Jun 4, 2019

What type of work contract in Japan is best?

What type of work contract in Japan is best? photo

What type of work contract in Japan is the best fit for you? The brutal truth here is that, for new arrivals at least, asking such a question about contracts for work in Japan may well be redundant. By this we mean that the potential worker is unlikely to be presented with much of a choice beyond “to sign, or not to sign.”

That said, questions regarding types of work contract in Japan are important to address -- for the newbie to have some understanding of how a contract of employment may affect the way they work, and on a broader level the kind of life in Japan they might be able to lead, and for those workers who’ve been working in Japan for a while to be able to gauge career progress, understand labor rights (and wrongs) and make more informed choices if alternative work contracts are presented. 

What we will attempt to do in this article is present a breakdown of the types of work contract typically encountered by foreigners who work in Japan. The laws and legal terminology behind each of these contract types will be a stretch for us (and likely the same for new workers in Japan). While we attempt to handle this to a certain degree, what we really want to focus on are the more practical and actionable aspects of each contract such that we can address any questions and concerns regarding the social status, workplace responsibility and lifestyle influence that comes with each employment contract type.

Contract types detailed in this article:

1) Regular / permanent employee - seishain / 正社員

2) Fixed-term employee - keiyaku shain / 契約社員

3) Dispatch worker - haken shain / 派遣社員

4) Outsourced worker - gyomu-itaku / 業務委託

5) Part-time - arubaito (アルバイト)

The ghost of the 29.5-hour contract still haunts

Setting the scene - regular employment in Japan

Government statistics and academic papers use the term “regular employment” to refer to the working situation of being directly employed with a company (as opposed to, say, employment through an agency), working full-time hours, and a term of employment that is unlimited.

It may seem odd that such a circumstance of employment is seen by many workers in Japan (including long-term expats) as a kind of golden chalice of work set-ups, and yet is given such a banal moniker as “regular employment.” On closer inspection though, this seeming disparity might be said to reflect the situation of employment in Japan today. 

Regular - because under Japan’s old employment / career-path model (and booming Bubble economy) most people would graduate from whatever educational institute to take up a lifetime of employment with a single employer and enjoy / endure all that came with that -- security, steady salary increases, bonuses, pensions, boredom and servitude.

Golden chalice - because years of economic recession, fiscal stagnation, an aging population, and a work-force increasingly eyeing-up the way things are done in the West has seen Japan inch away from the old model with more and more workers falling under the category of “non-regular employment,” -- fixed-term contracts, freelancers, dispatch workers et al.  

While this may be the increasingly popular choice of work circumstance during the early stages of a career in Japan, eventually kids, mortgages, and paltry state pensions leave workers in Japan (including foreign workers) hunting down and snatching-up opportunities to become “regular” once more.

Contract type 1: Regular / permanent employee - seishain / 正社員

Let’s stay with the “golden chalice” then, if only to get it out of the way, for this is likely to be the most unlikely of work contracts in Japan to be offered to foreigners (initially at least) at the same time is it might be something to work towards for many. 

Back to the three basics -- to be seishain is to be directly hired by a company, working full-time hours, and with no limit to the term of employment. It probably sounds like hell for some, heaven for others. Certainly, if you’re a foreigner wanting to live and work in Japan for the duration -- starting a family and owning a home in the process -- this is where you need to be. 

Seishain comes with it a certain, and desirable, societal status in Japan. Ticking the “seishain” box on application forms for credit cards, visas, loans, your dream home … at the very least means getting a foot in the door, so to speak (where ticking other boxes -- freelance, contract, dispatch -- could result in furrowed brows if not instant rejection).

And yes, seishain status may well make the process of romantic relations and winning over future in-laws a little smoother, especially for foreigners pursuing a local interest. 

Being seishain comes with it all the bells and whistles of company life in Japan, as in the good stuff:

Company supported, and thus cheaper,

state health, pension, unemployment insurance - shakai hoken

Sick leave, annual paid leave
Commuting expenses
Pension schemes (outside of state pension)
Career development programs
A greater sense of workplace community
Job security (it’s really hard to get fired)
Potential for salary increase
Greater responsibility
Free health checks

But the offer of a seishain contract may weigh heavy on the minds of some workers. 

Under this type of work contract in Japan, employees are susceptible to the desires of their employer. In Japan it’s quite common practice to regularly rotate workers around departments and teams and as a seishain one could put up little resistance to this. So while job-security is there in the broader context, team / department security may well be lacking. 

