Search

Employer of Record (EOR) in Japan

An EOR in Japan allows businesses to enter the market quickly, all while reducing the overhead costs of establishing a local entity. Atlas HXM offers a seamless EOR service that handles all aspects of employment from payroll processing to compliant administration, including assistance with work visa applications and sponsorship.

Partner with Atlas HXM for a cost-effective solution to hire and manage your workforce in Japan.

Talk to an Expert

Country InsightsJapanEmployer of Record

Quick Overview of EOR in Japan

Expanding into Japan doesn't have to mean drowning in paperwork or hefty setup costs. With an Employer of Record (EOR), you can find a partner that can help you tackle the complexities of local regulations and quickly hire employees, all while increasing compliance with Japan's labor laws. From payroll processing and tax compliance to benefits management, an EOR takes care of the legal nitty-gritty like social insurance contributions, so you can focus on growing your business without the time-consuming need to set up a costly local entity.

The EOR model offers a lower-risk, cost-effective alternative to setting up a subsidiary. Establishing a local entity in Japan can cost anywhere from USD 10,000 to USD 20,000 (JPY 1.5 million to JPY 3 million) plus the cost of maintaining human resources (HR), legal assistance, accountants and more. It can also become highly administrative. By partnering with an EOR, you can avoid these setup costs and enter the market faster, avoiding the overhead of a physical office. This is especially beneficial for startups, SMEs, and businesses testing new markets, who need to act quickly and comply with complex local regulations.

The contents of this article is not legal advice and should be used for reference only. If in doubt, please seek independent legal advice from a lawyer in the relevant jurisdiction.

The information provided in this article is provided for general informational purposes only. Accuracy, completeness, or reliability is not guaranteed. This content does not constitute legal, professional, or other advice and should not be relied upon. Any use of the information is at your own risk. Users are responsible for independently verifying any information. All materials are provided "as is," without any warranties of any kind, express or implied and Atlas Technology Solutions, Inc. disclaim all liability arising from use of, or reliance on, this content

What You'll Learn

  • Looking to hire in Japan without the hassle and administrative burden of setting up a local entity? An EOR helps you onboard employees while maintaining payroll according to local labor laws.

  • With a Direct EOR, you gain control, faster onboarding, and stronger compliance. It is ideal for businesses aiming to scale quickly.

  • On the other hand, an Indirect EOR may be more cost-effective but comes with slower processes and added complexity.

  • EOR service fees typically range from USD 300 to USD 600 (JPY 45,000 to JPY 90,000) per employee per month.

  • Atlas HXM offers a robust Direct EOR solution, providing smooth market entry, and seamless employee management: all in one platform.

How an EOR Works

Atlas HXM provides EOR services that ensure your business remains compliant with Japan's labor laws while you focus on growing your operations, and reduce your administrative and legal burdens.

Candidate Selection

Atlas HXM does not recruit candidates, but will check the employment setup around new hires like validating right-to-work, reviewing contract terms against Japanese rules, and configuring payroll and statutory obligations correctly. EOR providers in Japan, including Atlas HXM, can assist with work visa applications and sponsorship requirements, though the specific process depends on the visa type and employee qualifications.

Employment Contracts

Atlas HXM drafts and administers employment contracts according to Japanese labor laws. In the contract, we clearly outline employment terms to reduce the risk of future disputes, such as:

  • Job title and responsibilities

  • Salary, benefits, and working hours

  • Leave entitlements and notice periods

Payroll & Benefits Management

Payroll is processed in Japanese yen (JPY), including:

  • Accurate tax withholdings and social insurance contributions

  • Statutory benefits such as health insurance and pension enrollment

The EOR also helps maintain mandatory benefits, so employees are protected under Japan's laws.

Work Permit Compliance

In Japan, EOR providers can assist with work visa applications and sponsorship requirements. Atlas HXM manages compliant employment, payroll, social insurance, and statutory obligations in alignment with Japanese immigration and labor regulations.

Ongoing HR Support

Provides HR support, including: Leave management, employee relations and regulatory updates throughout the employee's tenure. This allows businesses to focus on core operations, while Atlas HXM handles ongoing administration.

Costs & Pricing

EOR services in Japan are typically billed as a platform/service fee in the range of USD 300–600 (EUR 270–540 / JPY 45,000–90,000) per employee per month. This fee covers administration such as compliant contracts, payroll processing, statutory filings, and HR administration for workers.

This service fee is separate from the employee's salary, benefits, taxes, and visa-related costs, which vary by role and jurisdiction.

By using an EOR, companies avoid the cost and overhead of setting up a Japanese entity, which can require USD 10,000–20,000 (JPY 1.5–3 million) upfront before any operational spend.

