Employer of Record in Japan

An Employer of Record (EOR) in Japan acts as the legal employer on your behalf, handling payroll, contracts, and compliance so your company can hire without a local entity.

Japan's Labor Standards Act requires written Japanese-language employment contracts, mandatory Article 36 Agreements for overtime work, and multi-agency social insurance registration before a single employee can be paid. Each requirement carries its own filing deadlines and penalties for non-compliance.

• EOR hiring typically completes in 2 to 4 weeks, compared to 2 to 3 months for entity setup.
• Employer social insurance contributions run approximately 15 to 18 percent of salary.
• Japan requires a minimum 30-day notice period for termination.
• Fixed-term employees gain indefinite-contract rights after 5 years of continuous employment under the Labor Contract Act.

This guide covers hiring options, employment law, payroll, visas, termination rules, and recent regulatory changes relevant to foreign companies hiring in Japan.

Gloroots is an EOR provider operating in Japan. This guide is written to help readers evaluate all available options, including direct entity setup, PEO arrangements, and independent contractor engagement, not only Gloroots.

What Is an Employer of Record in Japan?

An EOR becomes the statutory employer under Japan's Labor Standards Act, issuing compliant Japanese-language contracts and assuming all employer obligations, including social insurance registration across four schemes.

Foreign companies without a Japanese Kabushiki Kaisha (KK) entity use an EOR to hire local or foreign talent quickly and without incorporation.

The workflow runs as follows: the client selects a candidate; the EOR issues a Japanese-language employment contract; the EOR registers the employee with health insurance, pension, unemployment insurance, and workers' accident compensation; the EOR runs monthly payroll, remits taxes, and manages day-to-day HR administration while the client directs the work. For a full explanation of the model, see how does EOR work.

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Your Hiring Options in Japan: EOR vs. Entity vs. PEO vs. Contractor

Foreign companies entering Japan can choose from four paths: EOR, direct entity (KK or GK), PEO, and independent contractor. Each suits a different combination of headcount scale, risk tolerance, and speed requirement.

An EOR is the only path that requires no pre-existing Japanese entity and transfers all employer compliance obligations to the provider. Gloroots EOR services operate under a locally registered KK entity.

A PEO in Japan requires the client to already hold a Japanese legal entity. It acts as co-employer rather than sole legal employer. When a PEO is structured to act as the sole legal employer, it functions as an EOR and is legally compliant in Japan.

How to Hire in Japan Through an EOR: Step by Step

Hiring through an EOR in Japan follows six steps, from the initial hiring decision through ongoing employment management. Each step has specific compliance actions tied to Japanese labor and tax law.

Step 1: Decide Between EOR, Entity, PEO, or Contractor

• Assess headcount, timeline, and permanence before committing to a structure. If you are hiring fewer than 10 employees or testing the Japanese market, an EOR avoids 2 to 3 months of entity setup and the ongoing compliance overhead of a registered KK or GK.
• Assess permanent establishment (PE) risk carefully. If employees sign contracts, generate revenue, or make high-level decisions on behalf of the foreign company, Japanese tax authorities may determine that a PE exists even when an EOR is in place. Consult a Japanese tax adviser before proceeding.

Step 2: Vet and Select an EOR Provider

• Confirm the EOR owns its Japanese KK entity directly rather than operating through a third-party partner network. A partner-network model adds a layer of contractual and compliance risk.
• Verify the EOR supports MyNumber collection and handles personal data under the Act on the Protection of Personal Information (APPI).
• Check whether the EOR can sponsor work visas and file Certificate of Eligibility (CoE) applications on behalf of foreign hires.

For full selection criteria, see the "How to Choose the Right EOR in Japan" section later in this guide.

Step 3: Issue a Compliant Employment Contract

• Write the contract in Japanese and specify the role, compensation, working hours, leave entitlements, and termination conditions.
• Include an IP assignment clause confirming employer ownership of works created during employment under Japan's Copyright Act and Patent Act.
• For fixed-term contracts, apply the 5-year conversion rule: employees continuously employed for more than five years can request indefinite-term status.
• Draft non-compete clauses with financial compensation and reasonable geographic and duration limits to make them enforceable under Japanese law.

Step 4: Onboard and Register Statutory Requirements

• Collect the employee's MyNumber card and tax withholding forms on or before Day One.
• Register the employee with the health insurance association, Japan Pension Service, Hello Work, and the Labor Standards Inspection Office.
• File an Article 36 Agreement with the Labor Standards Inspection Office before assigning any overtime work.
• Obtain written employee consent before conducting background checks covering education and employment verification, as required under APPI and the Employment Security Law.

