Employer of Record Japan: 6 Providers Compared

The first Tokyo offer I priced, I got wrong twice in the same afternoon. I looked at a ¥6,000,000 salary, converted it, decided it was manageable, and moved on. Then the candidate asked what the bonus would be, and I understood that I had been budgeting about two thirds of a package.

Japanese employer cost is not one payroll tax paid to one agency. It is five separate insurance systems with different rates, different bases, and different ceilings, sitting on top of a pay structure where a large slice of annual money arrives twice a year. An employer of record takes the whole apparatus off your desk by employing the person through its own Japanese entity.

What a provider cannot do is change the arithmetic underneath. This guide covers what Japanese law requires before any vendor is involved, what a hire costs on top of gross salary, and six providers compared on the prices they actually publish. Every legal and contribution figure below was checked against Japanese government sources in September 2026.

How an employer of record works in Japan

An employer of record employs your Japanese hire through a Japanese entity it already holds, so you can put someone on a compliant local payroll without registering a company in Japan. You choose the person and the pay. The provider signs the contract and takes on the employer obligations.

The Japanese mechanics have one feature US buyers consistently underestimate. Enrollment is not a single registration. Health insurance and the employees' pension go to the pension office, employment insurance and workers' accident cover go to the labor bureau and the public employment security office, and each has its own base, its own ceiling, and its own filing calendar.

The right-hand column is the part vendors underplay. A provider removes administration and legal exposure, not judgment. You still recruit, still decide, and still own whatever onboarding experience the person actually gets in their first month.

Do you actually need one for Japan?

Only if the person is genuinely an employee and you have no Japanese entity. Those are two separate questions, and the first one decides most of the money, because engaging a genuine freelancer costs a fraction of what employing someone does.

The classification question is the expensive one. If the honest answer is freelancer, the right purchase is a contractor management product at $25 to $49 per person per month rather than an employment arrangement at ten to twenty times that. If the honest answer is employee, and you are setting hours and directing the work, keep reading. Guessing in your own favor is how a misclassification problem starts.

The five insurance systems an employer pays into

Employer social insurance in Japan adds about 15.7 percent to total remuneration for an employee under 40 in Tokyo, and about 16.5 percent once nursing care insurance starts at 40. Five insurance systems make up most of that, four shared with the employee and one paid by the employer alone, with two child-related levies collected alongside them.

Two of those lines are easy to confuse and are not the same thing. The child and childcare support levy is new, shared, and rides along with the health insurance premium. The child allowance contribution is older, employer-only, and rides along with the pension premium. Vendor country pages routinely merge them or miss one.

The labor insurance side is smaller and moves on its own schedule. Japan quotes these two rates per thousand of wages rather than as percentages. The Ministry of Health, Labour and Welfare sets employment insurance for a general business at 13.5 per thousand for the year from 1 April 2026, down from 14.5, with the employer carrying 8.5 of that and the worker 5, which is 0.85 percent and 0.5 percent. Accident compensation cover is unchanged for fiscal 2026 and sits at 3 per thousand, or 0.3 percent, for the miscellaneous business category that covers office work.

Ceilings matter more here than in most markets, because they differ by system. The pension stops accruing above ¥650,000 of standard monthly remuneration, so a senior hire costs proportionally less than a mid-level one on that line. Employment insurance and accident cover run on total wages with no ceiling at all. The child allowance contribution follows the pension base, so it stops where the pension stops.

Two dates matter for anyone reading a quote. Health insurance rates reset with the March remuneration, paid in April, so a quote written in February prices the previous year. The pension ceiling is legislated to rise in stages from ¥650,000 toward ¥750,000 between September 2027 and September 2029, which is far enough away to ignore in this year's budget and close enough to matter in a three-year plan.

Bonuses, retirement pay, and the rest of the package

Bonuses are not required by Japanese law and are close to universal in practice, which makes them the most expensive optional item in a Japanese offer. They also carry full social insurance, so paying through a bonus is not a cheaper way to pay someone.

JETRO, citing a National Personnel Authority survey, reports that private-sector bonuses in fiscal 2023 came to 4.49 months' worth of pay, normally split between a summer payment and a winter one. That is not a fringe benefit. On a package where the monthly salary is ¥500,000, four months of bonus is ¥2,000,000 a year, or a quarter of everything the person receives.

