Employment of Foreign Nationals in Japan: A Legal Guide to Work Visas and Residence Qualifications for Businesses to Comply With

In today’s era of intensifying global competition, securing top talent regardless of nationality has become an essential management strategy for Japanese companies to achieve sustainable growth and innovation. However, the process of employing foreigners extends beyond mere recruitment activities. It also involves legal procedures that demand a precise understanding and adherence to complex regulations, including the Japanese Immigration Control and Refugee Recognition Act (hereinafter referred to as “Japanese Immigration Law”). In particular, the concept commonly referred to as a “visa” legally consists of two distinct systems: the “visa” issued by Japanese embassies abroad and the “status of residence” granted by the Immigration Services Agency of Japan. Understanding this distinction is the first step. This article aims to provide reliable information to help corporate representatives in Japan grasp the overall picture of the procedures for employing foreigners and avoid potential legal risks. Specifically, it will explain, based on Japanese laws, everything from the basic classification of residency statuses to the application process for a “Certificate of Eligibility for Status of Residence” for hiring talent overseas, the document requirements that vary depending on the size of the company, and the severe penalties companies may face for non-compliance, in a step-by-step and comprehensive manner.

The Basics of Visas and Residence Status: The Legal Foundation for Employment in Japan

When employing foreigners, it is crucial to understand the legal differences between a “visa” and “residence status.” A visa is akin to a letter of recommendation issued by a Japanese embassy or consulate abroad, confirming that the foreign national’s passport is valid and there are no impediments to entering Japan. In contrast, residence status is the legal qualification necessary for a foreigner to land and stay in Japan, defining what activities they may conduct and how long they can stay. This residence status is managed by the Immigration Services Agency, an external bureau of the Japanese Ministry of Justice, and forms the core of activities within Japan.

From the perspective of a company’s hiring personnel, this residence status can be broadly classified into three groups based on the eligibility for work activities.

Firstly, there are “residence statuses with no restrictions on work activities.” These are granted mainly based on one’s status or position, such as permanent residents, spouses of Japanese nationals, spouses of permanent residents, and long-term residents. Foreign nationals with these statuses are not legally constrained in their activities and can be employed in any job type, just like Japanese citizens.

Secondly, there are “residence statuses with work permitted within a specified range.” This category is most common when employing foreigners engaged in professional and technical fields. For example, the “Engineer/Specialist in Humanities/International Services” status applies to science and engineering specialists, planners, marketing personnel, interpreters, etc.; the “Intra-company Transferee” status applies to those transferred from a foreign parent company or branch; and the “Skilled Labor” status applies to foreign cuisine chefs, among others. An important point in this category is the strict limitation that only activities within the scope of the granted residence status are permitted.

Thirdly, there are “residence statuses that, in principle, do not permit work.” This includes statuses such as “Student,” “Dependent,” and “Cultural Activities.” However, even individuals with these statuses may be exceptionally allowed to work if they obtain “Permission to Engage in Activity other than that Permitted under the Status of Residence Previously Granted” from the Immigration Services Agency. Based on Article 19, Paragraph 2 of the Japanese Immigration Control Act, for example, a student with a “Student” residence status can work part-time for up to 28 hours a week with this permission. When employing foreigners in this category, companies must always check the presence and scope of permitted activities on the residence card.

Understanding these classifications is fundamental to determining whether a candidate can legally work. Below is a table comparing these concepts.

Employing Talent from Abroad: Procedures for Certificate of Eligibility Application in Japan

When hiring foreign nationals residing overseas to work in Japan, the standard procedure involves applying for a “Certificate of Eligibility.” This certificate, as stipulated in Article 7-2 of the Japanese Immigration Control and Refugee Recognition Act, is a pre-arrival confirmation by the Minister of Justice that the intended activities of the foreign national conform to the requirements of a specific status of residence. The system aims to streamline the visa application process at Japanese diplomatic missions abroad and the landing examination at airports and other entry points in Japan.

