide
Employer costs come on top of gross pay. Use these figures to budget a hire and to compare it with a contractor rate.
Total monthly cost
~JPY 572,500 total
Example gross salary
JPY 500,000 gross/month
~JPY 330,000 net
Net pay to the employee
Tax and employee contributions
Withheld from gross pay
~JPY 72,500 social insurance employer
Employer contributions on that salary
Employer contributions
~14.5% pension (employer half) + ~5% health (employer half) + ~0.6% employment + ~0.3% accident
Employee contributions
~14.5% pension (employee half) + ~5% health + income tax
Total cost above gross
~14-15% above gross
Figures are estimates for planning. Rates change with each budget and can vary by sector, so confirm them before you make an offer.
What people earn here, from the legal floor to the main cities, plus the extra pay most employers budget for.
National average
~JPY 400,000
Per month
Tokyo
JPY 500,000 - 1,200,000
~40%
Osaka
JPY 420,000 - 900,000
~20%
Monthly gross. National average salary per year:
~JPY 4,800,000
Minimum wage
JPY 1,055/hour (national weighted average 2024; varies by prefecture)
Paid:
Hourly
Extra pay
Bonus (Shoyo)
2x/year standard: summer (June/July) and winter (December)
June-July and December
Collective agreements can set sector minimums above the national one. Check whether one applies to the role before you set the salary. Next step: estimate the full cost of an employee.
Who collects what, how often, and what happens when a payment is late.
Income tax brackets
5% up to JPY 1,950,000 / 10% / 20% / 23% / 33% / 40% / 45%
Tax year:
Calendar year (Jan 1 - Dec 31)
Filing calendar
Monthly by last day (statutory payment date)
Social security payments
March 15 (final tax return for those required)
Income tax
By January 31
Employee tax certificate
Gensen Choshu Hyo (Withholding Tax Certificate)
March 15
Annual return
Kakuteishinkoku (Final Tax Return)
Late payment penalties
Late social insurance: 14.6% annual; late income tax: 14.6% annual
Who collects what
National Tax Agency (NTA)
Income tax and withholding
Japan Pension Service
Employee Pension Insurance
Ministry of Health, Labour and Welfare (MHLW)
Labor law and social insurance
The time off and paid leave every employee is entitled to by law. Budget for it when you compare an employee with a contractor.
Annual leave
Nenkyu (Annual Paid Leave)
10 days (after 6 months) increasing to 20 days (after 6.5 years)
Public holidays
~16 public holidays
Sick leave
Byoki Kyuka
No statutory sick pay; employer discretion; health insurance pays 2/3 from day 4
Maternity leave
14 weeks (8 pre + 6 post)
2/3 salary via Health Insurance
The contracts you can use, and what ending an employment relationship costs.
Permanent
Mukiroken Koyo Keiyaku (Permanent)
Fixed term
Yukikigen Koyo Keiyaku (Fixed Term)
Independent contractor
Gyomu Itaku Keiyaku (Service Contract)
Collective agreements
Rodo Kyoyaku (Labor-Management Agreement)
Ending employment
Taishoku-kin (Retirement Allowance)
How it is calculated
Discretionary but common; typically 1 month/year; can be via DC pension plan
Calling someone a contractor does not make them one. If the role works like employment in practice, local authorities can reclassify it, with back contributions and penalties.
The errors that most often trigger back payments and penalties here, and what to do instead.
36 Agreement (Overtime) Non-Compliance
Risk Level: HIGH
Japanese law requires employers to file a 36 Agreement (Article 36 Labor Standards Act) with the Labor Standards Inspection Office before assigning any overtime. Since 2019 reforms, overtime is capped at 45 hours/month (360/year) with strict exceptions. Violations carry criminal penalties of up to 6 months imprisonment or JPY 300,000 fine per violation.
Year-End Tax Adjustment (Nenmatsu Chosei) Errors
Risk Level: HIGH
Japanese employers must perform nenmatsu chosei (year-end tax adjustment) for all employees in December. Errors in deductions for dependents, life insurance premiums, or housing loan deductions result in under or over-withholding that must be corrected in January.
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Next topicOntop is the Global Workforce Engine for contractor teams: contracts, compliance documents and payments in 150+ countries.
150+
countries
$49
per contractor per month
1 run
to pay your whole team
USD
Global Account for every contractor
FAQ
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Ontop works with contractors, not employees. As Contractor of Record, Ontop handles contracts, compliance documents and payments for contractors in 150+ countries. To employ someone, you need a local entity or an employer of record. Ontop doesn't act as your employer of record.
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Employers pay contributions on top of gross salary. The cost table on this page shows the rates that apply here and a worked monthly example. A contractor with Ontop costs the agreed rate plus Ontop from $49 per contractor per month.
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Many countries require an extra month or an annual bonus for employees. The salaries section on this page shows the one that applies here and when it is usually paid. Contractors are paid what you agree in the contract.
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Employers withhold income tax and the employee's social security share every pay run, then pay them to the local authorities. The taxes section on this page lists the brackets, rates and filing deadlines that apply here.
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Yes. The contractor vs employee calculator compares the full cost of an employee, employer contributions included, with a contractor rate plus Ontop's monthly fee.
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When the work is project-based, you need to start fast or you don't have a local entity. If the person will work fixed hours, under your direction and only for you, local law may treat them as an employee, so hire them as one.
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Misclassifying employees as contractors, missing tax and social security deadlines, and ignoring collective agreements that set higher wage floors. The mistakes section on this page covers the ones that come up most often here.
Compare employer costs, taxes and contractor rules in nearby countries:
Ready to hire? See Ontop pricing or learn how to build a global team without an employer of record.
Ready to hire? See Ontop pricing or learn how to build a global team without an employer of record.