Japan has a work culture as unique as everything else in the country. The various types of employment contracts in Japan are no different. Navigating the nuances can be overwhelming if you’re not familiar with them. There are three main types of employment contracts you should know about, namely:

The Permanent Employee (Seishain 正社員)
The Contract Employee (Keiyaku shain 契約社員）
The Temporary Staff/Dispatch Employee (Haken shain 派遣社員)

Let’s take a closer look at each type of employment contract.

The Permanent Employee (Seishain 正社員)

Seishain is for full-time employees with a 40-hour, Monday-to-Friday work week. This kind of contract is generally long-term. It offers job security, higher average salaries, and 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 along with an annual raise. So, even though the starting salary may be low, it most likely will increase with time. The opportunities for promotion are also good, as Japanese companies tend to reward seniority over merit.

Unfortunately, a lot will be expected from you. Depending on the company culture, you may have to do a lot of overtime. You’ll also have to attend lots of after-hour drinking parties (Nomikai 飲み会). From the company’s perspective, firing an underperforming employee is extremely difficult because of the numerous rights granted to permanent employees in Japan.

The Contract Employee (Keiyaku shain 契約社員）

Usually between a month to a year in duration, the Keiyaku shain is not as stable as a permanent employee contract, but in most cases, the company automatically renews the contract. It can be relatively stable, but may lack some of the extra benefits of the permanent employee contract. 

Contract employees generally have the same rights as permanent employees and will be covered by insurance (health and social insurance). They will also have paid holidays, paid leave, and most importantly: the right not to be fired without reason. There are also companies that will offer you a permanent employee position after a certain amount of time, usually 5 years. 

Some companies will offer the same salary as a permanent employee, but most will not provide bonuses or benefits. It is thus important to check the contract carefully before signing. For the company, offering a contract position is less risky because it is easier to terminate contract employees. The company can simply not renew it – which obviously worries the employees. 

Do note that, except in unusual circumstances, neither the company nor the employee has the right to break the contract before the agreed-upon time is over.

The Temporary Staff/Dispatch Employee (Haken shain 派遣社員)

Often abbreviated as haken (派遣), dispatch employees aren’t directly hired but rather sent to companies by the dispatch agency they are employed by. The contracts are temporary – mostly from three to six months. However, there is the possibility of renewal.

A dispatch employee can work for the same company for a maximum of three years. After that, the company will have to decide whether they want to hire the employee full-time or not. If a contract isn’t renewed, the agency will generally send the employee to another company.

However, some companies actually hire new people on this type of contract initially, and after a few months, if everything goes well, they will be offered a full-time job. Until then, the employee will have less pressure and more flexibility.

Working as a dispatch employee, however, doesn’t give much room for career advancement and there is a risk of being laid off in leaner times. This type of contract also has far fewer benefits compared to other types of contracts.

For companies, the hourly cost of a dispatch employee is around 150% more than a contract or permanent employee. Some of it will go to the dispatching agency, making it expensive.

Have More Questions?

Starting on the right type of contract will have a real impact on your career and the opportunities you will get in the future. Figuring all this out on your own can be difficult, so don’t hesitate to ask for help. Career advisors, for example, can help you to negotiate and will ask all the difficult questions for you. 

At Inbound Technology, we help foreign tech professionals find work in Japan. You can take the first step by getting in touch with one of our trustworthy career advisors here. We’re also on LinkedIn!