Types of Employment Contracts in Japan: A Guide to Seishain and Haken Contracts, among others

Understanding the types of Japanese employment contracts and lingo is an essential prerequisite to a successful job hunt in Japan.

Understanding Seishian and Haken contracts is essential before you move to Japan. The reason is if a foreigner is finding a job from overseas, the offered employment contract would generally be a Seishain or Haken.

Foreigners new to Japan often wonder what is a ‘Seishain,’ ‘Gyomu-Itaku,’ or an ‘Arubaito‘? Especially the difference between ‘Subcon‘ (sub-contract), ‘Gyomu-itaku,’ and ‘Haken‘ employment contracts causes much confusion to many foreigners in Japan.

Getting your head around the different kinds of Japanese employment contracts and types of employment will ensure your expat career gets off on the right foot! It will also ensure you do not make a mistake accepting a job.

Types of Employment Contracts in Japan

At a macro level, there are four types of employment in Japan. i.e., regular full-time employees, full-time contract employees, part-time employees, and freelancers. However, these employment types are sub-categorized into the following 7 types of employment contracts:

1. Seishain
2. Junshain
3. Keiyakushain
4. Arubaito
5. Haken
6. Gyomu-Itaku
7. Ukeoi

Let us discuss these employment types in detail.

What is a Seishain?

The three Kanji and their meaning of the word ‘Seishain (正社員) are as follows:

• 正 (Sei): Regular, right, correct, or true
• 社 (Sha): Company
• 員(In): Member

As evident from the meaning of the word, Seishain is a regular full-time employee of a company in Japan. It is the most coveted Japanese employment contract in Japan.

In addition to having a contract for an unlimited period with steady, full-time work, Seishain workers enjoy numerous benefits as per the labor laws of Japan.

Suppose an employer is considering hiring you from overseas for any job, such as a software developer job in Japan. In that case, it will generally be for a Seishain employment contract, except for a rare exception of a long-term contract job opportunity.

Benefits of a Seishain Contract

Social security

It is mandatory for an employer to provide various Japanese labor laws mandated social security benefits to the regular employees under Seishain employment contracts in Japan. These benefits are as follows:

Pension

In Japan, two-thirds of the cost of the pension of a retired employee is financed by pension insurance premiums. The government’s tax income finances the remaining one-third of the cost of the pension.

As a Seishain worker, while you pay 50% of the pension insurance premium, the employer contributes the remaining 50%.

Health Insurance and Nursing care

Japan has a robust health insurance system. Under The National Health Insurance of Japan, 70% of the cost of medical treatments and medicines is covered by insurance. As a Seishain, 50% of your health insurance premium is contributed by your employer.  

Accident Insurance

A Seishain contract will ensure your coverage under the Accident Insurance, apart from a few exceptions, for all work-related accidents, illnesses, and disabilities. 100% premium of the Accident Insurance of a Seishain worker is born by the employer.

Unemployment insurance

As a Seishain, if you lose your job, you will be covered under unemployment insurance to be eligible to receive 50 to 80% of your salary amount.

To can receive the unemployment benefit for a predetermined period of 3 months to a maximum of 12 months from Hello work in case of losing the job.

A worker is eligible to receive this unemployment benefit if the loss of the job is due to dismissal, redundancy, or completion of the contract. However, this is subject to the condition that you have worked in Japan for at least 6 months, and for this period, the premium for the insurance is paid for.

Regarding the above, as a foreigner, this English guide will come in handy for you.

Other Benefits

Other Seishain employee benefits include paid holidays, sick leave, bonuses, career opportunities, and wage increases.

While a Seishain enjoys all the above quantifiable benefits, another big benefit is job security. This is because, as per Japanese labor laws, firing an employee is only possible in extraordinary situations like serious misconduct, inability to carry out duties because of disability or other physical reasons, or unavoidable economic reasons.

If you’re seeking stable work and a strong visa application, then a Seishian contract is what you should aim for! 

Moreover, if you are looking for working visa sponsorship, say for a Japanese Engineer visa, a Seishain employment contract would make it much simpler to get the visa approval.

Cons of Seishain Employment Contracts

While Seishain contract brings you all the above benefits, it may restrict little to no lifestyle flexibility. A Seishain is also subjected to overtime work and possible transfers to other locations or job rotations.