Seishain will also be subject to six-month / annual performance reviews (and should be able to reflect a greater understanding of their employer’s organization as a whole), be under closer scrutiny from the CEO, have targets for growth that actually mean something, and be expected to at least show willing in the acquisition of new skills and the taking on of greater responsibility. One may also be expected to give a brief speech at the next company party after becoming seishain!  

Outside of regular tasks and a field of expertise, the seishain can also be called upon to lend a hand with activities that support the broader sense of community within a workplace -- organization of team-building trips, company parties and conferences (and all the MC, speech-giving, slide-making duties that come with this). Oh, and while the health checks may be free, as a seishain they will also be mandatory, something which workers not used to such system may find invasive and disconcerting … mentally, at least.

What type of work contract in Japan is best? photo

Ultimately, the status of seishain may come with it a sense that one can’t just walk away when things take a turn for the worse, or when the responsibility and performance pressures become too much. This is something that should be considered carefully by those foreign workers in Japan who like to feel that they are free to return home on short notice.

Contract type 2: Fixed-term employee - keiyaku-shain / 契約社員

Basically all of the above only with a finite, or fixed, term of employment. The keiyaku-shain contract often serves as the penultimate step toward becoming seishain. It’s a kind of safety zone for both employer and employee, showing promise but still feeling each other out, offering both parties the chance to back out should the need arise.

It might be the case that the foreigner starting work in Japan will join a company at this level -- sometimes the case with English-language schools that are trying to do the right thing by their staff.  

It could also be that you work for a company in Japan as a kind of subcontractor (gyomu-itaku / 業務委託 - more on this contract type later), the company likes your work and wants you more onboard so they offer you a keiyaku-shain contract as the next step. 

If you are offered the keiyaku-shain work contract in Japan perhaps common sense would dictate that it’s best to sign it and see how things go. It’s likely that the term of the contract will be a year at most meaning there will be clear light at the end of the tunnel if you find the going rather heavy.

*Note - Seishain or keiyaku-shain, both of these types of contract will look good on the Japanese resume. As one salary person told this writer, “Once you’re on the seishain path, it’s much easier to be offered a similar contract if you decide to change jobs.”

Contract type 3: Dispatch worker - haken shain / 派遣社員

Perhaps the polar opposite of the seishain contract. The haken shain contract is the one where a worker’s agreement is with a staffing agency which dispatches them to a location of work where, ostensibly, they work under the supervision of the people at said location. 

Let’s cut to the chase here. The term “dispatch worker” for foreigners who work in Japan is synonymous with the job, assistant language teacher (ALT). Certainly, it’s highly unlikely that a newly-arrived foreigner in Japan will walk into the nearest branch of a staffing agency and ask to be put on the waiting list for whatever job comes up next, not to mention logistically almost impossible.  

No, if you’re reading this and you’ve been offered, or have heard of the offer of, a contract as a dispatch worker, it’s almost certainly for work as an ALT. 

The situation is this, town or city-level Boards of Education (BOE) in Japan need to put ALTs in their public schools but have a limited budget to do so. They are also perhaps reluctant to deal with the logistics and communication barriers that come with employing a foreigner.  

In steps an ALT dispatch company (often assuming the identity of some kind of communications solution provider) offering to handle the ALT hiring, training, contracting, and firing process for what looks, to the BOE, like a very reasonable price (and one that is ultimately reflected in the paucity of the ALT’s salary). Then in steps another dispatch company offering the same thing only cheaper. So ensues a price-war for control of a given area of schools and more often than not the dispatch company offering the best conditions for the BOE (read poorest conditions for the ALT) wins. 

With the dispatch contract there are often glaring gaps between a worker’s contractual hours and obligations, and the reality of the working conditions. Put simply, you might be contracted to work, say, 30 hours a week but in reality you’re doing 40.

To say the least, a dispatch contract gives staffing agencies in Japan plenty of scope shortcut their staff, particularly fresh-off-the-boat foreigners who, understandably, have little clue about local labor law, and maybe even less interest. 

With this type of work contract in Japan you might get …

… unemployment insurance (this former ALT did, after a union was mobilized).  

You might get paid holidays at a reduced rate (this former ALT didn’t, they were simply “unemployed” during breaks between school terms).  