The practical consequence is that a salary figure quoted without the bonus is not comparable to a Japanese offer. A candidate weighing your ¥6,000,000 against a domestic ¥8,000,000 package is not comparing the same thing, and a provider quoting a monthly employer load against monthly salary alone is understating your annual bill by whatever the bonus adds.

Retirement pay is the other custom worth budgeting. JETRO states plainly that almost all enterprises in Japan operate some form of severance pay system, and the ministry's 2023 General Survey on Working Conditions puts the share of companies with a retirement benefit system at 74.9 percent, falling to 70.1 percent among companies with 30 to 99 employees. Nothing in statute obliges you to offer one, but a Japanese candidate leaving a domestic employer will notice its absence.

The trap is that a retirement allowance promised in the rules of employment becomes an enforceable liability that accrues quietly with service. If your provider's Japanese template includes one by default, you have taken on a long-tail cost that does not appear anywhere in a monthly quote. Ask to see the clause before you sign, and decide deliberately rather than inheriting a template.

What a Japanese hire costs on top of gross

One employee on ¥500,000 a month plus four months of bonus costs about ¥9,256,000 a year before the platform fee is added. That is ¥8,000,000 of total remuneration and ¥1,256,000 of employer contributions, on the Tokyo rates for someone under 40.

Read the two number columns carefully, because they are not multiples of each other. The monthly column prices the salary slice alone. The annual column includes the bonuses, which is why twelve times the monthly subtotal falls ¥314,000 short of the annual one. That gap is the contribution on the bonus, and it is the single most common omission in a Japanese budget.

Turning 40 costs another 0.81 percent of remuneration in nursing care insurance, which on this package is about ¥64,800 a year. It is small, it is automatic, and it starts in the month of the birthday rather than at the start of a fiscal year, so a budget built on a headline percentage drifts. The employee side of the same package runs about 14.7 percent out of gross, which shapes how the offer feels to the person receiving it even though it never touches your budget.

None of the numbers above is a provider decision. Japan is unusually predictable once you know the salary and the bonus, which is a genuine advantage over markets where a sector agreement can move the floor under you mid-year. The true cost of employing someone is set by Japanese law long before you pick a vendor, and the platform fee is the smallest line on the invoice.

The prefectural pay floor moves every autumn

Japan sets a minimum wage per prefecture rather than nationally, and the revised figures for fiscal 2026 give a weighted average of ¥1,177 an hour across all 47 prefectures. The rates do not all start on the same day, which is the part that catches employers with people in more than one prefecture.

The Ministry of Health, Labour and Welfare announced the prefectural determinations on 3 September 2026. Every prefecture rose by between ¥54 and ¥65, taking the weighted average from ¥1,121 to ¥1,177, with a highest prefectural rate of ¥1,280 and a lowest of ¥1,085. The ministry describes the ¥56 increase as the second largest since the guideline system began in 1978.

The rollout runs from 1 October to 2 December 2026, prefecture by prefecture, after each labor bureau completes its objection procedure. Two people on the same team can therefore sit under different floors inside one pay period, and a provider that applies the new rate to everyone on 1 October is guessing rather than tracking.

For the engineering, design, and commercial roles US companies usually hire in Japan, none of this binds. It matters in two narrower places: part-time and junior offers converted from a dollar budget, where a weak month of exchange rate can push an hourly equivalent under the line, and the statutory tests that key off wages when deciding whether a part-time worker enrolls in social insurance at all.

Hours, leave, and ending employment in Japan

The Japanese working week is capped at 40 hours, paid annual leave starts at 10 days after six months, at least five of those days must actually be taken, and there is no at-will employment. None of that is negotiable downward, and no provider can soften it for you.

JETRO sets out the working time rules that the Labor Standards Act imposes. Hours must not exceed 40 a week or eight a day excluding breaks, overtime carries a premium of at least 25 percent, and that premium rises to at least 50 percent once monthly overtime passes 60 hours. Night work between 10 p.m. and 5 a.m. adds a further 25 percent, and work on a statutory day off carries at least 35 percent.

Leave is where the statutory floor understates the market by the widest margin. The ministry's 2025 General Survey on Working Conditions found employers granting an average of 18.1 days of annual paid leave per worker during 2024, with 12.1 days taken, a take-up rate of 66.9 percent. Matching the 10-day statutory minimum is legal and will read as ungenerous to any candidate comparing your offer with a domestic one.