Step 5: Run Compliant Monthly Payroll

• Process monthly payroll in JPY, commonly on the 25th, and issue itemized payslips to each employee.
• Withhold income tax and resident (inhabitant) tax, and remit employer and employee social insurance contributions each month.
• Process biannual bonuses (summer and winter) with correct income tax and social insurance deductions applied.
• Conduct the year-end tax adjustment (nenmatsu chosei) to reconcile each employee's actual annual tax liability against amounts withheld.

Step 6: Manage Offboarding and Exit

• Provide 30 days' written notice or pay in lieu, and document the grounds for termination clearly in writing.
• Pay all outstanding wages, unused paid leave balances, and agreed severance by the employee's final working day.
• Issue the Certificate of Separation (Rishokuhyo) and the Tax Withholding Slip (Gensen Choshu Hyo) to the departing employee.
• Deregister the employee from health insurance, pension, and unemployment insurance within the applicable statutory deadlines.

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How to Choose the Right EOR in Japan

Choosing an EOR in Japan requires evaluating six factors before signing any contract.

Japan's labor framework is detailed and enforced across multiple government agencies. An EOR that lacks direct, in-country experience will create compliance gaps that are costly to correct. The criteria below give you a structured way to assess any provider before committing.

Use these factors to compare providers on substance, not on marketing claims. Verify each point with documented evidence, client references, and sample contracts. A provider that cannot demonstrate hands-on experience with Japan-specific filings and registrations is not ready to act as your legal employer in the country. For a broader comparison of providers, see the best employer of record guide.

Local Legal Knowledge and Compliance Track Record

Verify that the provider has direct experience filing Article 36 Agreements with the Labor Standards Inspection Office, managing registrations across health insurance, pension, and Hello Work, and executing the year-end tax adjustment (nenmatsu chosei) process for employees.

Ask for documented examples, not general assurances. A provider that has processed nenmatsu chosei for multiple clients in Japan will handle edge cases, such as mid-year joiners and employees with multiple income sources, without escalating them to you.

Own Entity vs. Partner Network

Confirm that the EOR directly owns and operates a registered Kabushiki Kaisha (KK) in Japan. Providers that subcontract employment to a local partner introduce an additional layer of legal and operational risk.

When a third-party partner is the legal employer, your company loses direct visibility into payroll execution, contract compliance, and statutory filings. Disputes over termination or benefits become harder to resolve when two intermediaries are involved.

Ask the provider to confirm entity ownership in writing and request the KK registration number. Verify it against the Legal Affairs Bureau's public registry before signing any agreement.

Support Model and Language Capability

Japanese-language HR support is not optional. Employment contracts, authority filings, and bank communications in Japan are conducted in Japanese, and errors in translation carry legal consequences.

Assess whether the provider employs in-country HR staff who can communicate directly with employees, the Japan Pension Service, Hello Work offices, and local banks in Japanese. Relying on machine translation for official filings creates compliance exposure.

Ask specifically about contract dispute resolution. If an employee raises a grievance with the Labor Standards Inspection Office, the provider must be able to respond in Japanese on your behalf without delay.

Pricing Transparency

Request an itemized fee schedule before committing to any provider. The monthly EOR fee per employee should clearly state what is included: payroll processing, statutory compliance, and benefits administration.

Costs that are commonly excluded include visa sponsorship, background checks, and equity administration support. These can add materially to the total cost per employee if not disclosed upfront.

Market rates for Japan EOR services range from approximately $199 to $699 per employee per month, depending on provider and scope. Review Gloroots' pricing page for a country-specific breakdown of fees and inclusions before comparing providers.

Data Security and APPI Compliance

Japan's Act on the Protection of Personal Information (APPI) governs how employee data is collected, stored, and transferred. Providers must have documented procedures that comply with APPI requirements.

MyNumber identifiers, used for tax and social insurance filings, require specific storage controls and access restrictions under APPI. Confirm the provider maintains a dedicated, access-controlled system for MyNumber data.

Cross-border data transfers require employee consent documentation under APPI. Ask the provider to share its standard consent forms and data processing agreements before onboarding any employee in Japan.

Integration and Platform Capability

Evaluate whether the EOR platform connects directly with your existing HRIS, expense management tools, and equity administration systems. Manual data transfers between platforms increase payroll error risk.

