Before starting payroll calculation, the following administrative procedures are required
Regarding the enrollment to Social insurance and Labor Insurance in Japan, there are 3
patterns according to the Japanese office's form of organization and the position of the
employee; on a compulsory, or voluntary basis, and the ungrantable cases.
Furthermore, in order to calculate payroll in Japan, opening an account in a Japanese bank is necessitated from the aspect of the payment of social insurance premiums, corporate and
individual income taxes.
The following rules are general in Japan;
Computation Period： 1 month - from the first to the last day of the month
Pay Day： 25th of every month (For the period of the 26th to the last day of the month,
it will be paid in advance / if the payday is a non-working day, it will be paid on the business
day just before.)
The Method of Payment： Bank Transfer
Salary Revision： Once a year
☆ If you plan to pay bonus, it must be indicated on the employment agreement.
Income tax withheld at source from employees through payroll calculation must be paid to
the tax office which exercises jurisdiction over the place of business which paid the salaries,
no later than the 10th day of the month following that in which the income was paid.
(If it falls on a Saturday, Sunday, or a national holiday, by first business day after the day.）
On the statement of payment, you need to put the reference number designated by the tax
office. In order to obtain the reference number, you need to file 'The notification of the
opening of a payroll office' to the jurisdictional tax office within a month of the opening of a
There are two prominent groups of Japanese social insurance system according to the type; 1) Social insurance which is consisted of Health Insurance, Nursing Care Insurance, and
Welfare Pension Insurance, and
2) Employment Insurance and Worker's Compensation Insurance.
See more information.
Health Insurance and Welfare Pension Insurance are applied by establishments. Those are
called eligible places of business, and there are 2 categories. Those which are compulsorily
covered by law, and voluntarily covered.
Corporations (including Japanese branches of foreign corporations )which employ more
than one employee are obliged to enroll as establishments covered compulsorily by Health
Insurance and Welfare Pension. By 'Employee' in this context, officers in Commercial Code
As for the representative offices of foreign corporations, they are covered compulsorily if
there are more or equal to 5 employees. However, if there are less, they don't fall into the
category. Representative offices of foreign corporations in Japan which conduct market
research in Japan or liaise with the Head Office or main overseas office with less than
5 employees can be covered voluntarily, with the approval of half of the employees
(excluding the representative in Japan,) and approval from Director-General of a Regional
Social Insurance Bureau...etc. to enroll social insurance.
Regardless of the form of organization, (whether it is a corporation, a branch office, or a
representative office, all establishments are under the coverage of Labor Insurance as long
as it has an employee or more and conducts business.
1) The necessity of a Japanese Bank Account
We see cases where foreign-affiliated companies try to open bank accounts in Japanese
branches of foreign banks which the Head Office or main overseas office regularly deal with.
However, there are many disadvantages with bank accounts opened in such Japanese
branches of foreign banks. First of all, you cannot pay the social insurance premium,
corporate tax, and income tax. Furthermore, there are very limited number of branches in
Japan.Therefore, at least one account with a Japanese bank is required to realize payroll
calculation in Japan.
2) Internet Banking Services
Most of the Japanese banks provide internet banking services, and many Japanese companies utilize the services for bank transaction. By taking advantage of this service, you don't need
to go to banks and make the bank transfer from your office. However, every bank provides
the service only in Japanese, and in general, the use from outside the country is not
guaranteed. Furthermore, account statements which will be printed out will also be in
Japanese only. Therefore, you can make payment of the cost of public utilities such as
various taxes from overseas by using internet banking services, but due to language barrier of computers, the operations will be limited to those from within Japan.
Please do not hesitate to contact us by phone or email! We'll be happy to answer your every question!
Payroll / HR Services in Japan
HR Business Management SR
ST Bldg. 1-2-4 Shiba-Koen,
Minato-ku Tokyo, Japan 105-0011
"Hi, I am Teizo Hirasawa,
representative of HRBM.
If you have any queries,
please do not hesitate to