If you value freedom in your life and work, perhaps contract or freelancing employment, as mentioned below, will make a better fit. 

Junshain

Junshain (準社員) means an associate or junior employee in Japan.

Despite similarities to Seishain workers, junior employees, or Junshain, are considered non-permanent company employees.

A junior employee has no definitive legal definition, so the contract stipulations vary case by case.

Junshain contracts must also be regularly renewed, allowing companies more power to alter or terminate your employment with them.

A Junshain contract generally has a salary on hourly or daily rates. However, there is always a possibility of having a fixed monthly.

While not as ideal as Seishain, a Junshain contract provides ample opportunity to work and grow in Japan successfully.

Keiyaku Shain (Contract Employee)

Keiyaku shain (契約社員), or Shokutaku shain, are contract employees under a direct contract with the company they work for.

A Keiyaku shain contract is a fixed-term, limited contract. Keiyaku shain often consists of workers with specialized knowledge and skills needed for projects that are not required long-term.

After the set period, contract renewal depends on the company’s or employee’s wishes. These contracts can also be used to rehire workers who have reached retirement age under more relaxed employment terms.

Responsibilities for the Keiyaku shain will be clearly defined and will rarely diverge, allowing workers the power to concentrate on their tasks while disregarding additional company activities and efforts. 

Pros and Cons of Keiyaku Shain in Japan

All the quantifiable benefits applicable to a Seishain apply to a Keiyaku Shain (Contract worker) also. One exception is Unemployment Insurance. While a Seshain contract has full unemployment insurance coverage, as a contract employee, you will have partial coverage of this insurance in Japan.

A Keiyaku Shain contract is limited to a maximum of 3-years period if you are less than 60 years old. However, for people who are 60 years or older, the contract can be for 5 years.

The disadvantage of a Keiyaku Shain contract is the lack of stability for people looking for a stable career. However, the same disadvantage becomes an advantage for people looking for more career flexibility.

Part-time Employees (Arubaito)

Part-time contracts largely exist to employ peope who wish to have casual work a few days a week. Those on part-time contracts will most likely work during their free time at an hourly rate, with few benefits besides limited paid leave and transportation costs.

The work will often be rudimentary and repetitive, with heftier responsibilities left to the Seishain staff. Common positions include store clerks, supermarket staff, convenience store staff, and factory workers. Some companies offer pathways from part-time to Seishain or Junshain, while others will start potential Seishain candidates off on a part-time contract as a testing phase.

Arubaito is essentially part-time by another name. The word itself is actually a loanword from the Dutch arbeit, meaning “to work.” It became popular during the Meiji Restoration (1868-1912), whereby students used it as slang for working while studying.

Despite no legal differences between part-time and Arubaito, the phrase continues to conjure the image of young people working while pursuing education or another passion. To accommodate students’ hectic schedules, Arubaito contracts tend to be lenient.

Unlike part-time, those working Arubaito will also be expected to quit once they graduate. Shifts will often be outside regular school or work hours, while weekend and public holiday work are common. The position usually has low responsibility, with modest hourly pay and few benefits. Typical jobs are essentially the same as part-time ones. 

Haken Contract

A Haken (派遣) contract means a contract to dispatch temp workers who are called Haken Shain ((派遣社員).

In Japan, dispatch or temp workers are employed by a dispatch agency or Jinzai haken gaisha (人材派遣会社) and sent to work temporarily for various companies requiring extra staff.

The dispatch agency sets wages, hours, roles, and conditions that will differ between companies, requiring careful consideration by the employees before signing the contract.

Moreover, the dispatch company will build the candidate’s profile based on the skills and experience to find suitable work with their client companies. Dispatch workers may also be free to decide the location, time, and period.

Pros & Cons of Haken Contracts

Uncertainty and instability are the most significant disadvantages of a Haken contract in Japan. Once the contract is up, your position may become unavailable. Moreover, Haken contracts are generally for a very short period, generally one month to less than 12 months.

Another disadvantage is that you receive hourly wages after deducting the Haken agency’s profit. It means that you end up receiving less money, which the end client is willing to pay for the work you are putting in. Another vital point to note is that agencies dispatching Haken temp employees generally keep a hefty profit for themselves, which leaves the workers getting much lower pay for their work.

In addition, some dispatch companies will demand that employees pay their own travel expenses.

