Setting Up a Company in Japan: HR and Employment Compliance Checklist for First-Time Market Entrants
Introduction
Japan is a compliance-intensive market. For foreign companies establishing a presence — whether through a wholly-owned subsidiary (K.K. or G.K.), a representative office, or an acquisition — the employment and HR compliance obligations begin before your first payroll run and scale as your team grows.
Unlike market entry guides that focus on corporate registration and tax, this guide focuses specifically on HR and employment compliance: the obligations that govern your relationship with every person you employ in Japan.
The compliance landscape changes at specific headcount thresholds. The structure of this guide follows that logic: from first hire through the 50-employee milestone and beyond.
Part 1: Before You Hire Anyone
Corporate and Employer Registration
Before hiring your first employee, the following registrations are typically required:
- [ ] Labor Standards Inspection Office notification: Required if you have a fixed workplace with employees. File within 10 days of opening the workplace (事業場)
- [ ] Public Employment Security Office (Hello Work) notification: Required within 10 days of opening
- [ ] Workers' Compensation Insurance enrollment: File at the Labor Standards Inspection Office before first hire — there is no grace period
- [ ] Employment Insurance enrollment: File at Hello Work within 10 days of employment starting
HR Infrastructure to Prepare
- [ ] Employment contract template reviewed by Japanese labor law counsel — includes all mandatory written disclosure items under the Labor Standards Act
- [ ] Payroll system configured for Japanese payroll: gross salary, social insurance deductions, income tax withholding (gensen chōshū, 源泉徴収)
- [ ] Annual paid leave tracking system (leave accrues from 6 months of service)
- [ ] Health checkup vendor identified and contracted (required from first hire)
Part 2: From First Hire
Employment Contract Obligations
Every employee must receive a written statement of working conditions at the time of hiring. Japanese law mandates disclosure of:
- [ ] Contract type (indefinite / fixed-term) and duration if fixed
- [ ] Workplace location and job description
- [ ] Start and end of working hours, rest periods, days off, leave
- [ ] Wages: calculation method, payment timing, components
- [ ] Rules for dismissal and resignation notice periods
- [ ] (From April 2024) For fixed-term employees: renewal possibility and criteria
Common mistake: Using a global employment agreement template that omits these mandatory disclosure items. These need to be in a separate Japan statutory disclosure document or integrated into the Japan-specific contract.
Social Insurance Enrollment
All full-time employees — and many part-time employees — must be enrolled from Day 1:
- [ ] Health Insurance (健康保険): Managed by the Japan Health Insurance Association (協会けんぽ) unless you establish a company health insurance association
- [ ] Employees' Pension Insurance (厚生年金保険): Japan Pension Service
- [ ] Employment Insurance (雇用保険): Hello Work
- [ ] Workers' Compensation Insurance (労災保険): Labor Standards Inspection Office
The enrollment deadlines are strict and retroactive penalties for late enrollment are substantial.
Mandatory Annual Health Checkups
From first hire, you must arrange an annual health checkup for all employees:
- [ ] Vendor contracted for annual regular health checkup (一般定期健康診断)
- [ ] Cost borne by employer: employees cannot be required to use paid leave for checkups
- [ ] New hire checkup: within 3 months of hire for anyone who hasn't had a checkup in the past 6 months
- [ ] Results handling: delivered to employee AND employer; must be reviewed with physician guidance; 5-year retention
Annual Paid Leave
- [ ] Paid leave accrual tracking begins at hire
- [ ] After 6 months of continuous employment: 10 days granted
- [ ] From 2019: employer must ensure at least 5 days are taken each year
- [ ] Carryover: unused leave carries forward for up to 2 years
Part 3: At 10 Employees — Work Rules Required
Once you reach 10 regularly employed workers, you must create and file Work Rules (就業規則):
- [ ] Work Rules drafted covering all required topics: working hours, leave, wages, disciplinary rules, dismissal procedures
- [ ] Employee review: Work Rules must be shared with employees and their feedback solicited (via representative if no union)
- [ ] Filed with Labor Standards Inspection Office in your jurisdiction
- [ ] Posted or made accessible to all employees
Work Rules function as the legal floor for your employment relationship. Individual contracts can provide better terms but not worse.