The procedure progresses through the following five steps:

1. Application within Japan: First, the accepting company, acting as an agent, applies for the Certificate of Eligibility at the regional immigration bureau that has jurisdiction over the company’s location. Typically, the application is made not by the foreign national but by a representative of the company in Japan or a lawyer/administrative scrivener commissioned for the task.
2. Examination by the Immigration Services Agency: Once the application is accepted, examiners from the Immigration Services Agency review the submitted documents to assess the stability and continuity of the company, the individual’s educational and professional background, and whether the planned job duties meet the criteria for the status of residence. The review period varies depending on the application details and timing but usually takes about one to three months.
3. Issuance and dispatch of the certificate: If the requirements are deemed to be met following the review, the Certificate of Eligibility is issued (by email if the application was made online or the applicant is registered for online services). The company then sends the original certificate to the foreign national abroad via international mail or forwards the email if the certificate was issued electronically.
4. Visa application at a diplomatic mission abroad: The foreign national, having received the Certificate of Eligibility, applies for a visa at the Japanese embassy or consulate-general in their country of residence. By presenting the certificate or the email forwarded by the company, the substantial examination is considered to have been completed in Japan, and the visa is usually issued promptly within about five business days.
5. Entry into Japan and issuance of the residence card: After the visa is issued, the foreign national travels to Japan. It is important to note that the Certificate of Eligibility is valid for only three months from the date of issue, and the individual must land in Japan within this period. Upon landing examination at a Japanese airport, presenting a passport, visa, and the Certificate of Eligibility will result in the immediate issuance of a “Residence Card” at Haneda Airport, Narita International Airport, Chubu Centrair International Airport, Kansai International Airport, New Chitose Airport, Hiroshima Airport, and Fukuoka Airport. At other airports or ports, the card is mailed to the reported place of residence after entry. This Residence Card serves as the official identification document in Japan.

This two-stage process centralizes the substantive examination within the specialized institution of the Immigration Services Agency in Japan, reducing the burden on diplomatic missions abroad while increasing predictability for both employers and foreign nationals. It effectively prevents the situation where a foreign national, after spending significant time and money to travel, is denied landing at the gateway to Japan.

Four Categories of Corporate Size and Their Definitions in Japan

In the application process for residency status related to employment, the Immigration Services Agency of Japan classifies accepting organizations (affiliated institutions) into four categories based on their size and reliability. This classification is an administrative mechanism that determines the level of simplification in the application process, and the category to which a company belongs significantly affects the volume of documents required for submission. It is key for companies to accurately understand which category they fall into for smooth preparation of their application.

Category 1 applies to entities considered to have the highest level of trustworthiness. Specifically, this includes companies listed on Japanese stock exchanges, mutual insurance companies, national and local public entities, and other similar public corporations. These institutions are deemed to have high social credibility and a stable management foundation, which results in a significant reduction of the documents required at the time of application.

Category 2 mainly includes large-scale, stable unlisted companies. The criteria for this category are based on the amount of withholding tax reported in the “Annual Withholding Tax Report” for the previous year, which must be at least 10 million yen. Even if the withholding tax amount does not meet this threshold, institutions that have received approval to use the “Residency Application Online System” from the Immigration Services Agency are treated as Category 2.

Category 3 primarily consists of small and medium-sized enterprises (SMEs). Specifically, these are entities and individuals who have submitted the Annual Withholding Tax Report to the tax office for the previous year and whose withholding tax amount is less than 10 million yen. The majority of Japanese companies fall into this category.

Category 4 includes entities and individuals that do not belong to any of the above categories. The most typical examples are newly established corporations. These companies have not yet completed a fiscal year and have not submitted the Annual Withholding Tax Report, therefore they must prove the stability and continuity of their business through other documents.

This categorization system is designed to streamline the review process. Companies in Categories 1 and 2, whose business stability has already been proven by public or objective indicators, are subject to a review process that primarily focuses on the eligibility of the foreign national. On the other hand, companies in Category 3, and especially Category 4, are subject to a more comprehensive review that includes the business content and financial situation of the accepting company itself, thus requiring more documentation for verification.

Below is a table summarizing the definitions and specific examples of each category.