You probably won’t get sick-leave, and you’ll likely be put on some kind of private health insurance plan that is probably ineffective in Japan.  

You might get free health checks (public school workers in Japan have to be checked for tuberculosis) or you might have to pay for them yourself (the latter for this former ALT).  

You may also have to go in for follow-up training on a Saturday at some point during the year, which may or may not be paid for (again, the latter in this case).

Going back to the second point listed above, the prospective dispatch ALT should at least check the term of their contract. It’s not unusual for what appears as a single contract to actually be broken down into three, representing employment during term time and unemployment in between.

What type of work contract in Japan is best? photo

Despite this the ALT is often asked by schools to volunteer their time during the summer (when they are unemployed) to help out with preparation for speech contests. Typically in this case the teacher doing the asking has no idea about the details of their ALT’s contract. 

While there is a lot that is negative about the dispatch contract for ALTs, it does come with some positives.

For one, the ALT can (and arguably should) unburden themselves of any sense of heavy responsibility in the workplace. It may sound dramatic but essentially the disparity between dispatch contract and actual working conditions, combined with a foreigner’s understandable ignorance, is tantamount to exploitation. No need then to show an undying loyalty to either school or staffing agency.

Under such circumstances the dispatch ALT should have no reason for taking their work home with them. During school holidays and between terms the ALT should feel free to take on other work in Japan, take trips overseas, and pursue side projects. There should be no sense of feeling like they have to be on call or checking emails every day. (Note - in terms of other work and side projects, just make sure that these don’t constitute a violation of your visa terms.)

For any half-decent ALT their dispatch contract is typically renewed, provided the staffing agency maintains their own contract with the BOE. However, renewals can often be last minute affairs, sometimes just days before the new school year gets going making it difficult to plan for the mid-term future.  

Ultimately, if you’re coming to Japan for fun, to see how things go, to get your foot in the door, well, the haken shain contract, while far from the best work contract Japan has to offer, as an ALT will be fine. It comes with a certain kind of freedom and plenty of free time. Just watch the purse strings.

Thinking longer term though, and really the dispatch contract will be cheating the ALT out of a number of benefits, not least in the case where contracts are broken into terms with periods of unemployment in between. In this case an ALT could only claim to have worked continuously for their employer for the length of the last school term -- around three months -- effectively shortchanging them of any rights and benefits that might be afforded the long-term worker in Japan.  

*Note 1 - Staffing agencies, despite all of their corner-cutting at the expense of the ALT, may still ask for a period of notice to be 90 days. Absurd and unlawful.  

*Note 2 - In the case that an ALT’s staffing agency offers support with visa applications and renewals don’t be surprised to see that your income as they’ve entered onto said forms is calculated as if that’s what they are paying you every month for an average of 12 months of the year (when actually you may only be working for, and getting paid for, around 10 months of the year).

*Note 3 - The gung-ho dispatch ALT might want to rally against the disparity between contract and actual work conditions, often believing that they have won the support of the native teaching staff at their location of work. More often than not though, said staff are offering words of sympathy only and will rarely take actionable steps to fight for the rights of their ALT. It can be a painful truth for some.

Contract type 4: Outsourced worker - gyomu-itaku / 業務委託

Working under the type of contract in Japan known as gyomu-itaku, an outsourced worker or subcontractor, comes with the odd status of not being an “employee” or even a “worker,” at least according to common interpretations of Japan’s Labor Standards Act. 

Effectively then, working as a gyomu-itaku in Japan is almost to be self-employed or rather to be operating as one’s own business.  

There are some scary implications with this, namely that the gyomu-itaku is not protected by Japan’s Labor Standards Law -- paid holidays, eight-hour work days, overtime limitations et al.  

So then the working conditions and lifestyle of the gyomu-itaku in Japan will likely be determined by the kindness (or lack thereof) of the people who took out the contract for their services, and the strength-of-will of the gyomu-itaku and their understanding of the scope of the service they are contractually obliged to provide.

Of course, the status of not being an “employee” or “worker” might raise alarm bells for when it comes to visa (renewal) applications, and as such it’s unlikely that a company will bring someone to Japan directly from overseas as an outsourced worker. That said though, income and name value tend to be more important factors when it comes to visa applications, rather than contractual technicalities. (In many cases though, the gyomu-itaku is likely to be in Japan already, perhaps with the status of residence, “Spouse or Child of Japanese National.”  