Note on language: Work Rules must be in Japanese for legal filing. If you have non-Japanese speaking employees, consider providing a parallel translation — but the Japanese version is the legally binding one.
Part 4: At 50 Employees — The Most Significant Threshold
Crossing 50 regularly employed workers triggers the most substantial cluster of new obligations. Plan for this milestone 3–6 months before you reach it.
4.1 Industrial Physician Appointment (産業医選任)
- [ ] Identify and contract an industrial physician — a licensed physician with occupational medicine qualification
- [ ] File appointment notification with the Labor Standards Inspection Office (within required timeframe after reaching 50)
- [ ] Document physician's responsibilities: regular workplace visits, health checkup review, stress check oversight, consultation availability
- [ ] Inform employees of the industrial physician's existence and availability for confidential consultation
Industrial physicians are typically contracted on a monthly visit basis. Allow 1–3 months to identify and contract a suitable physician — availability varies significantly by region.
4.2 Health Management Officer (衛生管理者)
- [ ] Appoint at least one health management officer from existing staff
- [ ] Verify qualification: the role requires a national qualification (衛生管理者免許) or equivalent
- [ ] File appointment notification with the Labor Standards Inspection Office
- [ ] If no current employee holds the qualification: plan for staff to obtain it (training programs available) or contract an external health management service
4.3 Occupational Health Committee Formation (衛生委員会)
- [ ] Form the committee with required members: industrial physician, health management officer, employee representatives, management representative
- [ ] Establish monthly meeting schedule — required by law
- [ ] Create meeting minute template — minutes must be retained for 3 years
- [ ] Establish employee notification process so committee activities and minutes are accessible
The committee's first substantive task is typically reviewing the past year's health checkup aggregate results and planning the first stress check implementation.
4.4 Annual Stress Check (ストレスチェック制度)
This is the obligation most foreign companies discover only at or after the 50-employee milestone:
- [ ] Select implementation approach: industrial physician as implementer, or certified external vendor
- [ ] Contract vendor or establish internal process — vendor selection can take 4–8 weeks including due diligence
- [ ] Multilingual questionnaire: if your workforce includes non-Japanese speakers, verify your vendor's language support
- [ ] Employee communication plan: explain what the stress check is, that individual results are private, how high-stress follow-ups work
- [ ] Group analysis review process: build stress check group analysis review into Occupational Health Committee agenda
- [ ] Workplace improvement documentation: committee must deliberate on and document at least one improvement action based on results each year
Key compliance point: Unlike health checkups, individual stress check results belong to the employee, not the employer. HR will not see individual data. The employer receives only aggregate group analysis. This privacy-protective design is unique to Japan and is non-negotiable.
Part 5: Ongoing Annual Obligations
Once established, these obligations recur every year:
| Obligation | Timing | Notes |
|---|---|---|
| Annual health checkup | Once per year per employee | Within fiscal year; coordinate with clinic network |
| Stress check (50+) | Once per year | Typically 2–4 months to implement from start to group analysis |
| Industrial physician workplace visit | Monthly (most companies) | Minimum frequency varies by headcount |
| Occupational Health Committee meeting | Monthly | Must be minuted and retained 3 years |
| Paid leave tracking (5-day minimum) | Throughout year | Employees must take at least 5 days annually |
| Workers' Compensation Insurance premium adjustment | Annual | Based on actual wage payroll |
| Employment Insurance premium adjustment | Annual | Year-end payroll reconciliation |
| Withholding tax year-end adjustment (nenmatsu chōsei) | December–January | Income tax reconciliation |
Part 6: Growth Beyond 50 — Additional Thresholds
As your Japan operation grows, additional obligations activate:
At 100+ Employees
- Employment promotion plan for disabled workers (障害者雇用促進法): companies with 100+ employees must file annual reports and meet employment rate quotas (currently 2.5% of workforce)
- More intensive Occupational Health Committee review expectations
At 300+ Employees
- Childcare and caregiving support plan (次世代育成支援対策推進法): required action plan and reporting
At 1,000+ Employees
- Full-time industrial physician required (in-house)
Part 7: What Foreign Companies Typically Miss
Based on common patterns with international companies setting up in Japan:
Missed at incorporation
Stress check and industrial physician planning — these are triggered by headcount, not incorporation, but companies that are growing fast often hit 50 employees before they've planned for these obligations.