Documents Required by Companies by Category

When applying for a Certificate of Eligibility for residence status in Japan, the documents that a company must prepare vary according to the four categories mentioned earlier. Here, we will specifically explain the necessary documents using the commonly utilized residence status category of “Engineer/Specialist in Humanities/International Services” as an example.

First, there are documents that are universally required across all categories. These form the basis of the application:

• Certificate of Eligibility Application Form: Use the latest form downloaded from the Immigration Services Agency of Japan’s website. (Immigration Services Agency of Japan “Residence Status ‘Engineer/Specialist in Humanities/International Services'” https://www.moj.go.jp/isa/applications/status/gijinkoku.html)
• Photograph: A passport-sized photo of the applicant that meets the specified standards.
• Return Envelope: For notification of the examination result, with the address clearly written and a postage stamp for registered mail affixed.
• Notification of Working Conditions or a Copy of the Employment Contract: A document detailing specific working conditions such as job description, salary, and working hours.
• Documents Certifying the Applicant’s Educational Background and Work Experience: This includes university graduation certificates and resumes detailing previous work experience.

Next, in addition to the above common documents, the following documents are submitted to prove the company’s category.

Category 1 companies submit one of the following documents to prove their status:

• A copy of the company’s quarterly report or a document certifying that the company is listed on a Japanese stock exchange.
• A copy of the document certifying that the company has received approval for establishment from the competent government ministry.

Category 2 and Category 3 companies submit the following documents to demonstrate their business scale:

• A copy of the totalized statement of the legal documents for the previous year’s employee salary income withholding slips (with the tax office’s receipt stamp).

Category 4 companies, which do not yet have a tax payment record, need to objectively demonstrate the stability and continuity of their business. Therefore, they are required to submit more documents than companies in Categories 1 to 3. Typically, the following documents are submitted:

• Business Plan: A document that rationally explains the specific business content, revenue projections, and why it is necessary to employ the foreign national.
• Certificate of Registered Company Information: An official document issued by the Legal Affairs Bureau that certifies the basic information of the company.
• A copy of the most recent fiscal year’s financial statements: Submitted if the company has completed a fiscal year since its establishment. If the company is newly established and does not have financial statements, it is necessary to explain this.

The difference in these document requirements reflects the logic of risk assessment conducted by the Immigration Services Agency of Japan. For Category 1 and 2 companies, the reliability of the business is already assured, so the examination focuses mainly on the individual qualities of the applicant. However, for Category 3, and especially Category 4 companies, the examiner carefully judges not only the applicant but also whether the company itself has the capacity to stably continue employing foreigners and whether the business is legal and substantial. Therefore, for Category 4 companies, which are newly established, applying for residence status is not just an employment procedure but also an opportunity to prove the legitimacy and future prospects of the business to the authorities.

Penalties for Companies: The Risk of Facilitating Illegal Employment Under Japanese Law

Companies employing foreigners in Japan bear the responsibility to not only understand and properly execute the procedures of the residence status system but also to continuously comply with legal regulations throughout the employment period. Failure to fulfill this obligation exposes the company to a significant legal risk known as the “Crime of Promoting Illegal Employment,” as stipulated in Article 73-2 of the Japanese Immigration Control and Refugee Recognition Act. This law imposes severe penalties on those who engage in activities that facilitate illegal employment.

The typical acts that constitute the Crime of Promoting Illegal Employment can be categorized into three main types. First, employing foreigners who are illegally staying in Japan or who hold residence statuses that do not permit employment (e.g., Temporary Visitor). Second, making foreigners work beyond the scope of activities defined by their residence status. For example, assigning an engineer with a “Engineer/Specialist in Humanities/International Services” residence status to perform simple factory work that does not require specialized knowledge as their main job. Third, making foreigners work beyond the hours permitted by their “Permission to Engage in Activity other than that Permitted by the Status of Residence Previously Granted.” An example is having a student, who is limited to 28 hours per week, work 40 hours a week.

If these violations are committed, the employer may face “imprisonment for up to three years or a fine of up to three million yen, or both.” Furthermore, under Japanese law, not only the direct perpetrator of the violation but also the corporation itself can be subject to fines due to the dual penalty provisions, holding the entire company accountable.

