What You Need to Know When Hiring Your First Employee in Japan

When you first start a company, you’ll likely handle many tasks on your own.

Sales, accounting, customer service, procurement, and administrative work.

However, as your business grows, you’ll eventually need additional help.

For many foreign business owners,

“hiring your first employee”

marks the first major turning point in running a business in Japan.

This is because, in Japan, the act of “hiring someone” comes with significant legal responsibilities.

Furthermore, for foreign business owners residing in Japan under the “Business Manager” status of residence, hiring employees is not merely a matter of business expansion.

With the revision of the Business Manager requirements in October 2025, it has become mandatory to employ at least one full-time employee. The hiring process itself has become a critical issue affecting the maintenance of your status of residence and the continuity of your business.

In this article, we’ll explain the basic points you should know before hiring your first employee.

The first thing to consider is “Who to hire?”

Before you begin the hiring process, there are a few things you should clarify first.

That is, “What kind of talent do you need?”

For example,

• Full-time employees
• Part-time employees
• Casual workers
• Contract employees

The applicable rules differ depending on the type of employee.

It also depends on whether you are hiring a Japanese national or a foreign national.

• Permanent Residents
• International Students
• Specified Skilled Workers
• Engineers, Specialized Professionals, and International Business
• Dependents

If you plan to hire foreign nationals, the matters you need to verify will vary depending on their status of residence.

In particular, when hiring foreign nationals, it is risky to make the decision based solely on the need for immediate labor due to a staff shortage.

Before beginning the hiring process, it is important to clarify the profile of the required personnel and whether they are legally eligible to work in Japan.

The Business Manager Visa and the Importance of “Full-Time Employees”

For foreign business owners residing in Japan under the Business Manager status of residence, hiring employees has become more important than ever.

Due to the 2025 amendments, it is necessary to employ at least one full-time employee; however, this is not simply a matter of “just hiring anyone.”

First, that employee must be a Japanese national, or if a foreign national, must hold a specific status of residence such as Permanent Resident, Long-Term Resident, or Spouse of a Japanese National.

The following points are also important:

• Are they truly working full-time?
• Has the employment contract been properly drafted?
• Is the salary being paid appropriately?
• Have the necessary social insurance and labor insurance procedures been completed?
• Are working hours and days off being managed appropriately?

Even when hiring an employee for the purpose of obtaining a Business Manager visa, you cannot ignore labor laws or social insurance regulations.

As long as you operate a company in Japan, you have a responsibility to properly employ your employees and manage their labor affairs.

Things to Decide “Before They Start Working”

In Japan, it is required to clarify conditions before an employee starts working, rather than determining them after they begin.

For example, the following conditions must be clearly stated in advance:

• Salary
• Working hours
• Days off
• Work location
• Contract period
• Job duties
• Overtime

Some foreign business owners believe that

“We can just have them start working first and discuss the details later.”

However, this approach can lead to problems down the road.

Especially when hiring full-time employees, it is essential to clearly define the number of working days, working hours, salary amount, and job duties.

The Employment Contract Is a Vital Management Tool

In Japan, it is extremely important to prepare an employment contract and a notice of employment conditions.

These are not merely documents.

They are tools for aligning the expectations of management and employees.

Employment contracts and notices of employment conditions should include the following details:

• What is the salary?
• What are the working hours?
• Is there overtime?
• When are the days off?
• What kind of work will be performed?

Without a written contract, it is easy for issues to arise later, such as claims that “the conditions are different from what the company told me.”

In relation to the business manager’s residency status, having an appropriate employment contract also serves as important documentation demonstrating that the company is actually conducting business and employing staff.

Understanding the Minimum Wage

Japan has a minimum wage system.

Therefore, even if there is an agreement with the employee, you cannot pay a salary that falls below the minimum wage.

This applies to all workers, regardless of nationality or employment status.

Foreign business owners may tend to base their salary expectations in Japan on wage levels in their home country.

However, as long as you are conducting business in Japan, you must comply with Japan’s minimum wage rules.

When hiring full-time employees, it is not only important to comply with the minimum wage but also to ensure that the salary level is commensurate with the job duties and responsibilities.

Rules Regarding Working Hours Are Also Important

In Japan, “how many hours were worked” is highly emphasized.

Therefore, you must manage the start and end times of each employee’s shift, break times, and any overtime hours worked.

Some business owners feel that “it’s only natural to work until the job is done.”

However, Japan has detailed rules regarding working hours.

Managing working hours is particularly important when hiring full-time employees.

If working hours are not recorded, it could lead to disputes later regarding overtime pay or work on holidays.

Check Social Insurance and Labor Insurance

When hiring employees, issues related to social insurance and labor insurance arise.

• Health Insurance
• Employee Pension Insurance
• Unemployment Insurance
• Workers’ Compensation Insurance

The required procedures and the types of insurance you must enroll in may vary depending on the size of your company and how your employees work.

If your company hires full-time employees, enrollment in social insurance is required.

Additionally, Workers’ Compensation Insurance is a mandatory system that you must enroll in as soon as you hire even a single employee.

It is important to verify these details before hiring, rather than “thinking about it after hiring.”

Additional Verifications When Hiring Foreign Nationals

When hiring foreign nationals, there are additional items to verify.

For example:

• Residence status
• Period of stay
• Existence of work restrictions
• Consistency between job duties and residence status

You must verify not only salary and working hours but also whether the individual is legally eligible to work.

If a foreign CEO holding a Business Manager visa hires another foreign national,

it is dangerous to make decisions based solely on the assumption that

“I’m a foreigner too, so I understand.”

As an employer, you have a responsibility to verify their Residence Card and the scope of their permitted employment.

Hiring is the responsibility of the business owner

When hiring for the first time, it is easy to think, “I’ve found a good candidate, so let’s have them start working right away.”

However, hiring is not merely about finding people.

From the moment an employee is hired, various responsibilities arise for the business owner.

Especially for foreign business owners operating under a Business Manager residence status, hiring employees is not only essential for maintaining their residence status but also serves as a key factor in demonstrating the company’s credibility and the continuity of its business.

That is why it is crucial to understand the necessary rules before rushing into hiring.

Summary

Hiring your first employee is a major step toward growth for your company.

However, it also means taking on new responsibilities as a business owner.

Before hiring,

• determine employment terms
• prepare employment contracts
• confirm the minimum wage
• understand working hours
• confirm procedures for social insurance and labor insurance
• in the case of hiring foreign nationals, verify their status of residence

are necessary preparations.

Especially for foreign business owners operating under the “Business Manager” status of residence, hiring is not merely about securing personnel.

Hiring full-time employees and implementing proper labor management are not only essential for the company’s growth but also key factors in demonstrating business continuity and social credibility.

Hiring people is not simply about getting help with work.

It is also about establishing the company’s organizational structure.