1. TOKYO
Alliott Group Asia Pacific Conference
Singapore – June 2011

2. www.aplaw.jp
PAYROLL REGULATIONS
1. What documentation must be produced by employers to
satisfy legal requirements?
 Roster of Workers
 Wage Ledger
 If 10 or more employees, “Works Rules”
 Other notifications required if a new office of an offshore
company
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PAYROLL REGULATIONS
2. What withholdings must an employer make?
 Withholding income tax
 Inhabitants’ tax
 Public insurances
 Taxes are usually settled by monthly withholdings and a
year-end adjustment
 Usually no need for employees to separately file a tax
return (exceptions: salary exceeding ¥20 mil, receiving
salary payments from more than one employee, has
other types of income, etc.)
 Deductions from taxable income possible
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PAYROLL REGULATIONS
3. Are there compulsory contributions to Superannuation or
Pension plans?
Yes:
 Workers’ Accident Compensation Insurance
 Employment Insurance
 Health and Nursing Care Insurance
 Employees’ Pension Insurance
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INCOME TAX
1. When will a relocated employee to your country be
deemed to be a tax resident?
 Domiciled in Japan
 One year continuous residence in Japan
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INCOME TAX
2. Does your country have different classifications for
residents? (e.g. Permanent and Temporary)
 Residents – (i) domiciled or (ii) continuous residency in
Japan for one year
 Non-permanent Residents – individuals that meet all of
the following criteria:
 Resident;
 foreign citizen; and
 domiciled or resident in Japan for up to five of the last 10
years
 Non-resident – individuals that are not “Residents”
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INCOME TAX
3. What tax free or tax concessional allowances can be paid to
new residents and/or temporary residents?
 Nothing specific
 Non-resident only taxed on certain Japan sourced income
 Non-permanent Resident only taxed on:
 Japan sourced income (remitted to Japan or not); and
 foreign sourced income paid in or remitted into Japan
 Residents taxed on world-wide income
 Tax efficient for housing to be leased by employer
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INCOME TAX
4. What are the tax rates for residents and non Residents?
 National Income tax scaled at 5% (<JPY1,950,000 p.a) to
40% (>JPY18,000,000, p.a)
 Flat rate taxes apply to certain income earned by non-
residents
 Local (“Inhabitants”) taxes – 10%
 Other taxes if self-employed (e.g., business tax,
consumption tax)
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INCOME TAX
5. What other tax effective salary packaging opportunities exist
for a relocating employee?
 Nothing specific for relocating expats
 Retirement compensation taxed at lower rates and
separately from other income; not certain if foreigners can
use this
 Lease residence in employer’s name
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EMPLOYMENT LAW
1. What are the visa requirements for an employee coming to
work in your country?
 Many different categories of visa – depends on the
activity
 Different requirements for each category (experience,
education, etc.)
 Non – visa restrictions, e.g. lawyers
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EMPLOYMENT LAW
2. What mandatory entitlements must be provided to
employees? (e.g. annual leave, sick pay, redundancy and
termination payments etc)?
 Minimum wage
 Overtime – complex – not applicable to “Management”
 Leave – no entitlement for the first 6 months, the
increases to 20 days after 6.5 years service
 Maternity leave – pre-and post-birth
 Childcare leave – child up to 1 year old
 Family care leave
These may be unpaid but the employee may be entitled to
payment from state insurance.
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12. www.aplaw.jp
EMPLOYMENT LAW
3. Are employment contracts mandatory?
 Employment contracts not required, but employee must be
given a statement of basic terms:
 employment period (commencement date, and term if
fixed);
 place to work
 responsibilities
 regular time to work, holidays, overtime, leave
 wages
 matters related to the termination of employment and
 details of any retirement allowance
 Employer must ensure key employment terms understood by
the employee
 If 10 or more employees must have “works rules” setting out
certain matters as required by law
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EMPLOYMENT LAW
4. Redundancy & Termination
 No separate concept of “redundancy” - termination for
“business reasons”
 Termination of an employment agreement (other than a
fixed term agreement on expiry, or termination for cause)
requires 30 days’ notice or pay in lieu, or a mix of the two
 Termination of a fixed term employment agreement on
expiry of a fixed term may be required to have reasonable
grounds when there is a reasonable expectation of the
employee for renewal of the fixed term employment
 “Dispatched workers” hired through agencies common,
and can be terminated easily by the contracting employer
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EMPLOYMENT LAW
 Termination procedures are not formalised at law but
need to be reasonable
 Employer is under a duty to fully consult with the
employee
 Terminating employment other than on expiry of a fixed
term can involve significant time and cost
 Foreign company intending to terminate employee
should take advice ASAP
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EMPLOYMENT LAW
5. Can an employment contract overrule mandatory
entitlements for employees?
 Only if better than the mandatory entitlement
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16. www.aplaw.jp
Philosophy The Firm
* One of Japan’s leading law firms and the first Japanese law firm to
Thinking and Acting create a foreign law joint venture
Globally
* Founded in 1994, the firm has doubled in size in the last 3 years and
We are a multi-lingual and multi- now has over 80 lawyers, including 23 Partners
cultural firm, where productive
interaction among Japanese bengoshi * 4 foreign Partners collectively having over 50 years experience in
and international lawyers is the
normal mode of operation. We are
leading US and London law firms
the first and remain the only
independent Tokyo law firm with * Unique combination of local and foreign expertise
foreign partners, which enables us to
offer our clients the quality of
service that the modern business * Leading capabilities in Finance, Capital Markets, Corporate, Dispute
community demands. Resolution and Real Estate
* Frequently recognized for expertise, innovation and strategic thinking
“… the first truly international domestic Japanese law firm …”
Asian Legal Business 2005
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17. www.aplaw.jp
Address Contacts
Fukoku Seimei Bldg For further information about Atsumi & Sakai and how we can help your
(Reception 12F) business in Japan, please visit our website at www.aplaw.jp or contact:
2-2 Uchisaiwaicho 2-chome
Chiyoda-ku, Tokyo
100-0011 Japan
TEL: +81 (0)3-5501-2111
FAX: +81 (0)3-5501-2211 Daniel C. Hounslow
WEB: www.aplaw.jp Partner
Solicitor admitted in England and Wales (1988)
* JR Lines
Registered Foreign Attorney (English Law)
Six minutes walk from the Hibiya Exit of
Shimbashi Station on the JR Yamanote daniel.hounslow@aplaw.jp / +81 (0)3 5501 2118
and Keihin Tohoku Lines
* Subways
Directly connected via Exit #A6 of
Uchisaiwaicho Station on the Toei Mita
Line; three minutes walk from Exit #C4
of Kasumigaseki Station on the Chiyoda Japanese legal advice in this memorandum was provided by
and Hibiya Lines; five minutes walk
from Exit #B2 of Kasumigaseki Station Japanese lawyers (Bengoshi):
on the Marunouchi Line • Michiya Iwasaki, Partner (Employment)
• Yoshihito Ueno, Counsel (Tax)
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