Terrie's Job Tips -- Starting Your Own Company - Part Five: Hiring Rules

As I have said previously, hiring people can be a tedious process for the new company owner or country manager, not just from the point of view of management but also for the administration work required by the government. Most of this administration is spent assisting the authorities to track and pay levies relating to health, unemployment, pension, accidents, and similar employee benefits. If you're under 5 people, and don't have a formal corporate entity, i.e., you're a "kojin jiygyo" or a representative office, then you can avoid some of the following. However, I'm assuming that most interested readers will be forming a regular Kabushiki Kaisha, in which case Shakai Hoken (Social Insurance) and other levies are compulsory from your first hire.

Hiring people as regular employees (Seishain) involves your having to integration your company with various authorities relating to the safety and well-being of your staff. Let's look at these.

*Social Insurance
When you initially register your company and you think you'll be employing others, you also need to register it with the Social Insurance Office (Shakai Hoken Jimusho). This allows your company to start offering shakai hoken to the new employees, and consists of Health Insurance (Kenko Hoken), the Old Age Pension (Nenkin), and for those employees over 40 years old, Nursing Insurance (Kaigo Hoken). There is a branch of the Social Insurance Agency in every major city in Japan, but if you can't find one, then contact your local city office as sometimes they handle payments and benefits.

*Labor Insurance
There are two facets to labor insurance, consisting of Workers Accident Compensation Insurance (Rosai Hoken) and Employment Insurance (Koyo Hoken). The former is lodged with the Labor Standards Inspection Office of the Labor Bureau (Rodokyoku), while the latter is lodged with the Public Employment Service Office, better known as Hello Work (Kokyo Shokugyo Antei Sho). Often you will find both the Labor Bureau and Hello Work in the same building, since they both fall under the auspices of the Ministry of Health, Labor, and Welfare.

The initial act of making these various registrations isn't really such a problem, although of course the costs of the insurances do add up. As a rule of thumb, we usually figure here at LINC Media that after the cost of shakai hoken, commutation, and holiday allowances, that a person usually costs about 25% more than their salary.

Where the real administrative burden kicks in is in having to remember to submit annual reports, notifications of signing on and terminating employees, and wages and work conditions adjustments that include such ordinary issues as pay changes and bonus payments. In addition, if you plan to change the person's place of work, this will also require the appropriate paperwork.

Most company owners/managers find that the volume and detail of the paperwork all too much to deal with, and decide to go get professional help. I personally think this is a good idea. The help you'll need is that of either a general Gyosei Shoshi (Administrative Scrivener), most often used when actually setting up, or a Sharoshi (Labor Consultant), where you have already done the set-up and just want someone specialized in labor issues only. The fact is that increasingly, these various disciplines are now available from a single office, along with payroll and other services. Typically they charge much less than a well-informed secretary and so are worth considering.

For more detail about the submission and reporting procedures for the employment of staff in Japan, JETRO has a good web site giving the flow of government office interaction. You can find it at: www.jetro.go.jp/en/invest/setting_up/laws/section4/reference.html#r6