Missed at fast growth
Work rules and 36 Agreement filing — often overlooked when companies grow quickly from 5 to 30+ employees. Both need to be in place before the 10-employee and overtime thresholds are crossed.
Missed for specific employee groups
Fixed-term contract mukiroka rule — employees on repeatedly renewed fixed-term contracts gain the right to convert to indefinite-term employment after 5 cumulative years. Many foreign companies don't track this until employees raise it.
Part-time social insurance enrollment — employees working over roughly 20 hours/week and meeting certain wage thresholds must be enrolled. Companies used to home markets where part-time workers aren't entitled to employer benefits undercount their social insurance obligations.
Missed in ongoing compliance
5-day annual leave mandate — since 2019, employers must ensure employees take at least 5 days. This is not self-enforcing; HR must actively monitor and prompt employees who haven't taken leave.
Stress check group analysis to committee — many companies implement the stress check survey but never complete the loop: group analysis → committee deliberation → documented improvement action. The full cycle is what's required, not just running the survey.
Quick Reference: Compliance by Headcount
| Milestone | New Obligations |
|---|---|
| Incorporation | Workers' Comp insurance, employer registration |
| First hire | Health insurance, pension, employment insurance enrollment; employment contract disclosure; annual health checkup |
| 10 employees | Work Rules (file with Labor Standards Inspection Office) |
| 50 employees | Industrial physician appointment; health management officer; Occupational Health Committee; annual stress check |
| 100 employees | Disabled worker employment quota and reporting |
| 1,000 employees | Full-time industrial physician required |
Building Your Japan HR Infrastructure: Recommended Sequence
For a company planning to scale from 0 to 100 employees in Japan over 2–3 years:
Year 1 (1–20 employees): - Employment contracts reviewed by local counsel - Social insurance enrollments in order - Annual health checkup vendor contracted - Work Rules drafted and filed when approaching 10 employees
Year 2 (20–50 employees): - 36 Agreement in place (if overtime is a reality) - Start physician search process — 3–6 months lead time recommended - Evaluate stress check vendor options - Prepare Occupational Health Committee structure
At 50 employees: - Industrial physician contracted and filed - Occupational Health Committee first meeting - First stress check implementation (within 12 months of crossing threshold)
Ongoing: - Annual health checkups, stress check, committee meetings as standing calendar items - Review fixed-term contract renewal history annually (mukiroka rule tracking) - Paid leave tracking for 5-day minimum compliance
How COCKPITOS Helps Foreign Companies Get Compliant
COCKPITOS is designed for companies navigating the Japan occupational health compliance environment for the first time:
- Stress check implementation in 10 languages — no separate translation required for multinational workforces
- Group analysis dashboard for Occupational Health Committee reporting
- Industrial physician coordination support — connecting your physician to the stress check workflow
- 1on1, pulse survey, and skill map integrated into the same platform — building ongoing employee engagement alongside compliance infrastructure
Contact us to discuss your Japan compliance setup →
Related Articles
- Japan Employment Law for Foreign Companies: What HR Needs to Know Before Hiring Your First Employee
- The 50-Employee Milestone in Japan: New HR Compliance Obligations You Must Meet
- Occupational Health in Japan: Mandatory Health Checkups, Stress Checks, and Industrial Physician Requirements
- Japan Stress Check Law — A Complete Guide for Foreign Companies