Japan — Statutory Benefits & Leave

The Labour Standards Act (Rōdō Kijun Hō, Act No. 49 of April 7, 1947, as amended) establishes the minimum employment standards for all workers in Japan and is the central statute governing wages, working hours, rest periods, annual paid leave, and other core working conditions. The Act applies to any person "employed at a business or office and to whom wages are paid, regardless of the type of occupation" (Article 9), covering employees in both the private and public sectors unless expressly excluded.

Scope and non-derogability. Article 1 declares that working conditions "should meet the needs of workers who live lives worthy of human beings," and Article 13 renders void any labour-contract provision that falls below LSA standards, automatically substituting the statutory minimum in its place. Employers and workers may agree to more favorable terms, but the LSA sets the floor.

Administering agency. The Ministry of Health, Labour and Welfare (MHLW, 厚生労働省) administers the LSA through its Labour Standards Bureau at the national level and 47 prefectural Labour Bureaus paired with 321 Labour Standards Inspection Offices nationwide. Labour standard inspectors have visitatorial authority to enter workplaces, examine payroll records and timekeeping, and issue correction orders or impose criminal penalties for serious violations (the LSA grants them special judicial-police powers under the Code of Criminal Procedure).

Key substantive chapters that cross-border employers will encounter include:

• Chapter II (Articles 13–16): labour-contract formation, including mandatory written disclosure of wages, working hours, and other working conditions at the time of hire (Article 15).
• Chapter III (Articles 17–31): wage-payment principles (currency, full payment, direct payment, monthly regularity; Article 24), advance-payment restrictions (Article 17), and integration with the Minimum Wages Act of 1959 for prefecture-specific wage floors (Article 28).
• Chapter IV (Articles 32–41): statutory working-time limits (40 hours per week, 8 hours per day; Article 32), rest periods (45 minutes for workdays exceeding 6 hours, 1 hour for workdays exceeding 8 hours; Article 34), weekly or 4-weekly rest days (Article 35), overtime agreements under Article 36 (the "36 Agreement"), and annual paid leave accrual and usage rights (Article 39).
• Chapter V (Articles 56–64-3): protections for minors, including a prohibition on employing children below age 15 (until March 31 following their 15th birthday; Article 56) and restrictions on night work and dangerous work for those under 18.
• Chapter VI (Articles 65–68): maternity protections, including pre-natal (6 weeks) and post-natal (8 weeks) leave (Article 65), restrictions on dismissal during maternity leave plus 30 days thereafter (Article 19), and nursing-time allowances (Article 67).
• Chapter XI (Articles 75–88): employer liability for medical treatment and compensation when a worker sustains an injury or contracts an illness "in the course of employment" (業務上, gyōmu-jō); this framework is now largely operationalized through the separate Workers' Accident Compensation Insurance Act.

Overtime and premium-pay framework (Article 36). The 40-hour week and 8-hour day are strict statutory ceilings unless the employer concludes a written labour-management agreement ("36 Agreement") with either the majority labor union at the workplace or, if none exists, a representative elected by a majority of workers, and files that agreement with the local Labour Standards Inspection Office. Even when a valid 36 Agreement is in place, monthly overtime is capped at 45 hours per month and 360 hours per year in principle; temporary "special circumstances" clauses allow extensions up to 720 hours annually, less than 100 hours in any single month (including statutory rest-day work), and an average of 80 hours per month over any 2- to 6-month period, with no more than 6 months in a year exceeding 45 hours. These caps took effect April 1, 2019 for large employers and April 1, 2020 for small and medium-sized enterprises; certain industries (construction, automobile driving, physician work) were subject to transitional grace periods extending to April 1, 2024. Overtime work triggers premium pay at 125 % of the base hourly rate; hours beyond 60 in a single month attract 150 %; statutory rest-day work commands 135 %, and night work (10 p.m.–5 a.m.) adds an additional 25 % surcharge (Article 37 and 2018 working-style-reform amendments).

Relationship to other employment statutes. The LSA is the keystone of a larger statutory framework: the Minimum Wages Act (Act No. 137 of 1959) fixes prefecture-by-prefecture wage floors revised annually (Article 28 LSA cross-references it); the Industrial Safety and Health Act (ISHA) imposes employer duties for workplace safety, hazard prevention, and health examinations; the Workers' Accident Compensation Insurance Act provides no-fault injury and illness benefits; the Labour Contract Act (Act No. 128 of 2007) governs formation, modification, and termination of individual contracts and overlays fairness principles on dismissals and fixed-term renewals; the Act on Childcare Leave, Caregiver Leave, and Other Measures extends parental leave and nursing-care leave beyond LSA maternity protections; and the Equal Employment Opportunity Act prohibits sex-based discrimination in recruitment, assignment, promotion, and termination.