This is particularly relevant for technology companies granting stock options or restricted stock units to Japanese employees. Japan has specific tax treatment rules for equity compensation, and your EOR platform must support accurate reporting of equity income at the point of vesting or exercise.

Request a list of supported integrations and ask for a live demonstration before signing. Confirm whether API access is available for custom connections to internal finance or HR systems.

Workforce and Talent Pool in Japan

Japan's workforce of approximately 68 million is one of the world's oldest, with a median age of 48.7 years. A shrinking domestic labor pool is driving demand for foreign professionals in IT, healthcare, and skilled trades.

Tokyo dominates finance, consulting, and tech hiring. Osaka leads in manufacturing and life sciences. Fukuoka is the primary startup and IT hub.

Work culture places strong emphasis on group harmony (wa), hierarchical decision-making, and long-term employment loyalty. Younger professionals increasingly expect flexible work arrangements and performance-based pay. English proficiency is moderate nationally but higher in Tokyo-based multinationals. Average private-sector salary is approximately JPY 4,780,000 annually, with software developers averaging JPY 5.5 million, approximately $36,000 to $38,000 USD at current exchange rates. Yen weakness creates a cost advantage for foreign employers: skilled Japanese professionals are available at significantly lower USD cost than equivalent talent in the US or Australia. For a regional comparison, see how hiring conditions differ in our employer of record China guide.

Employment Law Essentials in Japan

Japan's employment law framework is built on the Labor Standards Act (LSA), the Labor Contract Act, and several sector-specific statutes. Employers must comply with rules covering contracts, working hours, wages, anti-discrimination, and union rights.

The LSA prohibits discrimination based on nationality, creed, and social status. The Equal Employment Opportunity Act prohibits sex discrimination. Companies with 101 or more employees must disclose their gender pay gap annually. Employers with 40 or more employees must maintain a workforce where persons with disabilities represent at least 2.5% of total headcount.

The Labor Union Act guarantees employees the right to form unions and to strike. An Article 36 Agreement, a written labor-management agreement, is required before any overtime can be worked. Works councils are not required in Japan.

Employment Contracts

All employment contracts must include IP assignment clauses. The Patent Act governs employee inventions; the Copyright Act covers works created during employment. Non-compete clauses require financial compensation and a reasonable scope to be enforceable under Japanese case law.

Fixed-term contracts carry a conversion right under the Labor Contract Act. Employees continuously employed for more than five years may request conversion to an indefinite-term contract. Employers cannot refuse a valid conversion request.

Working Hours and Overtime

Standard working hours are 8 hours per day and 40 hours per week under the LSA. Any overtime requires a valid Article 36 Agreement. Standard caps are 45 hours per month and 360 hours per year. Under special circumstances, the maximum is 720 hours per year, 100 hours per month including holiday work, and an average of 80 hours per month over any 2 to 6 month period.

Minimum Wage

Japan sets minimum wages at both the national and prefectural level. As of October 2024, the national weighted average is approximately 1,055 yen per hour. Tokyo's prefectural minimum is 1,163 yen per hour.

Employers must apply whichever rate is higher: the national minimum or the applicable prefectural minimum. Gloroots ensures all salaries meet or exceed the applicable prefectural minimum wage.

Leave and Statutory Benefits in Japan

Japan's leave framework combines statutory paid leave, social insurance benefits, and employer obligations under the Industrial Safety and Health Act. Employers must also pay a commuter allowance for employees who travel to work.

Commuter allowance is legally required and is non-taxable up to 150,000 yen per year. Amounts above that threshold are subject to income tax withholding. The Industrial Safety and Health Act requires annual medical check-ups for all employees. Stress checks are mandatory for companies with 50 or more employees, and the employer bears the cost.

Annual Leave

Employees become eligible for paid annual leave after six months of continuous employment, provided they have attended at least 80% of scheduled working days. Entitlement starts at 10 days and increases with service length, up to a maximum of 20 days.

Employers must designate at least 5 days of annual paid leave per year for any employee who receives 10 or more days of entitlement. Employees cannot waive this obligation.

Sick Leave

Japan has no statutory employer sick pay obligation. Employees on health-insured sick leave receive approximately 66% of salary from the health insurance association after a three-day waiting period.

Maternity and Paternity Leave

Maternity benefit pays 67% of daily salary (subject to a cap) from the health insurance association. Parental leave benefit pays 67% of wage for the first 180 days, then 50% thereafter.

