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Undoubtedly, payroll is a critical process for any organization.The pay cycle in Japan refers to the period for which an organization pays its employees, and this can vary depending on the pay frequency that the organization chooses to adopt.

In Japan, payments are made monthly typically by the 25th.

A "13th month" or even a "14th-month" paycheck is typically paid in Japan as a summer bonus in June and a winter bonus in December. Japan has a customary 13th or 14th-month bonus payment. The company is free to decide whether to pay the bonus or not. The same applies to Part-time and full-time workers.

The hourly minimum wage in Japan varies by area. Tokyo has the highest rate at 985 yen, while Kagoshima has the lowest rate at 761 yen.

In principle, the government sets the minimum wage every year based on the Minimum Wage Law, and companies must pay their employees at least the minimum wage amount. The minimum wage varies from state to state; for example, in Tokyo it is 1041 Yan/hour.

There are two types of minimum wages: (1) regional minimum wages, which are applied on a prefectural basis, and (2) specific minimum wages, which are applied on an industry or occupation basis (for example, automobile retailing).

If employees work over 40 hours a week, the company is expected to pay overtime to employees unless they work in a management position. Companies that intend to use overtime on a regular basis should put in place a written agreement between employees and management, commonly called “article 36″ and submit it to Labor Standards Inspection Office. This agreement is often called “Article 36″ because it refers to Article 36 of the Japanese Labor Law. This report should be renewed every year.   

Limits of overtime hours in Japan

The overtime hours should stay within the following limits in Japan:

• 5 hours per day
• 45 hours per month
• 360 hours per year

Extra wages for overtime labor are typically paid at a rate of 25% under the Labor Standards Act. To reduce long working hours, the rate of overtime paid for labor exceeding 60 hours per month has been fixed at 50% for large companies since April 2010. This rate has been delayed for small and medium-sized businesses until now, but it will eventually go into force on April 1, 2023.

Japan does not specify how long records must be kept.

Generally, taxpayers must maintain books and records in case they are subject to inspection by tax authorities.

Japan does not provide the length of time in which records must be kept.

Employers in Japan must maintain records regarding compensation and benefits provided to employees.

The following terms must be expressly stated in writing when concluding an employment contract, regardless of whether it is verbal or written:

• length of service;
• employment information, including job description;
• start and end times, extra hours, rest periods, vacation days, and shift changes;
• the decision, computation, and payment of wages (apart from special wages and retirement benefits); and
• rules and processes for leaving and resigning (including grounds for dismissal).

A person who is hired as an employee is required to submit the following documents during onboarding:

1. Resumé
2. Certificate of items stated in the resident register;
3. Copy of Driver's Licence (for those who have a driver's license);
4. Copy of Certificates of qualifications (for those who have certificates of qualifications);
5. Other documents specified by the company

In the event that any changes occur in any documents after submission, the employee must immediately notify of such changes to the company in written form.

Under the Labour Standards Act of 1947 article 20, an employer must usually give 30 days' notice before dismissal, or pay in lieu of notice. An employee is permitted to resign at any time (usually two weeks' notice is required).

For permanent employees, the probationary period in Japan typically lasts between three and six months.

In Japan, it is common practice to set a probationary period of three to six months for new hires, effective from the hiring date. The workflow for the probationary period is up to each company to decide; it is common to define the tasks to be done before onboarding and have the employees comply with such tasks that you want during Onboarding and have them perform them based on those tasks.

National Holidays

The following national holidays are observed in Japan

• Jan 1 and Jan 2: New Year's Day
• Jan 9: Coming of Age Day
• Feb 11: National Foundation Day
• Feb 23: Emperor's Birthday
• Mar 21: Vernal Equinox
• Apr 29: Showa Day
• May 3: Constitution Memorial Day
• May 4: Greenery Day
• May 5: Children's Day
• Jul 17: Marine Day
• Aug 11: Mountain Day
• Sept 18: Respect for the Aged Day
• Sept 23: Autumnal Equinox
• Oct 9: Health and Sports Day
• Nov 3: Culture Day
• Nov 23: Labor Thanksgiving Day

Despite the fact that there is no regulation governing sick or disability leave resulting from work, many businesses have their own policies addressing sick leave and/or compensation for times when they are ill.

According to the Child Care and Nursing Care Act, a pregnant employee may take up to six weeks (or 14 weeks in the event of multiple fetuses) of maternity leave before giving birth and eight weeks after doing so. Additionally, an employer cannot require a woman to work within eight weeks of giving birth. However, if such a woman has made the request to return to work, this Act shall not prevent an employer from granting her request, provided that six weeks have passed since the woman gave birth and the work activities to be performed are those that a doctor has approved as having no adverse effect on her. During maternity, the company is not required to pay the employee.

A worker (of either gender) who has worked for the company for at least a year is eligible to take child care leave for a kid under the age of one (or until the child becomes one year and two months old, one and a half years old, or two years old). This is dependent on specific circumstances and excludes some workers, such as those with fixed-term contracts that end when the kid becomes one and a half years old. During parental leave, the company is not required to pay the employee.