Penalties. Violations of core LSA provisions—forced labor (Article 5), wage non-payment (Article 24), unlawful overtime (Article 32 / Article 36), failure to grant statutory leave (Article 39)—carry criminal sanctions: imprisonment of up to 6 months or fines of up to ¥300,000 for most wage and hour breaches, and imprisonment of up to 1 year or fines of up to ¥500,000 for forced-labor violations. Labour standard inspectors may impose administrative correction orders before resorting to criminal referral, but the statute's penal backbone gives the inspection regime significant deterrent force.

Source: Labour Standards Act (Act No. 49 of 1947, as amended) Source: Labour Standards Bureau overview, MHLW

Annual paid leave (年次有給休暇, nenji yūkyū kyūka) is the statutory minimum leave entitlement under Article 39 of the Labour Standards Act. Unlike many jurisdictions where leave accrues from day one, Japan conditions the initial grant on six months of continuous service and an attendance rate of at least 80 % of total working days during that period. Workers who meet both tests receive 10 working days of paid leave; the entitlement then increments annually for each additional year of continuous service, reaching a statutory ceiling of 20 days after 6.5 years of employment.

## Accrual schedule and incremental vesting

Article 39(1) grants 10 working days of paid leave to a worker who has been employed continuously for six months from the date of hire and who has reported for work on at least 80 % of the total working days. Article 39(2) provides for incremental increases: for workers who have been employed continuously for at least one and a half years, the employer must grant one additional day of annual paid leave for each additional year of continuous service beyond the initial six-month anniversary, up to a maximum of 20 working days. The full accrual table, reflected in Ministry of Health, Labour and Welfare guidance, is:

• 6 months: 10 days
• 1.5 years: 11 days
• 2.5 years: 12 days
• 3.5 years: 14 days
• 4.5 years: 16 days
• 5.5 years: 18 days
• 6.5 years and beyond: 20 days

The entitlement is statutory—employers may provide more generous accruals or grant leave from day one, but the LSA sets the floor. Any labour contract that provides less is void under Article 13, with the statutory minimum automatically substituted.

## The 80 % attendance threshold and deemed-attendance periods

Eligibility for each year's accrual is conditional on the employee having attended work on at least 80 % of working days during the relevant qualifying period. Article 39(10) treats certain absences as deemed attendance when calculating the 80 % rate: periods of absence due to work-related injury or illness, childcare leave or family-care leave under the Act on Childcare Leave and Caregiver Leave, and maternity leave under Article 65 of the LSA all count as working days for the attendance-rate calculation. An employee who falls below the 80 % threshold in a given year does not accrue new leave for the following period, although any previously accrued and unexpired leave remains available.

## Proportional granting for part-time and short-hours workers

Article 39(3) and the Ministry of Health, Labour and Welfare Ordinance for Enforcement of the Labour Standards Act (Article 24-3) establish a proportional granting regime for workers whose prescribed weekly working hours are fewer than 30 hours and whose prescribed weekly working days are fewer than 5.2 days (the statutory benchmark for "ordinary workers"). These workers receive a reduced number of annual leave days scaled to their contracted schedule; for example, a worker employed for four days per week for six months receives seven days (rather than ten), rising to 15 days (rather than 20) after 6.5 years. Workers who meet or exceed either the 30-hour-per-week threshold or the 5.2-day-per-week threshold are entitled to the full-time accrual schedule.

## The 2019 employer designation duty — mandatory five-day minimum

The April 2019 Work Style Reform amendments (Act No. 71 of 2018, amending the LSA effective April 1, 2019) added Article 39(7), which imposes an affirmative employer obligation: for every worker entitled to 10 or more days of annual paid leave in a given year, the employer must ensure that at least five days are actually taken within 12 months of the "base date" (the first day of each one-year period measured from the initial grant date or the annual anniversary). The statute offers two compliance pathways: (i) the employee voluntarily requests and takes five or more days, or (ii) the employer designates specific dates for paid leave, after hearing the employee's opinion and endeavoring to respect the employee's wishes.