Particularly noteworthy for companies is the treatment of “negligence” under Japanese immigration law. The law generally does not accept the claim of “not knowing that the activity constituted illegal employment” as an excuse for exemption from liability. However, if there was “no negligence” in not knowing, one may be exempt from punishment. This implies that companies have a proactive duty to carefully verify the residence status and eligibility for employment of the foreigners they intend to hire, such as by checking the original residence card. If illegal employment occurs as a result of only checking a copy of the residence card or taking the individual’s verbal declaration at face value, the company may be deemed negligent for failing to fulfill its verification obligations and thus become subject to punishment.

A conviction for the Crime of Promoting Illegal Employment does not only result in direct penalties such as fines or imprisonment but can also have a serious impact on a company’s business activities. For instance, companies penalized for facilitating illegal employment may become ineligible to participate in systems such as the Technical Intern Training Program or the Specified Skilled Worker Program, which are crucial sources of labor in certain industry sectors. This demonstrates how compliance violations can evolve from mere legal issues to management risks that threaten the very continuity of business operations.

Post-Employment Procedures: Notification of Employment Status of Foreign Nationals in Japan

The employment process for foreign nationals does not end with obtaining the necessary residence status and finalizing their entry into the company. After the commencement of employment, there are legal obligations that companies must fulfill in Japan. One such obligation is the submission of the “Notification of Employment Status of Foreign Nationals.” This is a procedure mandated for all employers under the Japanese “Act on Comprehensive Promotion of Labor Policies, Stabilization of Employment of Workers and Enhancement of Their Working Lives.”

This notification must be reported to the local Public Employment Security Office (Hello Work) when a foreign national is newly employed or when an employed foreign national leaves the company. The purpose of this system is to enable the government to accurately grasp the employment status of foreign workers and to promote proper employment management and support for re-employment.

The method of notification varies depending on whether the foreign national is covered by employment insurance. If the foreign national is eligible for employment insurance, the submission of the “Employment Insurance Eligibility Notification” will also serve as the notification of the employment status of the foreign national, so no separate document submission is required.

On the other hand, if you employ a foreign national who does not qualify for employment insurance due to conditions such as working hours, you must submit the “Notification of Employment Status of Foreign Nationals (Form No. 3).” This form can be downloaded from the website of the Ministry of Health, Labour and Welfare. (Ministry of Health, Labour and Welfare “About Notification of Employment Status of Foreign Nationals” https://www.mhlw.go.jp/stf/seisakunitsuite/bunya/koyou_roudou/koyou/gaikokujin/todokede/index.html).

The deadline for submission is by the end of the month following the month in which the hiring or departure occurred. Failure to submit this notification or submitting a false notification may result in a fine of up to 300,000 yen, so caution is necessary. This procedure is carried out under the administrative purpose of labor market management by the Ministry of Health, Labour and Welfare, separate from the residence management overseen by the Ministry of Justice (Immigration Services Agency), and companies must comply with both sets of regulations.

Conclusion

Employing foreign professionals is a powerful means for Japanese companies to enhance their global competitiveness. However, compliance with Japan’s complex and stringent immigration laws is an absolute requirement for realizing this. As detailed in this article, a precise understanding of residency status, preparation of appropriate documents according to the size of the company, and avoidance of serious legal risks such as the crime of promoting illegal employment are responsibilities imposed on all companies. These procedures require specialized knowledge and meticulous attention, as neglecting them could lead to unexpected time losses and legal sanctions.

At Monolith Law Office, we have a wealth of experience in providing legal services related to work visas and residency qualifications in Japan, as discussed in this article, to a multitude of clients within the country. Our firm’s strength lies in the deep understanding of the Japanese legal system, complemented by the presence of multiple attorneys who are English speakers with foreign legal qualifications. This enables us to support cross-border legal procedures accurately, facilitating smooth communication not only with corporate legal and HR personnel but also with overseas candidates themselves. If you are struggling with the complex procedures and compliance systems related to employing foreigners, please do not hesitate to consult with our office.