Cost to Hire an Employee in Japan (2026)

• Gross salary, usually paid monthly.
• Employer costs of about 15.5% at a JP¥8,000,000 salary: JP¥1,236,980 a year, of which the largest is welfare pension (kosei nenkin), employer share.
• An EOR fee, if you hire without your own entity. The providers in our Japan guide publish starting prices of US$199–599 per employee per month; see how to choose an EOR in Japan for the shortlist.

Mandatory employer costs at a JP¥8,000,000 salary (mid-level professional). Employee contributions and income tax come out of gross pay and aren't included.

Contribution ceilings mean employer costs can be a smaller share of higher salaries. Figures exclude the EOR fee.

• Employer social insurance: About 15–16% of pay in Tokyo (pension, health, employment and accident insurance), lower above the ceilings
• Pension (kosei nenkin): 18.3%, split equally, on pay up to ¥650,000 a month
• Minimum wage (Tokyo): ¥1,280 an hour from 1 October 2026
• Working hours: 40 a week and 8 a day; overtime needs a '36 agreement'
• Paid annual leave: 10 days after 6 months, rising to 20 days
• Dismissal notice: At least 30 days, or pay in lieu

• Long-term care insurance (age 40–64), employer share (0.81% of gross, up to JP¥16,680,000): Half of 1.62%, for employees aged 40 to 64 only. Switch on in the estimator if your hire is in that age band.
• Commuting allowance (customary) (JP¥120,000 / year): Not required by law but almost universal; commonly a monthly commuter pass. ¥120,000 a year is an estimate.
• Rates are for an employee under 40 in Tokyo. Add 0.81% for long-term care insurance if the employee is 40 to 64.
• Pension and the child contribution stop rising above ¥650,000 a month of pay, and health insurance above ¥1,390,000, so the effective rate falls at higher salaries.
• Employee social insurance contributions, income tax and resident tax are deducted from pay and are not employer costs.
• Japan has no statutory severance pay. Retirement allowances and severance are set by company rules or contract, and dismissals are difficult (see below).
• Foreign employees are generally covered by Japanese social insurance; a social security agreement between Japan and their home country can exempt some seconded staff from pension contributions.

Without your own entity in Japan, an Employer of Record can employ your hire for a monthly fee. The alternative is setting up your own Japanese KK. See the comparison in our Japan guide and EOR vs local entity.