In practice, most employers monitor leave usage during the year and designate dates only when an employee is on track to fall short of the five-day threshold. Half-day leave counts as 0.5 days toward the five-day minimum, but hourly leave (permitted under Article 39(4) by labour-management agreement, up to five days per year) does not count toward the mandatory five-day total.

Article 39(8) requires employers to maintain an annual paid leave management ledger (nenji yūkyū kyūka kanri-bo) recording the base date of entitlement, the number of days taken, and the dates designated by the employer; records must be kept for five years (a transitional rule currently sets the retention period at three years for smaller employers, but the five-year standard is the target).

Penalties. Employers who fail to ensure the five-day minimum face fines of up to ¥300,000 per employee under the penal provisions of the LSA (Article 120). Failure to maintain the annual leave management ledger or to include the annual-leave base date and days granted in the written statement of working conditions (required under Article 15) each triggers separate fines of up to ¥300,000.

## Carry-over and expiration

Unused annual paid leave may be carried forward for up to two years from the date of entitlement; after the two-year window, the leave expires under Article 115 of the LSA (the general statute of limitations on wage-related claims). Employers cannot shorten this carry-over period to the employee's disadvantage, though more generous policies are permitted. There is no statutory right to cash out annual leave during employment; payout is reserved for the termination scenario (resignation, dismissal, or end of a fixed-term contract), at which point all unused leave must be paid out at the employee's average wage.

## Employee right to specify timing and employer right to change timing

Article 39(5) grants employees the right to take annual paid leave at the time of their choosing; no reason or justification is required, and employers in principle cannot refuse. The sole statutory exception is the employer's right to change the timing (jiki henkou ken): if granting leave on the requested date would "impede the normal operation of the business," the employer may request an alternative date. This exception is narrowly construed—mere busyness, short staffing, or difficulty in finding a substitute do not suffice. The employer bears the burden of demonstrating that operational disruption would be objectively serious and must propose a concrete alternative date.

## Planned allocation system (Article 39(6))

Employers may designate certain days of annual paid leave in advance through a labour-management agreement with the majority union or, if none exists, a representative elected by a majority of workers (Article 39(6)). This "planned allocation" system allows coordinated shutdowns (e.g., extended summer holidays or year-end closures) or staggered group leave schedules. The critical statutory constraint is that at least five days of each employee's annual entitlement must remain available for the employee to designate freely; only days exceeding five may be subject to planned allocation. Because the 2019 employer designation duty already requires five days to be taken, most employers use planned allocation for the portion above five days (e.g., days 6 through 20), preserving flexibility for the employee to use the first five days for emergencies or personal needs.

Source: Labour Standards Act, Article 39 (Act No. 49 of 1947, as amended by Act No. 71 of 2018) Source: Ordinance for Enforcement of the Labour Standards Act, Article 24-3 (proportional granting)

Japan does not impose a single national minimum wage. Instead, the Minimum Wage Act (Act No. 137 of April 15, 1959, as last amended by Act No. 27 of 2012) establishes a dual system of regional minimum wages (地域別最低賃金, chiiki-betsu saitei chingin) and specified minimum wages (特定最低賃金, tokutei saitei chingin), with each of Japan's 47 prefectures setting its own hourly floor and a subset of prefectures layering industry-specific minimums on top of the regional rate for designated sectors. Article 28 of the Labour Standards Act cross-references the Minimum Wage Act and makes compliance mandatory; any labour contract that specifies a wage below the applicable minimum is void under Article 13 of the LSA, with the statutory floor automatically substituted.

## Regional minimum wages — the primary floor for all workers

Article 9 of the Minimum Wage Act requires that regional minimum wages be decided for each prefecture to guarantee a minimum level of wages for low-paid workers, taking into account (i) workers' cost of living, (ii) prevailing wages in the region, and (iii) the ability of ordinary enterprises to pay (Article 9(2)). The Director of each Prefectural Labour Bureau decides the regional minimum wage after consultation with the tripartite Regional Minimum Wages Council (composed of equal numbers of worker representatives, employer representatives, and public-interest members; Articles 21–22) and following public notice and an opportunity for objections (Article 11).

