The number of foreigners starting businesses in Japan is increasing year by year.
Foreign business owners are thriving in a wide range of fields, including restaurants, IT, trade, hospitality, tourism, construction, and e-commerce targeting overseas markets.
However, once they actually start running a company in Japan, many foreign business owners hit a major roadblock when it comes to “hiring employees.”
This isn’t simply a matter of “the Japanese language.”
Japan has its own unique employment rules and approach to labor management, which can be extremely difficult for foreign business owners to understand.
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A Country Where “I Didn’t Know” Doesn’t Cut It
For example,
- Not having a written employment contract
- Paying less than the minimum wage
- Not understanding the rules regarding overtime pay
- Not knowing that enrollment in social insurance is required
- Believing that employment insurance isn’t necessary because the employee is a part-timer
Cases like these are not uncommon.
Some foreign business owners think,
“It’s a small company, so it’s fine”
“I’m just having a friend help out”
“Other foreign business owners are doing the same thing”
.
However, in Japan, you generally cannot avoid liability simply by claiming “I didn’t know.”
As a result,
- Guidance from the Labor Standards Inspection Office
- Investigations from the Pension Office
- Disputes with employees
- Claims for unpaid overtime pay
- Adverse effects on residence status renewal
and other major problems may arise.
What Foreign Business Owners Are Really Struggling With
In reality, many foreign business owners do not intend to violate the law.
Rather,
“I don’t know where to turn for advice”
“I can’t read the letters from government agencies”
“I don’t know what the risks are”
“I don’t know if the information from my community is actually correct”
These are common situations they find themselves in.
Especially when they have few Japanese friends or business partners, their only source of information may be their own national community.
As a result,
“Everyone else is doing it, so it must be okay”
“This much is no big deal”
“Japan isn’t strict”
they may end up believing inaccurate information like this.
In Japan, There Is a Heavy Responsibility Associated with “Employment”
In Japan, hiring employees comes with a very heavy responsibility.
For example,
- Clearly stating working conditions
- Complying with the minimum wage
- Managing working hours
- Overtime pay
- Social insurance
- Labor insurance
- Paid leave
- Safety precautions
and many other rules.
Furthermore, you cannot simply get away with claiming, “The company didn’t know.”
Additionally, when hiring foreign employees,
- Residence status
- Work restrictions
- Activities outside the scope of the visa
- Period of stay
and other matters related to the Immigration Control Act.
In short, hiring foreign nationals in Japan means
you must simultaneously consider
“Labor Law”
“Social Insurance”
and
This is precisely why accurate knowledge is crucial
On the other hand, foreign business owners who correctly understand Japanese regulations and respond appropriately often achieve stable, long-term business operations.
- Employees are more likely to stay
- It is easier to hire Japanese employees
- You are more likely to gain the trust of business partners
- There are fewer issues with visa renewals
- It is easier to prevent problems before they arise
and many other benefits.
As long as you are running a business in Japan, “employment management” is just as important a part of management as “sales.”
What We Want to Convey in This Series
In this series,
- Basic rules required when hiring employees in Japan
- Points that foreign business owners often misunderstand
- Basics of social insurance and labor insurance
- Employment contracts and overtime rules
- Points of caution specific to hiring foreign nationals
and more will be explained as clearly as possible.
This is not intended for “legal experts,” but rather
“foreign business owners who want to continue running their companies in Japan with peace of mind.”
I aim to write this series with them in mind.