Ending employment is the part that carries real risk rather than real money. JETRO states that an employer must give at least 30 days' notice or pay 30 days of wages as a notice allowance, and, separately, that a dismissal is only permitted where there are objectively reasonable grounds and it is appropriate in light of socially accepted ideas, with the grounds stated in the rules of employment.

Those two rules pull in different directions for a US buyer. The notice period is short and cheap by European standards. The validity test is strict, and it is retrospective: what decides the case is the record built during the employment, not the reasoning written on the day. Performance documentation, warnings, and a real attempt at improvement are the substance of a defensible exit, which means the exit is largely decided months before anyone considers it.

Employer of record providers for Japan compared

Six providers, compared on the fees they publish rather than the fees a salesperson mentions. All six publish an employment rate, and all six publish a contractor rate alongside it.

The published band runs from $199 to $699 per employee monthly, a spread of about $6,000 a year on a single Japanese hire. The more useful differentiator in Japan is not price. It is whether the provider will tell you, in writing, which entity employs your person, what the quote treats as the contribution base, and whether the Japanese contract template promises a retirement allowance.

The six providers reviewed

Deel publishes every rate on one page, which in this category is still not universal, and at $599 per employee monthly it sits at the market anchor rather than the top of it. For a US company making a first Japanese hire, the practical draw is that employment and contractor management live in one account, so the common shape of one employee in Tokyo and three contractors elsewhere does not need two vendors.

Press on Japan specifically. The vendor says it holds entities in more than 130 countries without naming them, and the answer for Japan decides who is accountable if a pension enrollment is filed late or an Article 36 agreement is missing. Ask for the Japanese contract template as well, read the retirement allowance clause and the intellectual property assignment, and confirm whether the platform fee is charged in bonus months.

Remote states on its pricing page that it directly owns all of its legal entities and does not rely on third parties to employ workers. That is the vendor's own claim rather than a verified fact, but if it holds for Japan it buys something specific: one named party to file the enrollments, hold the Article 36 agreement, and answer to a labor standards inspector.

The second argument is the exit. Payroll on its own costs $29 per employee monthly for companies that already hold the local entity, and that is the product you move onto after you register in Japan, which removes one migration from the plan. The trade is price: at $699 per employee monthly it sits at the top of the published range, roughly $1,200 a year above the anchor on a single hire.

Papaya Global publishes a starting rate of $499 per employee monthly, below the $599 anchor, and prices employment, contractor of record, contractor payments, and managed payroll separately so you buy the piece you need. The platform is built around payments and reporting rather than employment alone.

That reporting bias suits Japan better than it suits most markets. Employer cost here is seven separate lines running on different bases with different ceilings, plus bonus months that behave differently from salary months. A report that separates them is genuinely useful at budget time. The caution is the words in front of the number, because a starting rate is not a Japan quote.

Atlas HXM publishes a starting rate of $599 per employee monthly and describes its own model as direct rather than partner-based, which puts it in the same conversation as the owned-entity option above it at a lower published price. Its pricing page also compares rival rates, which is worth reading as marketing rather than as data.

What to establish is whether the direct model extends to Japan. Providers commonly own entities in their largest markets and lean on partners elsewhere, and Japan is large enough that ownership is plausible but not safe to assume. Ask for the name of the employing entity and its corporate number, and ask who signs the Article 36 agreement.

Oyster publishes its rate, gives contractors a free first 30 days before charging $29, and includes setup and offboarding in the subscription rather than billing them separately. That suits a founder who wants one Japanese employee and no standing relationship to manage, and the buying flow is the most straightforward in this group.

The hourly advisory rate is the tell about the model. People partner services are metered at $300 an hour, so guidance is a product rather than an included service. In Japan that lands badly at exactly the wrong moment, because a dismissal turns on whether the grounds are objectively reasonable, and that is the conversation where you want a person rather than a ticket.

RemoFirst publishes the lowest fee in this group by a wide margin, starting at $199 per employee monthly, and states that no setup, onboarding, or termination fees apply, with no annual contracts and no minimums. On one Japanese hire that gap is roughly $4,800 a year against the anchor and $6,000 against the top tier, which decides the business case at seed stage.

The words in front of the number are doing the work, and Japan is a market where they matter more than usual. The vendor's own page says pricing may vary with local country requirements, and Japan is a five-system jurisdiction with a bonus structure and a strict dismissal test. Ask for the Japan figure in writing, ask who holds the entity, ask what the deposit is, and ask whether the fee changes in bonus months.