2025–2026 rates. The Ministry of Health, Labour and Welfare announced the revised regional minimum wages in September 2025, with most prefectures implementing the new rates between October 2025 and March 2026. The national weighted average rose to ¥1,121 per hour, representing a ¥66 increase (6.3 %) over the prior year—the largest absolute annual increase since hourly-rate reporting began in 2002. For the first time in Japan's modern wage history, all 47 prefectures exceeded the ¥1,000-per-hour threshold. The highest regional minimum wage is Tokyo at ¥1,226 per hour, followed by Kanagawa at ¥1,225; the lowest are Kochi, Miyazaki, and Okinawa, each at ¥1,023 per hour. Eight major metropolitan prefectures (Tokyo, Kanagawa, Osaka, Kyoto, Hyōgo, Saitama, Chiba, and Aichi) all exceeded ¥1,100 per hour.

Effective-date dispersion. Unlike many jurisdictions that implement wage adjustments on a single nationwide date, Japanese prefectural councils set individual effective dates. For the 2025–2026 revision cycle, effective dates ranged from October 1, 2025 (Tochigi and 19 other prefectures) to March 31, 2026 (Akita), a 181-day window. Six prefectures (Akita, Kumamoto, Oita, Miyazaki, Saga, and Iwate) imposed cross-calendar-year effective dates—delayed until January, February, or March 2026—to provide additional lead time for small businesses to adjust payroll systems and pricing. This dispersion has been controversial: while employers argue it cushions compliance costs, labour unions have pointed out that a worker in Akita subject to the March 31, 2026 effective date will receive the old wage for six months longer than a worker in Tochigi, effectively reducing the worker's annual earnings by tens of thousands of yen despite a nominally higher hourly rate in some cases.

## Specified (industry-specific) minimum wages — higher sectoral floors

Article 15 of the Minimum Wage Act permits worker or employer representatives to petition the Minister of Health, Labour and Welfare or a Prefectural Labour Bureau Director to establish, revise, or abolish specified minimum wages for a particular industry or occupation. After consultation with the relevant Minimum Wages Council, the Director may decide a specified minimum wage that applies to workers in that industry within the prefecture. Article 6 establishes that when both a regional minimum wage and a specified minimum wage apply to the same worker, the higher rate controls.

Specified minimum wages are relatively rare and tend to cluster in manufacturing and skilled trades. For example, Hiroshima Prefecture historically maintained specified minimum wages for the iron and steel industry (¥1,179 per hour for certain iron-industry jobs, effective December 31, 2025) and for electronic-parts manufacturing (¥1,110 per hour). When the Hiroshima regional minimum wage rose to ¥1,085 per hour in November 2025, the lower specified minimums became inoperative under the "higher-rate-prevails" rule, and the regional floor applied. Employers in industries subject to a specified minimum wage must pay the greater of the regional or specified rate; if the specified rate exceeds the regional floor, the specified rate is binding for that industry.

## Coverage, exclusions, and the permit system for reduced-capacity workers

The Minimum Wage Act applies to all workers as defined in Article 9 of the Labour Standards Act—any person employed at a business who receives wages—except (i) workers employed at businesses that only employ cohabiting relatives, and (ii) household employees (Article 2(i)). Part-time workers, fixed-term contract employees, and dispatched (staffing-agency) workers are all covered. Article 13 specifies that for dispatched workers, the minimum wage applicable at the client's place of business controls, not the staffing agency's location.

Special permit for workers with reduced work capacity. Article 7 establishes a discretionary permit system under which the Director of a Prefectural Labour Bureau may grant an employer permission to pay a wage below the minimum to workers who meet specific criteria: (i) workers whose mental or physical disabilities result in significantly reduced work efficiency, (ii) workers during a trial employment period (typically not exceeding a few months, and narrowly construed), (iii) workers undergoing accredited basic vocational training (Article 24(1) of the Vocational Abilities Development Promotion Act), and (iv) workers engaged in light duties or other categories specified by Ministry of Health, Labour and Welfare ordinance. The permit is individual and time-limited; employers must apply in advance and demonstrate that the worker's capacity genuinely warrants the exception. This exception does not apply to workers under age 18 or over age 65, or to workers during the first six months of employment in an industry subject to a specified minimum wage, unless the employer obtains an explicit permit for that worker.