Depending on the employee's term of continuous work, the statutory minimum amount of paid yearly leave varies:

• 6 months of service = 10 days of paid annual leave
• 1 year and 6 months = 11 days
• 2 years and 6 months = 12 days
• 3 years and 6 months = 14 days
• 4 years and 6 months = 16 days
• 5 years and 6 months = 18 days
• 6 years and 6 months or more = 20 days

A worker who has worked for at least a year and is caring for a family member who needs nursing is allowed to take 93 days of leave altogether for each family member under the Child Care and Nursing Care Act. This excludes some employees, such as those with fixed-term employment contracts, whose employment would expire within six months and 93 days of the nursing care leave's scheduled start date. Additionally, the employee is not entitled to compensation while on nursing care leave.

The employee is also entitled to leave in order to care for a family member according to the Child Care and Family Care Leave Act. The family member, who might be the spouse, the child, the parents or even the grand-parents, needs to be in a condition requiring continuous care (Art. 2). Such leave must not exceed three months and can, except for certain circumstances, be exercised only once per person (Arts. 15 and 11). The employee does not get any payment during this period.

The following are examples of typical grounds for termination:

• an employee's inability to provide labor due to injury, disability, illness, or permanent damage;
• significantly poor performance;
• breach of work responsibilities and duties, orders, or workplace disciplines, policies, and internal rules; and
• loss of job responsibility, redundancy due to business downsizing, or economic; Every reason for termination must be specified in the work regulations or the employment contract.

Under the Labour Standards Act of 1947 article 20, an employer must usually give 30 days' notice before dismissal, or pay in lieu of notice. An employee is permitted to resign at any time (usually two weeks' notice is required).

Collective agreements may contain provisions on notice periods. If notice periods in the collective agreement differ from the statutory notice periods, the employer and the employee observe the notice periods in the collective agreement. The amount of notice is dependent on the function of the employee and the length of service, if the employer terminates the contract, the notice period is as follows:

• For the executives, working less than one year is counted as a notice of one month. Employees working for one year to five years are counted as a notice of 2 months.
• Employees working for more than five years have counted a notice of three months.
• Employees working less than one year give eight days' notice.
• Employees with one year to five years give one month's notice.
• Employees working for more than five years give two months' notice.

If the employer terminates the contract, notice is not required in cases of serious misconduct.

Under Japanese law, there is no statutory obligation to pay severance allowance upon termination, except in circumstances when payment is in lieu of notice.

To be eligible to apply for a long-term visa, an employee from another country must first receive a Certificate of Eligibility (COE). A COE is a legal document that the Japanese Ministry of Justice issues. A sponsor in Japan is necessary in order to receive the COE. Sponsors might be family, coworkers, or institutions.

Any form of work visa that is authorized to stay in Japan for a regular length of five years, three years, one year, or three months may be granted a long-term visa under Japanese law. An outside-of-Japan employee who will soon be relocated to the company's Japanese office for a brief period of time may qualify for a work visa under the category of the intra-company transferee.

The application process for applying for a Work Visa for Japan is:

• Getting a Certificate of Eligibility
• Applying for a Japan Work Visa

Every foreigner who enters Japan for long-term purposes needs to get a Certificate of Eligibility from the Immigration Services in Japan.

After you receive the Certificate of Eligibility, your employer must send it to you so you can use it to apply for the Work Visa from a Japanese Diplomatic Representative Office.

Japan has close to 30 different work permits and long-term visas based on an expatriate’s job and reason for moving to Japan. There are specific work visas for occupation, including options for artists, instructors, journalists, professors, skilled laborers, and more. The type of permit an employee applies for will determine how long they can remain in Japan. Typically, the length ranges from three months to five years.

In addition to the work permits for occupations, Japan recently introduced specific skills visas, including:

• Specified Skilled Worker Visa: This visa is for foreign workers coming to Japan to fill employment gaps in certain labor sectors. Japan hopes it will bring approximately 500,000 new foreign workers to the country by 2025.
• Specified Skills Visa 1-SSV1: Only skilled workers in specific industries, such as shipbuilding, agriculture, nursing care, and some others, can apply for this visa. It requires Japanese language tests and technical exams. The visa is valid for one year and renewable for up to five years. If an applicant wants to stay longer than five years, they will need to apply for visa 2-SSV2.
• Specified Skills Visa 2-SSV2: Applicants can renew this visa indefinitely and bring their family members to Japan. Individuals currently living and working in Japan under a Visa 1-SSV1 can apply for this specific visa only after they get a higher level of specialization in their field.

Background checks are not constrained by law in Japan. However, certain information has to be handled carefully based on the sensitivity of the data. According to the 2003 Act on the Protection of Personal Information, it is generally prohibited to collect sensitive personal information about applicants without their consent. This includes information about their race, religion, social status, medical history, criminal history, and whether or not they have been the victim of crime.

It is also customary to request a medical exam and a statement of any criminal histories. These delicate data must be gathered in a way that is socially acceptable and safely stored.

In Japan, the employer cannot conduct background checks on the employee as it may lead to employment discrimination. Background checks may be done only after getting consent/approval individually from the employees. The company cannot force the employees to provide consent/approval. Referrals from previous employers cannot be done without obtaining consent/approval from the employee either.

Therefore, it is not possible to terminate or cancel the employment contract on this basis.