Explore Our Transparent Pricing Plans 

What to choose: EOR vs PEO

EOR

Employer of Record

An EOR becomes the legal employer for your talent in a country where you do not have an entity. The EOR handles compliant contracts, payroll, statutory benefits, tax filings, and labour-law adherence. You still direct the employee's work. This model suits companies expanding into Japan without wanting to form a local entity.

PEO

Professional Employer Organization

A PEO provides outsourced HR services like payroll, benefits, HR admin, but only when you already have a local entity. You remain the legal employer, and the PEO shares administrative tasks without taking on employer liability. Suitable when you are already established in the country and are only looking to offload HR administration.

What’s Best for You?

  • Choose an EOR when you want to hire in Japan without setting up an entity and want a partner who can take on contracts and payroll.

  • Choose a PEO when you already operate locally and just want HR support.

What to Choose: Direct vs Indirect EOR

Direct EOR

The EOR owns the legal entities in the target country and manages employment directly. This model offers faster onboarding, and greater operational control across all employment processes.

Best for: Businesses of any size entering Japan. Whether hiring one employee or building a larger team, it provides a structured framework from day one.

Indirect EOR

The EOR provider operates through a third-party local entity. While it can be used in certain scenarios, it may introduce additional coordination layers and potential compliance complexity.

What’s Best for You?

  • A Direct EOR model is a strong and reliable option for businesses of any size entering Japan.

  • With Atlas HXM’s direct infrastructure, companies benefit from streamlined onboarding, clear accountability, and consistent legal assistance — without needing to establish a local entity.

Work Life in Japan

Japan's employment framework is designed to balance operational needs with employee protections. Here's what you need to know:

Employment Types:

  • Permanent: Ongoing employment with full statutory benefits for indefinite duration.

  • Fixed-Term: Cannot exceed 3 years unless the employee has expert knowledge or is 60+ years old (up to 5 years).

  • Temporary: Allowed in most occupations except specific restricted sectors; maximum 3 years with the same employer.

Probation Periods: There is no explicit legal requirement but probation periods are typically 1 to 6 months and must be outlined in the employment contract. These periods allow employers to assess employee suitability before offering permanent employment. Notice periods for employers to notify employees during probation are 30 days for employees working more than 14 days, and 2 weeks for employees to notify employers.

Working Hours & Overtime: In Japan, the standard workweek is 40 hours, with a maximum of 8 hours per day. Employees must receive a minimum of 45 minutes break after working 6 consecutive hours or 1 hour break for over 8 hours of work. Overtime cannot normally exceed the legal limits, such as 45 hours per month and 360 hours per year. Overtime is regulated and must be paid out according to the rates set by local law. The EOR ensures that all overtime is calculated correctly and that employee work hours comply with local regulations.

Leave Entitlements

Leave Type

Eligibility / Duration

Payment / Notes

Annual Leave

10 days after 6 months employment, increases to maximum of 20 statutory days

Paid by employer; unused leave may carry over one year

Maternity Leave

14 weeks (6 prenatal \+ 8 postnatal)

Two-thirds of daily wage if enrolled in health insurance

Paternity Leave

4 weeks within first 8 weeks of birth

67% of average earnings first 180 days, 50% thereafter

Sick Leave

Not mandatory unless in contract

Must use annual leave or unpaid; 60% wage for work-related illness

Public Holidays

All statutory holidays

135% of regular wage if required to work; handled by Atlas HXM

Vacation Leave

As per company policy / statutory minimum

Paid; unused leave typically paid out upon termination

Payroll & Benefits: Wages are calculated based on prefectural minimum wage rates (national average JPY 1,055 per hour), with monthly payment cycles standard. Atlas HXM manages payroll in JPY, social insurance contributions (health, pension, employment, workers' compensation), statutory benefits, bonuses, and supplemental benefits.

Atlas HXM can help you manage these aspects and can help ensure that employees are supported and compliant with Japan's labor laws while businesses can focus on operations without administrative burdens.

More Reading

10 Best Employers of Record in Japan

Blogs10 Feb 2026

Japan Expands Family Leave & Flex Work in 2025

Blogs28 May 2025

Japan Part-Time Employment Rules

Blogs25 Nov 2024

Taxes & Compliance

Japan operates on a calendar-year tax system, running from January 1 to December 31. Employers must remit income tax withholdings by the 10th of the following month, complete annual tax reconciliation (nenmatsu chōsei) by January 31st, and file corporate tax returns within two months of fiscal year-end. Social insurance contributions and consumption tax filings follow specific schedules.