## The annual revision process and the Central Minimum Wages Council

Minimum wages are reviewed annually. The process begins each summer when the tripartite Central Minimum Wages Council (中央最低賃金審議会, chūō saitei chingin shingi-kai)—an advisory body to the Minister of Health, Labour and Welfare composed of equal numbers of worker, employer, and public-interest members (Article 22)—deliberates on a target increase for the national weighted average. The Council evaluates three statutory factors under Article 9(2) and (3): (i) workers' cost of living (including the consumer price index and its regional variation), (ii) prevailing wages (industry wage surveys conducted under Article 28), and (iii) the ordinary ability of enterprises to pay wages (business-survey data on profitability and labour costs).

In late July or early August, the Central Council issues guidelines dividing Japan's 47 prefectures into three economic tiers (A, B, and C) and recommending a target yen-amount increase for each tier. For the 2025 revision, the Council recommended a ¥63 increase across all three categories—a departure from the historic practice of smaller increases for lower-tier prefectures—in an effort to narrow regional wage disparities and stem labour outflows from rural areas to higher-wage metropolitan zones.

Each Regional Minimum Wages Council then deliberates on the specific yen amount for its prefecture, typically adhering closely to the central guideline but occasionally exceeding it when local labour shortages or political pressure demand. For the 2025–2026 cycle, 39 of 47 prefectures exceeded the central guideline by 1 to 18 yen; Kumamoto Prefecture, buoyed by a semiconductor-industry boom, raised its minimum wage by ¥82—18 yen above the national recommendation—the largest single-prefecture increase.

After the Regional Council reaches a recommendation, the Director of the Prefectural Labour Bureau issues a public notice of the proposed minimum wage (Article 10) and allows a 15-day objection period (Article 11(4)). If objections are filed, the Council must reconsider them before the Director makes a final decision. Once decided, the new minimum wage is promulgated by official gazette and takes effect on the date specified in the decision, commonly in early October but—as the 2025–2026 cycle demonstrated—sometimes delayed to November, December, or even the following March.

## Government wage-growth targets

The Japanese government has set a medium-term policy goal of raising the national weighted-average minimum wage to ¥1,500 per hour by the late 2020s (some official statements target "during the 2020s," while labour advocates have called for achievement by 2030 at the latest). Achieving ¥1,500 from the 2025 base of ¥1,121 would require an average annual increase of approximately 6–7 % sustained over the next four to five years. This target reflects twin policy objectives: combating deflationary pressures that have gripped Japan's economy since the 1990s, and improving workers' purchasing power to stimulate domestic consumption in the face of an aging and shrinking workforce.

## Employer obligations and penalties

Article 4 of the Minimum Wage Act imposes an absolute obligation: employers must pay wages at least equal to the applicable minimum wage. Any labour contract, collective agreement, or works rule that sets wages below the minimum is void to that extent, and the statutory minimum applies by operation of law (Article 4(2)). Employers must also post or otherwise notify workers of the applicable minimum wage at a conspicuous place in the workplace at all times (Article 8).

Violations carry criminal penalties. Article 40 imposes a fine of up to ¥500,000 on employers who fail to pay the minimum wage; this penalty was increased in the 2007 amendments (Act No. 129 of 2007, effective July 1, 2008) as part of a broader effort to strengthen enforcement. Labour standard inspectors have authority under Article 32 to enter workplaces, examine payroll records, and question employers and workers; persistent or egregious violations may result in referral for criminal prosecution. In practice, Labour Standards Inspection Offices typically issue administrative correction orders before pursuing fines, but the penal provision remains a backstop.

## Calculation method for monthly or piece-rate workers

For workers paid a monthly salary, the employer must convert the monthly amount to an hourly equivalent and compare it to the applicable minimum wage. The basic formula is monthly base salary ÷ monthly contractual working hours. Payments excluded from the calculation include (i) overtime premiums, (ii) late-night and rest-day premiums, (iii) bonuses and other lump sums paid at intervals exceeding one month, (iv) family allowances, (v) commuting allowances, and (vi) certain in-kind benefits (Article 4(3) and Ministry ordinance). Only the base wage for ordinary working hours is tested against the minimum. For piece-rate or commission workers, Article 4(1)(iii) requires the employer to guarantee at least the minimum-wage equivalent for actual hours worked, calculated by dividing total piece-rate or commission earnings by actual hours; if the result falls below the minimum, the employer must pay a supplement.

Source: Minimum Wage Act (Act No. 137 of 1959, as amended by Act No. 27 of 2012) Source: Labour Standards Act, Article 28 (cross-reference to Minimum Wage Act) Source: Ministry of Health, Labour and Welfare, Labour Standards Bureau overview (including minimum-wage administration)