From April 2025, employers of employees raising children under age 3 must make efforts to enable remote work. From October 2025, employers of employees with children aged 3 to elementary school age must implement at least two of five prescribed flexible measures, including remote work of ten or more days per month.

Public Holidays

Japan observes 16 national public holidays in 2025 and 2026: New Year's Day, Coming of Age Day, National Foundation Day, Emperor's Birthday, Vernal Equinox Day, Showa Day, Constitutional Memorial Day, Greenery Day, Children's Day, Marine Day, Mountain Day, Respect for the Aged Day, Autumnal Equinox Day, Sports Day, Culture Day, and Labor Thanksgiving Day. Employers are not legally required to grant time off on every holiday, but the practice is widely observed. The Labor Standards Act requires at least one rest day per week.

Payroll, Tax and Statutory Contributions in Japan

Japan payroll runs monthly. Employers must withhold income tax, resident tax, and social insurance contributions, then remit each to the relevant authority.

The year-end tax adjustment (nenmatsu chosei) is mandatory. It reconciles all withholdings against actual annual income for each employee. Errors trigger back payments and penalties from the National Tax Agency, making accurate record-keeping a high-priority compliance obligation.

Japan's income tax applies on a progressive scale. The current 2024/2025 brackets range from 5% on income up to ¥1.95 million to 45% on income above ¥40 million, with a separate 2.1% surtax applied to the base income tax amount.

• MyNumber requirement: Each employee's MyNumber (individual identification number) must be recorded on all tax and social security filings.
• Resident tax: Collected at municipal and prefectural level. Employers withhold resident tax monthly and remit to local governments. New employees may experience a gap year before resident tax withholding begins, as assessments are based on prior-year income.

Gloroots manages payroll calculations, nenmatsu chosei reconciliation, MyNumber compliance, and remittances to all relevant authorities under its registered Japanese entity.

Work Visas and Permits in Japan

Foreign nationals require a Certificate of Eligibility (CoE) from the Immigration Services Agency before a work visa is issued by a Japanese embassy or consulate.

An EOR with a registered Kabushiki Kaisha (KK) can sponsor work visas and CoE applications on behalf of foreign employees. The client company does not need its own Japanese entity. This is a material advantage for companies hiring foreign nationals in Japan without an established local presence.

Permanent establishment risk applies regardless of visa type. If foreign employees engage in revenue-generating activities or high-level decision-making in Japan, PE risk may arise for the parent company.

Equity and ESOP Consulting in Japan

Equity compensation is increasingly common in Japan's tech and startup sectors, particularly in Tokyo, Osaka, and Fukuoka, where global companies compete for engineering talent.

Stock options granted to Japanese employees are subject to income tax at exercise, not at grant, under standard treatment. Qualified stock options (tax-qualified shikaku seigen tsuki stock options) defer taxation to the point of sale, but require strict conditions. These include a cap of ¥12 million per year in exercisable value. EOR employees may face restrictions on equity participation depending on the parent company's equity plan structure.

Misclassification Risk in Japan

Japan's Labor Standards Inspection Office actively investigates misclassification. Reclassification triggers retroactive obligations regardless of what the contract states.

Penalties are specific and significant. Labor law violations carry fines up to JPY 300,000 and/or imprisonment up to 6 months. Social security-related violations carry fines up to JPY 500,000 and/or imprisonment up to 6 months. Unpaid social security contributions attract a 10% penalty tax on the outstanding amount.

Japan's Whistleblower Protection Act (WPA) adds further exposure. Workers who report criminal acts, including misclassification, to authorities are protected by law. Dismissal of a whistleblower is null and void, which means misclassification disputes can escalate into wrongful termination claims simultaneously.

An EOR removes misclassification risk by ensuring workers are classified as employees from Day One, with compliant contracts and full social insurance enrollment in place before work begins.

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Hiring, Onboarding, Termination and Offboarding in Japan

Japan's employment lifecycle is governed by the Labor Standards Act, the Labor Contract Act, and the Industrial Safety and Health Act. Each phase, from pre-hire documentation to final offboarding, carries specific legal obligations that employers must execute in the correct sequence.

The sections below cover onboarding, termination, and offboarding in detail.

Onboarding

Onboarding in Japan requires action across four phases. Each phase has legal and administrative deadlines that must be met before the next begins.

Before Day One

• Issue a Japanese-language employment contract specifying role, wages, working hours, leave entitlements, and termination conditions.
• Collect the employee's MyNumber card, tax withholding declaration forms, and social insurance application documents.
• File an Article 36 Agreement with the Labor Standards Inspection Office if the role requires overtime work.
• Obtain written consent for any background checks, covering education and employment verification, under the Act on the Protection of Personal Information (APPI).

