There are several types of employment contracts that are unique to Japan. Besides the language and cultural differences, Japan has a very specific working culture. Needless to say, navigating the nuances of the culture and contracts can be overwhelming. In this article, I will briefly explain the differences between the three most common types of contracts for full-time positions.
Seishain （正社員） : The Permanent employee
Permanent employees work full-time, with unlimited contracts.
This contract 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 if sometimes the starting salary is not very high, over the years it will go up if you do a good job. The opportunities for promotion are also good, as the Japanese system tends to reward seniority over merit.
On the negative side, you will have a lot of expectations from the company. Depending on the company culture, you may also have to do a lot of overtime work and participate in all the company’s nomikai (drinking parties).
One downside for the company is that firing an underperforming employee is extremely difficult. This is because in Japan employees are highly protected by law, especially permanent employees.
Keiyaku shain（契約社員）: The Contract employee
These types of contracts are usually from a month to a year long. It may not sound as stable as a permanent employee contract but the truth is that in most cases the company automatically renews the contract. This means that they are relatively stable, but may lack some of the extra benefits of the permanent employee contract.
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.
Different rules for contract workers
The rules will depend on the company. Some companies will offer the same salary as a permanent employee, but most will not provide bonuses or benefits. There are also companies that will offer you a permanent employee position after a certain amount of time, usually 5 years.
It is important to be sure the company offers everything you need before signing the contract.
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 simply won’t renew the contract and the dispatching agency will probably offer you work at a different company.
The least stable type of contract
The longest a dispatch employee can work for the same company 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 on this type of contract initially, and after a few months, if everything goes well, they will be offered a job.
The hourly cost of a dispatch employee is generally around 150% of 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 in leaner times.
This type of contract also has far fewer benefits compared to contract or permanent employers.
On the bright side, the responsibilities are much lighter, and 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. Be sure to ask HR about the terms and conditions you don’t understand. Make sure they can offer you the right type of career growth. Starting your professional career in Japan 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 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. They can also provide you with career counseling and advice. If you need help, don’t hesitate to register here