The cliché of jobs for life in Japan has rarely been less true. However, fewer Japanese companies retain lifetime employment now. Reforms introduced by former Prime Minister Junichiro Koizumi a decade ago liberalized the labor market, accelerating the growth of part-time and casual work. Current Prime Minister Shinzo Abe continues supporting that trend.

On the supply side, young professional Japanese are increasingly shying away from the job-for-life security sought by their parents (and grandparents) at big firms as per the current trend. For the professionally mobile, the recovering economy offers opportunities: there are 1.2 positions for every job seeker in the country. Professionals with technical cum bilingual skills are in particularly short supply. Vendors/Staffing companies are helping to fill the gap in payrolls, especially in Japan-based foreign organizations, and in Japanese companies looking for bilingual staff.

There are various terms used with respect to staffing, namely, 派遣 / haken, 請負 / ukeoi, 出向 / shukkou, 委託 / itaku. In each of these, there is a relation between 2 companies, i.e, the vendor and customer. Let me touch upon each of the terms.

  • 派遣 / haken – means causing a employee(s) employed by one person so as to be engaged in work for another person under the instruction of the latter, while maintaining his/her employment relationship with the former. Let us get into the details later on.
  • 請負 / ukeoi – means causing a employee(s) employed by one person to work internally on the work order received from another person. Here the worker will work under the instruction of the former and has no relation with the latter.
  • 出向 / shukkou – means causing a employee(s) employed by one person so as to be engaged in work for another person under the instruction of the latter, but the difference w.r.t to haken is that the employee will have to sign an agreement with the client in addition to the agreement with the employer. 在籍出向 / zaisekishukkou is what we just learnt about, one more type being 転籍出向 / tensekishukkou. In this type, everything is the same as earlier but the worker will sign an agreement with the client only. In other words, once done the employee will have no relation with the main employer and is equivalent to the employee changing companies.
  • 委託 / itaku – 外部委託 / gaibuitaku or outsourcing is the more familiar word and it means to hand over certain task(s) to other company(s) who are specialized in certain field of work. This may sound similar to ukeoi, but the difference is that in ukeoi there are deliverables and the way of implementing it is entirely dependent upon the order receiving company. In contrast, gaibuitaku is more about handing over specific tasks like maintenance etc.

Haken

My point of focus in this blog will be haken, which is used by most of the local and Japan based foreign companies/staffing agencies to dispatch employees to client side. There are two types of haken:

(1) “Specified worker dispatching undertakings” whereby a Vendor/Staffing company hires employees on a regular basis and sends them on assignment to work at its client companies on temporary basis.

(2) “General worker dispatching undertakings” whereby a Vendor/Staffing company registers temporary employees and sends them to its client companies on a contingent basis by signing a per-job contract each time the agency receives an assignment from its client companies.

Worker Dispatch Flow

As regularly employed type dispatching secures stable employment of dispatched workers, Specified worker dispatching undertakings are considered to be preferable over the General Worker Dispatching Undertakings.

Conditions for employee dispatching services

The Vendor/Staffing company must clearly indicate labor conditions when labor contracts are concluded, must clearly state the amount of dispatching fee when dispatch employment starts at a client company (haken saki), and clearly specify employment conditions.

With the revision of the Worker Dispatch Law in 2015, working on the same job at the same establishment as a dispatched employee for more than three years is basically not allowed. After going through certain procedures, working for more than 3 years is possible, but the employee is required to move to a different “section”. Since September 2018, if a worker is being considered to be dispatched to the same “section” of the same establishment continuously for 3 years, it is possible to receive the employment stabilization measures (obligation) stated below from the dispatching vendor (haken gaisha). Those who are expected to be dispatched for more than a year but less than 3 years are subject to the same obligations but with certain efforts from the Vendor side.

The Vendor/Staffing company needs to take any of the following measures from #1 to #4 ,i.e, employment stabilization measures. In addition, when #1 fails to lead to direct employment, it is necessary to choose from one of the measures from #2 to #4.

  1. Request for direct employment to the client company (if the company agrees to the request, the dispatched worker becomes their employee)
  2. Provide new employment opportunities (dispatch destination) (The conditions are limited to reasonable items in light of competence and experience of the dispatch worker)
  3. Offer indefinite employment (mukikoyou) in the dispatching company other than as dispatched employee.
  4. Other measures to stabilize employment
Annual leave, Overtime pay etc.,

Labor laws, such as Labor Standards Act and Equal Employment Opportunity Law, are applicable even in dispatched labor.

Employers are required to grant annual leave with pay to employees who have been employed for six consecutive months and present at work for more than 80% of those working days. Annual leave may not be kept in reserve. The right to annual paid leave expires after 2 years. In principle, it is illegal to convert unused paid holidays into cash.

Employers must complete certain legal procedures to have employees work beyond legal working hours or on rest days. Employees who work beyond legal working hours are eligible for extra pay of more than 25% above the normal hourly or daily wages, and for work on rest days, a rate of 35% is applicable.

Onboarding formalities

Employees hired directly by a Japan based company, or the ones transferred through intra-company method for long term work in Japan will require the following during their tenure. Appropriate visa stamping being a prerequisite before landing in Japan.

  • 在留カード / Residence Card – A residence card shall be issued to a foreign national who stays in Japan for a mid- to long term as a result of having obtained permits relating to the status of residence.This shall issued at airport/muncipal offices and updated with residence address at municipal government offices. A residence card contains the important part of the personal information held by the Minister of Justice, such as name, birth date, gender, nationality/region of origin, address, status of residence, period of stay, and whether or not he/she can work. If there is any change in these matters, the relevant person is obliged to notify the change.
  • 住民票 / Certificate of residence – A Juminhyo is a registry of current residential addresses maintained by local governments in Japan. These resident records have been made for “medium-to-long term residents” who are residing in Japan for the medium-to-long term. When proof of residence is required in Japan, you will often be asked to submit a Juminhyo. If a foreign resident moves to a different municipality (city/ward/town/village), you must report your move out to the former municipal office, and to the municipality having jurisdiction over your new residence. Unless you complete these reports, you will not be issued a copy of your Juminhyo.
  • 健康保険証 / Health insurance card – Employee Health Insurance (EHI), as the name suggests, is an employment-based health insurance; meaning, your employer pays half of your EHI premium. The other half is simply deducted from your monthly paycheck. The insurance covers 70 percent of your medical bills (and any of your dependent family members as well).The premium for this insurance depends on your income. To register for this type of insurance, all you have to do is become an employee; the company’s human resource department will take care of the paperwork, and you will soon be issued an insurance card.

The coverage under the Employees’ Health Insurance (EHI) and the Employees’ Pension Insurance(EPI) is compulsory by law, and it is not a contract which employers or employees may opt for the coverage or may withdraw.

The Japanese pension system is mainly composed of national pension insurance (kokumin nenkin) and employees’ pension insurance (kosei nenkin). All residents of Japan who are between 20 and 60 years of age, including foreign residents, are required to enroll in the national pension plan. Employees’ pension is mainly for those who are employed by private business corporations. Contributors to the employees’ pension are entitled to future pension payments and also to the use of various welfare facilities. When you are enrolled in the employees’ pension at work, you are also automatically enrolled in the national pension; you are paying extra premiums in addition to the national pension premiums.

Credits:
https://www.mhlw.go.jp/stf/seisakunitsuite/bunya/0000077386.html
http://www.s-i-a.or.jp/en/qa/222
http://www.immi-moj.go.jp/english/tetuduki/kanri/hituyou_syorui.html
https://japanhealthinfo.com/japanese-healthcare-services/japanese-health-insurance/
Knowledge & Experience