Day One

• Register the employee with the health insurance association, Japan Pension Service, Hello Work, and the Labor Standards Inspection Office.
• Provide a Japanese-language employee handbook, workplace safety training, and harassment policy documentation.
• Issue residence card (Zairyu Card) registration guidance to any foreign national employees joining the team.

First Week

• Confirm payroll setup including bank account details, commuter allowance calculation, and bonus structure.
• Conduct cultural onboarding covering group harmony (wa), workplace hierarchy, and communication norms.
• Confirm the employee's stress check schedule and annual medical check-up schedule under the Industrial Safety and Health Act.

Beyond

• Schedule 30-day and 90-day check-ins and maintain probation period documentation for up to 6 months.
• Track fixed-term contract duration and flag employees approaching the 5-year threshold for conversion right notification under the Labor Contract Act.

Termination

Employers must provide at least 30 days' written notice or pay in lieu. Termination requires documented just cause: serious misconduct, well-documented poor performance, or genuine redundancy. Japanese courts routinely side with employees when the process is not followed precisely.

In redundancy cases, the employer must demonstrate it explored alternatives, including internal transfers and voluntary retirement programs, before enforcing termination. Courts apply a four-factor test and will void terminations that skip this step.

Post-termination non-compete obligations are enforceable only when the contract includes financial compensation and sets reasonable geographic and duration limits. Clauses without compensation are routinely struck down by Japanese courts.

Offboarding

Offboarding in Japan involves three sequential phases: settlement, documentation, and exit. Each carries statutory deadlines.

Settlement

• Pay all outstanding wages, unused paid leave balances, and agreed severance by the final working day.
• Conduct the year-end tax adjustment (nenmatsu chosei) if offboarding occurs mid-year or at year-end.
• Calculate and pay any agreed retirement allowance (taishoku kin) per company rules or the applicable collective bargaining agreement.

Documents

• Issue the Certificate of Separation (Rishokuhyo), which the employee requires to claim unemployment benefits from Hello Work.
• Issue the Tax Withholding Slip (Gensen Choshu Hyo), which the employee requires for annual tax filing.
• Provide the employee with social insurance deregistration confirmation.

Exit

• Deregister the employee from health insurance, Japan Pension Service, and unemployment insurance within statutory deadlines.
• Collect company property including laptop, ID card, and access passes, and deactivate all digital accounts and system access.
• Conduct an exit interview consistent with Japanese cultural norms and facilitate knowledge transfer to maintain business continuity.

What's New: Recent Regulatory Changes in Japan

Japan's Work Style Reform Act amendments and Labor Contract Act updates have introduced significant new employer obligations in 2024 and 2025, with further changes taking effect in October 2025.

• October 2024: The national minimum wage increased to approximately JPY 1,055 per hour (national weighted average), with Tokyo reaching JPY 1,163 per hour. Employers must update payroll calculations immediately to reflect the new floor.
• April 2025: Employers of employees raising children under age 3 must make documented efforts to enable remote work under the amended Child Care and Nursing Care Act.
• October 2025: Employers of employees with children aged 3 to elementary school age must implement at least 2 of 5 prescribed flexible work measures, including remote work of 10 or more days per month.
• 2024: Companies with 101 or more employees must now disclose gender pay gap data annually to the Ministry of Health, Labour and Welfare.
• 2024: The disability employment rate requirement increased to 2.5% for employers with 40 or more employees.

Employers should conduct a quarterly compliance review and assign a named internal owner to monitor Ministry of Health, Labour and Welfare announcements for further 2025 amendments.

Costs and Financial Planning for Hiring in Japan

Hiring costs in Japan extend well beyond base salary. Employer social insurance contributions, mandatory bonuses, and commuter allowances add 20–30% to total employment cost.

Several costs are not legally mandated but are widely expected in practice. Retirement allowance (taishoku kin) is a strong cultural norm even without a statutory requirement. Annual medical check-ups under the Industrial Safety and Health Act are borne by the employer. Commuter allowance is non-taxable up to ¥150,000 per year but must be paid when employees travel to work.

Understanding the full cost picture before hiring prevents budget overruns. See our breakdown of employer of record cost for a detailed comparison across markets.

EOR fees for Japan typically range from approximately $199 to $699 per employee per month, depending on provider and scope. Gloroots offers predictable, country-specific pricing with no hidden setup costs.

