The different types of employment contracts in Japan

10月 19, 2021 0 Comments

Working in Japan is very different from working in other countries. Besides the language and cultural differences, Japan has a very specific working culture and as foreigners it is sometimes difficult to get the meaning of all the different terms used. In this article, I will briefly explain the differences between the three most common types of employment contracts for full time positions.

Seishain (正社員) : The Permanent employee

The Permanent employee is working full-time, with unlimited contracts.

This contract offers stability, higher salary and often a lot of benefits – especially if you work for a big company. 

Depending on the company, the conditions usually include one or two bonuses a year and an increased wage each year. So, even if sometimes the starting salary is not very high, over the years it will go up if you do a good job.There are also high chances of getting a promotion because in Japan, promotions are usually more for seniority than merit.

On the negative side, you will have a lot of expectations from the company and depending on the company culture, you will maybe have to do a lot of overtime work and participate in all the company’s nomikai (drinking parties). 

Regarding the demerits for the company, firing an employee will be much harder because in Japan employees are highly protected by law, especially permanent employees.

Keiyaku shain(契約社員): The Contract employee

The contracts are usually from a month to a year. It  doesn’t sound as stable as a Permanent employee contract but the truth is that in most cases the company automatically renews the contract and you will have stability. 

Regarding the rights,  contract employees have the same as permanent employees and will be covered by insurance (health and social insurance), will have paid holidays, paid leave, and the most important : the right not to be fired without reason.

The rules will depend on the company. Some companies will offer the same salary as a permanent employee, some will not provide bonuses or benefits, and some will offer you a permanent employee position after a certain amount of time. 

It is important to be sure the company offers everything you need before accepting the offer.

To the company, offering a contract position is less risky because it is easier to terminate contract employees on completion of their contract term, simply by not renewing it – which obviously is the number one reason for the worries of the employees. 

Keep in mind that except for unusual circumstances, neither the company nor the employee has the right to break the contract before the agreed upon time is over.

Haken shain (派遣社員): The Temporary staff/Dispatch employee

Dispatch employees aren’t directly hired by the company they work for but by a dispatching agency. 

Usually the contracts are temporary and are mostly from three to six months. When the contract is about to end, the dispatching agency will ask both the company and the employee if they wish to renew the contract. If they do, a new contract is made, if they don’t they will simply don’t renew the contract and the dispatching agency will offer a new job at another company.

The longer a dispatch employee can work for the same client is three years. After those three years, the company will have to decide whether they want to hire the employee directly or not. If they don’t, once again the dispatching agency will offer another job. However, some companies actually hire new people first as a haken and after a few months of testing if everything goes well, offer a regular contract with them.

The hourly cost of a dispatch employee is generally around 150% the cost of a contract or permanent employee. Although, some of it will go to the dispatching agency.

Working as a dispatch employee doesn’t give much room for career advancement and there is a risk of being laid off when the company has a rough time.

This is also a less stable option with fewer benefits compared to contract or permanent employers.

On the bright side, the responsibility is much lighter and the dispatch employees usually don’t have to work overtime and go to the nomikai

Before accepting a job in Japan, take the time to carefully read the offer letter and don’t hesitate to ask the HR all the terms and conditions you don’t understand, and what kind of career growth they can offer. Starting your professional career in Japan as a permanent employee, a contract employee or a dispatch employee will have a real impact on your career and on the job change possibilities you will get in the future. 

Doing the process on your own is sometimes difficult, so don’t hesitate to ask for an agency’s help. Agents can help you to negotiate and will ask all the difficult questions for you. If you need help, don’t hesitate to register here

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