Category

Details

Employer Payroll Tax

Health insurance: \~5% of salary

Pension insurance: 9.15% of salary Employment insurance: 0.6-1.05% (industry dependent) Workers' compensation: varies by industry risk

Employee Payroll Tax

Progressive income tax: 5%-45% Local inhabitant tax: varies by municipality Health insurance: \~5% of salary Pension insurance: 9.15% of salary Employment insurance: 0.3-0.6% Long-term care insurance: 1.23% (employees over 40)

Pension System

Two-tier system: National Pension (basic) \+ Employees' Pension Insurance

National Pension: JPY 831,700 annually for full 40-year contribution

Retirement age: 65 years

Minimum contribution period: 10 years

Consumption Tax & EOR Costs: Japan applies a 10% consumption tax (VAT) on most goods and services, with a reduced 8% rate for essential items. EOR services are generally subject to the standard 10% consumption tax rate, either included in quoted fees or added separately. Businesses may be able to recover consumption tax through proper documentation.

Atlas HXM handles tax compliance, including progressive income tax calculations, social insurance contributions, annual tax reconciliation, and expatriate tax management, ensuring businesses minimize administrative burden.

Termination

Employees must receive at least 30 days' notice for termination or payment in lieu, subject to contract, regardless of service duration. The notice requirement doesn't apply to probationary employees who have worked less than 14 days. Severance pay isn't legally required but is commonly provided, typically ranging from one to several months of salary based on length of service. The EOR helps ensure proper handling of terminations, including notice periods, final wages, and required documentation.

Visas & Work Permits

In Japan, foreign nationals must hold valid work authorization such as a Highly Skilled Professional (HSP) Visa, an Engineer/Specialist in Humanities/International Services (EG/SH) Visa, or a Business Manager Visa depending on their roles and qualifications. EOR providers, including Atlas HXM, can assist with work visa applications and sponsorship requirements, though the specific process depends on the visa type and employee qualifications. Atlas HXM can employ individuals under the EOR model and manage payroll, social insurance, benefits, and compliant employment administration.

5 Things to Look for in an EOR Provider in Japan

  1. Local expertise and knowledge of Japanese labor laws, social insurance requirements, and cultural employment practices.

  2. Advanced technology for payroll, reporting, and HR system integration with Japanese regulatory requirements.

  3. Experience in your industry and handling work visa management and sponsorship processes.

  4. Strong track record and relationships with government agencies and legal advisors familiar with Japanese employment law.

  5. Global presence to support multi-country expansion, with verified security standards (ISO 27001/27017/27018, GDPR).

Speak to an Expert

atlas logo

Atlas HXM provides direct EOR services, managing payroll, and benefits efficiently. Atlas HXM's unified platform automates HR, payroll, while offering premium employee support, global benefits, and access to 9,000+ learning courses. Recognized by Everest Group PEAK Matrix 2025 and NelsonHall NEAT Assessment 2025, Atlas HXM combines compliance, technology, and global expertise.

See Our Clear Pricing Plans 

FAQs

How quickly can I hire employees in Japan through an EOR?

With an EOR, you can typically hire employees in Japan within 1-2 weeks, significantly faster than establishing a local entity which can take several months.

Can an EOR help with visa sponsorship for foreign employees?

Yes, many EOR providers can assist with work visa applications and sponsorship requirements, though the specific process depends on the visa type and employee qualifications.

What are the typical contract terms when working with an EOR in Japan?

EOR contracts typically range from 12-36 months, with options for shorter-term arrangements or month-to-month agreements depending on your needs and the provider's policies.

What is the typical probation period in Japan?

Usually 3 months and must be in the employment contract, with 30-day notice required for termination after 14 days of work.

How much notice is required for termination in Japan?

At least 30 days' notice or payment in lieu, regardless of service duration, except for probationary employees with less than 14 days of work.

What are the social insurance contribution rates for employers in Japan?

Rates include health insurance (~5%), pension insurance (9.15%), employment insurance (0.6-1.05%), and workers' compensation (varies by industry).

For People, By People

Explore Atlas HXM

Become a PartnerCareersAbout UsWhat is HXMOur Global ImpactAnalyst Reviews & ReportsPricingContact Us

Products

Hire with Employer of Record (EOR)Run EOR PayrollSponsor & Relocate TalentManage Global EmployeesEngage EmployeesStay Globally Compliant

Solutions

Hire International EmployeesSimplify International EmploymentConsolidate Global Entities Expand into New MarketsFix Contractor MissclassificationSupport Global Mobility Switch EOR Providers

Resources

Global Salary CalculatorGlobal Compliance Risk CalculatorEmployee Cost CalculatorCountry InsightsGlobal Atlas Report 2026BlogCustomer Success StoriesAll Resources
Follow us

       

©2026 Atlas Technology Solutions, Inc.

Cookie PolicyPrivacy NoticeTerms & Conditions