Common Challenges and How Gloroots Solves Them in Japan

Foreign employers in Japan face five recurring operational challenges that go beyond general compliance. Each has a specific solution when working with Gloroots.

Why Gloroots Is a Strong EOR Partner in Japan

Gloroots is suited for foreign companies hiring between 1 and 50 employees in Japan without a local entity, particularly those in technology, finance, and life sciences where compliance complexity is highest.

Japan-specific capabilities include direct Kabushiki Kaisha (KK) entity ownership, Article 36 Agreement management, MyNumber and APPI-compliant data handling, Certificate of Eligibility and work visa sponsorship, and year-end tax adjustment (nenmatsu chosei) processing.

Gloroots can onboard employees in Japan in 2–4 weeks. Direct entity setup takes 2–3 months by comparison.

The platform is well suited for companies testing the Japanese market, hiring a small remote team, or expanding quickly without committing to entity incorporation. Buyers should confirm Gloroots' fee structure for Japan, verify direct KK entity ownership, and request a sample Japanese-language employment contract before signing. This is standard due diligence for any EOR provider. For a broader comparison of providers, see our guide to the best employer of record options, or review the full range of EOR services Gloroots offers.

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Conclusion

Japan's Labor Contract Act 5-year conversion rule and Article 36 Agreement requirements make employment compliance more operationally demanding than in most Asia-Pacific markets.

Companies evaluating Japan entry should compare EOR, direct entity, and PEO options against their headcount timeline and risk tolerance. The four-path table earlier in this guide provides a starting framework for that decision. Companies already considering adjacent markets can also review the employer of record Singapore guide for a comparable APAC hiring context.

Frequently Asked Questions About Employer of Record in Japan

Is it legal to use an Employer of Record in Japan?

Yes, using an EOR in Japan is fully legal. The EOR becomes the statutory employer under Japan's Labor Standards Act, issuing compliant Japanese-language contracts and registering employees with health insurance, pension, and unemployment insurance. The client company directs the work while the EOR holds all employer obligations.

How long does it take to hire an employee in Japan through an EOR?

Most EOR providers can onboard an employee in Japan within 2–4 weeks, compared to 2–3 months for direct entity setup. The timeline depends on whether the employee is a Japanese national, which is faster, or a foreign national requiring a Certificate of Eligibility and work visa, which typically adds 4–8 weeks for CoE processing.

What does an EOR in Japan cost?

EOR fees for Japan typically range from approximately $199 to $699 per employee per month, depending on the provider and scope of services. This generally covers payroll processing, compliance management, and benefits administration. Visa sponsorship, background checks, and equity administration are often priced separately. Request an itemized fee schedule before signing.

What benefits do employees receive when hired through an EOR in Japan?

Employees hired through an EOR in Japan receive the same statutory benefits as direct hires: health insurance, pension, unemployment insurance, workers' accident compensation, paid annual leave of 10–20 days depending on tenure, and maternity and paternity leave paid by social insurance. Biannual bonuses and commuter allowances are also standard. EOR employees may not receive parent company equity grants.

What is the difference between an EOR and a PEO in Japan?

An EOR becomes the sole legal employer in Japan, requiring no pre-existing Japanese entity from the client. A PEO acts as a co-employer but requires the client to already hold a registered Japanese entity such as a KK or GK. For companies without a Japanese entity, an EOR is the only compliant option.

Can an EOR sponsor work visas in Japan?

Yes, an EOR with a registered Kabushiki Kaisha in Japan can sponsor work visas and process Certificate of Eligibility applications for foreign national employees. This includes the Engineer/Specialist in Humanities visa, Highly Skilled Professional visa, and Intra-Company Transferee visa. The client company does not need its own Japanese entity to sponsor visas through an EOR.

What is the 5-year fixed-term contract rule in Japan?

Under Japan's Labor Contract Act, fixed-term employees who have been continuously employed for more than 5 years can request conversion to an indefinite-term employment contract. The employer cannot refuse a valid request. This rule applies regardless of whether the employee is hired directly or through an EOR, and requires proactive contract duration tracking.

Does using an EOR in Japan eliminate permanent establishment risk?

No. Using an EOR reduces compliance risk but does not eliminate permanent establishment risk. If employees engage in revenue-generating activities, contract signing, or high-level decision-making on behalf of the foreign company, Japanese tax authorities may deem a permanent establishment exists, triggering corporate tax obligations in Japan. Companies should limit employee activities and seek qualified tax advice.