The negatives of this type of work contract in Japan are as clear as the positives. Effectively, you have no entitlement to paid holidays, shakai hoken, controlled working hours, promotion, bonuses, and all the rest of it.

On the other hand, the positives are abundant: 

take orders only from yourself
not contractually obliged to work certain hours
not contractually obliged to turn up at an office every day
have no need to get bogged down in office politics
can jump ship comparatively easily
don’t have to participate in company team-building, parties and other events 

The list goes on. Essentially, the gyomu-itaku is hired to get a job done so the flow of a contract is dominated by tasks that need doing, rather than the how, when, and where, these tasks (hopefully) get done. Despite this, such types of contract in Japan tend to come with a salary that gets paid monthly, options to renew (if work still needs doing), the potential of salary increases, and to be part of other company perks (socials on the company’s coffers e.t.c). 

Even though you are not employed by the contracting company, of course, you can still use their name on resumes and CVs (if it’s a name worthy of boasting about).

For those workers who enjoy freedom in their work and a sense of independence, the gyomu-itaku could be the best work contract available in Japan. And if the entity that contracted your services is a good one, and you do a good job, days off / vacation periods are paid for, opportunities for growth are passed your way, and maybe you’ll be brought in as a keiyaku shain with a view to becoming seishain in the future. 

*Note 1 - Companies might offer gyomu-itaku contracts as a way to get a feel of a worker that they would potentially like to hire on a permanent basis.

*Note 2 - For health insurance / pension the gyomu-itaku will likely have to go through Japan’s National Health Insurance (Kokumin Kenko Hoken) for which they will have to pay premiums in full by themselves (the entity that is paying for your services has no obligation toward Shakai Hoken). Those who have the status of residence of “Spouse of Child of Japanese National” may be able to be included as a family member on their partners Shakai Hoken, if said partner is on it.

*Note 3 - Taxes will have to be filed by the gyomu-itaku. It’s a tedious process but does come with the reward of claiming that you work from home for which there might be a substantial rebate.

Contract type 5: Part-time - arubaito (アルバイト)

Yea, the first question to address about part-time work in Japan is, perhaps, “What’s with the term, “arubaito”?” It comes from the German, “arbeit” -- “work” / “job.”

We’ll be brief here as it’s unlikely that a foreigner will come to work in Japan on a part-time contract -- income from part-time work alone will not be sufficient to acquire a long-term status of residence.

Most foreigners working part-time in Japan will be those whose status of residence is, “Permanent Resident,” “Spouse or Child of Japanese National,” “Student” (with separate permission sought to work), or those who are in Japan on a working holiday visa.

While working part-time in Japan doesn’t come with all the benefits afforded the full-time keiyaku-shain or seishain part-timer workers may still be eligible for shakai hoken and annual paid leave, among others.

The ghost of the 29.5-hour contract still haunts

While not an actual type of work contract here in Japan what we are referring to are those contracts that limit hours of work during the working week to 29.5. Seems like a random number. Maybe it is in some respects but having staff work less than 30 hours a week effectively unburdened employers of having to enroll them on shakai hoken -- state-run health, pension, unemployment insurance for which employers have to contribute to an employee’s premiums.  

Setting contracted hours to 29.5 per week was scandal, often perpetrated by English-language schools, that authorities turned a blind eye to until as recently as 2016. 

New legislation enacted into law that year saw the hours of work required for shakai hoken eligibility reduced to 20 per week. Don’t get too excited though, as there were (and remain) other requirements, the stiffest of which is that the company you work for employs more than 500 workers each of whom meets the eligibility requirements for shakai hoken. 

It all sounds a bit convoluted, a political sleight of hand designed to cause the least amount of upset to big business while appearing to do the right thing by workers.  

The point here being that if you are presented with a contract which details hours of work as 29.5 a week, take a closer look and be armed with some understanding as to what’s actually going on.

What type of work contract in Japan is best? photo

Any kind of talk about the types of work contract available in Japan should be approached with some degree of caution. On the one hand, those who are new to work in Japan will probably get the best out of their early years in the country by not getting bogged down by the finer details of their contract, of whatever type. Do the work. Leave it at work, and get on with enjoying life in Japan. 

Further down the line, when things like family, shakai hoken, pensions, loans and career progression come to the fore, is when employment contracts offered to foreigners seeking work in Japan should come under closer scrutiny. 

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