The advantages of Haken contracts are greater flexibility for employees about the type of work and contract durations. While many positions will be similar to part-time, dispatch workers often have more opportunities with intensive and fulfilling work at full-time hours. 

Gyomu-Itaku and Ukeoi Contracts

Both Gyomu-Itaku and Uketoi contracts are for freelancing work.

Depending upon visa limitations, expats in Japan may be able to work freelance. This can be done either by starting a sole proprietorship called kojin jigyo(個人事業) or simply through self-employment as a freelancer.

During your work, you will likely sign individual contracts with companies outlining the scope and period of your work. The name of these contracts depends upon the company, with many using terms like “outsourcing” or “subcontracting.”

Common options for freelance work include the Gyomu-Itaku (業務委託) and Ukeoi (請負) contracts. These are as follows:

Gyomu-Itaku

Gyomu-Itaku is a subcontracting contract where an employee (or an entity) is hired to carry out mutually agreed tasks with an agreed wage calculated on an hourly or monthly basis. In other words, we can define the Gyomu-Itaku contract as a task-based subcontracting contract where the subcontractor does not necessarily guarantee the delivery of tasks.

Ukeoi Contract

An Ukeoi contract is also a subcontracting contract like Gyomu-Itaku. However, a Ukeoi contract is like an outsourcing contract, requiring satisfactory delivery of each assignment before payment. Remuneration (hoshuu報酬) will be dictated or negotiated beforehand.

Pros and Cons: Full-time or Part-time Employees

While several nuanced employment options are available, the broad trend is the stability of a Seishain or Junshain employment vs. flexibility (Keiyaku, Arubaito, Haken, freelance, etc.).

Naturally, your choice will depend upon personal career and lifestyle goals, with the freedom of casual work and the regular income of a full-time position both being viable options for different people. To help you decide, we’ve broken down both types of employment systems into merits and demerits.

Full-Time Regular Employees (Seishain)

Merits:

• Regular, stable, and continuous employment 
• Opportunities for bonuses and other benefits
• Fixed salary
• Raises and promotions 
• Welfare and Insurance

Demerits:

• Long hours, high possibility of overtime 
• Extra responsibilities, including participation in committees and after-work events (common in Japan)
• Difficulties in doing additional work/side-gigs (often requires permission, can be outright denied)
• Transfers (both location and position) are common in Japan
• High responsibility – blame for not meeting targets, etc.   

Full-Time Contract Employment (Keiyaku Shain)

Merits:

• Stable employment with visibility for the contract duration
• Fixed salary
• Welfare and Insurance
• No obligation to take on extra responsibilities and after-work events
• Not much stress about transfers and relocations

Demerits:

• Less stability compared to Seishain
• High possibility of overtime 
• Not opportunities for bonuses and other benefits
• No promotions to higher levels and raises during the contract period
• Difficulties in doing additional work/side-gigs (often requires permission, can be outright denied)

Full-Time Subcontracting Employment (Gyomu-Itaku)

Merits:

• Generally, there is not much stress of overtime and no free overtime work
• No obligation to take on extra responsibilities and after-work events
• No stress for possible transfers and relocations
• The flexibility of doing additional side gigs

Demerits:

• Uncertainty and instability
• Earnings based on hours worked
• No promotions and raises
• Lack of welfare and Insurance
• No severance or retirement pay

Part-time Employment (Arubaito)

Merits:

• Short, flexible hours
• Overtime is rare
• Ability to select and adjust work hours 
• Ability to work multiple jobs or while studying 
• No transfers
• Low, clearly-defined responsibilities 

Demerits:

• No guarantee of contract renewal
• Unstable work
• Hourly pay – often low
• Slim opportunities for raises and promotions
• No severance or retirement pay
• Less welfare and benefits 

Find the Suitable Employment Contract for You!

As we have seen, Japan offers workers a rich tapestry of employment contracts suiting all lifestyles and ambitions. Naturally, gaining full-time Seishain employment is the typical Japanese dream. However, for those with plans to study, work multiple jobs, enjoy freedom, or start their own freelancing business, a part-time Arubaito, Gyomu-Itaku, Keiyaku, or another contract might be a more suitable option.

Of course, whether or not you’ll be employable under these employment contracts depends upon your Japanese visa type. However, it’s crucial to confirm the contract type before applying. Happy job hunting!