A provider or your own Japanese company

Use a provider while your Japanese headcount is small, and model your own company once it is not. The crossover arrives sooner than founders expect, usually at three or four employees, because the fee is charged per person while the cost of running a company is mostly fixed.

The third row is a warning rather than a recommendation. Engaging someone in Japan as a freelancer while setting their hours and directing their methods is the fastest route to a relationship being treated as employment after the fact, with the contributions and entitlements calculated backward across the whole engagement. The product you buy does not decide the classification. The relationship does.

There is also a question for your tax adviser that has nothing to do with which provider you choose: whether the way your Japanese person works could create a taxable presence for your US company regardless of who employs them. Signing authority and customer-facing sales are the usual concerns, engineering rarely is, and the question belongs in the file before it belongs in an audit. If you later move the person onto your own payroll, treat it as a change of employer rather than a data migration, because continuity of service and any accrued retirement entitlement both need handling.

What to ask before you sign

Before you choose

FirstHR is not an employer of record. We hold no entity in Japan, employ nobody on your behalf, and take on no employer liability, so if you need someone on a Japanese payroll next month, the providers above are the category to shortlist. FirstHR is an onboarding and HR platform, not a payroll provider.

This section exists because the provider decision and the HR decision are separate, and people conflate them. A provider handles the legal employment. It does not run the first week, own the signed documents, deliver the training the role requires, or keep employee records in a state where you can find them a year later. In Japan that last point carries more weight than usual, because a defensible exit rests on the record you built while things were still going well.

That layer stays yours whichever route you take, and it is what we built FirstHR for: onboarding with e-signature, document management, training with completion tracking, and an employee record that holds together for a small business without a dedicated HR person, at a flat $98 to $198 per month regardless of headcount.

Frequently Asked Questions

What is an employer of record in Japan?

The company named as employer on the Japanese contract, the payslip, and the insurance enrollments, while the person works for you in every practical sense. It already holds a Japanese entity, files with the pension office and the labor bureau, runs yen payroll, and carries the legal exposure that a US company with no Japanese presence cannot carry itself.

How much does an employer of record cost in Japan?

Published fees among the six providers here span $199 to $699 per employee monthly. Add Japanese statutory contributions of roughly 15.7 percent of total remuneration, the bonus your offer will need to carry, any refundable deposit, and a currency markup, since the fee is billed in dollars against a yen payroll.

What are employer social insurance contributions in Japan?

Health insurance at 4.925 percent on the Tokyo rate, the employees' pension at 9.15 percent, employment insurance at 0.85 percent, workers' accident cover at 0.3 percent for office work, a child allowance contribution at 0.36 percent, and a child and childcare support levy at 0.115 percent. Nursing care insurance adds 0.81 percent from age 40.

Are bonuses mandatory in Japan?

No. Nothing in statute requires one, and almost every serious Japanese offer includes one anyway, with JETRO citing a National Personnel Authority survey that put private-sector bonuses at 4.49 months' worth in fiscal 2023. They also attract full social insurance through the standard bonus amount, capped at ¥1,500,000 per payment for the pension and ¥5,730,000 of cumulative bonuses a year for health insurance.

What is the minimum wage in Japan?

Somewhere between ¥1,085 and ¥1,280 an hour, depending on which of the 47 prefectures the person works in. The fiscal 2026 revisions put the weighted average at ¥1,177, and the new rates arrive on a rolling schedule between October and December rather than all at once.

How much notice do I have to give an employee in Japan?

Thirty days, or 30 days of wages paid instead as a notice allowance. The notice is the cheap part. Because Japan has no at-will employment, the dismissal also has to rest on objectively reasonable grounds that appear in the rules of employment, so the real work happens in the months of documentation before it.

How much annual paid leave do employees in Japan get?

The floor is 10 days once six months are behind them, climbing to 20 days for long service, and five of those days have to be used rather than merely offered. Employers grant considerably more in practice, averaging 18.1 days per worker during 2024 according to the ministry's 2025 General Survey on Working Conditions.

Should I use an employer of record or set up a Japanese company?

A provider first, and a company once the fee per head costs more than running one. A Japanese subsidiary needs a registration, a representative in Japan, notifications to three separate offices, a local accountant, and ongoing administration, against a fee that scales with every head you add. Run the crossover at three or four employees.