Doing business in Japan

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How to Start a Temporary Staff Agency Dispatch Worker Business in Japan

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Dispatch worker businesses, aka temp staff agencies, are seeing rapid growth in Japan. This growth in dispatch worker businesses results from:

  • The gradual trend of Japanese workers becoming more flexible (and very gradually less obsessed with lifetime employment opportunities) and using temporary work to test new career opportunities, or while searching for the next long-term position.
  • The rapidly shrinking workforce forcing employers to hire people from temporary staff agencies as opposed to hiring long-term employees.
  • Contrasting with the previous point, employers seeking to achieve a leaner workforce.
  • Increased demand for workers from abroad in all categories, ranging from hotel housekeeping to aerospace engineering.

As a government-licensed Tokyo recruitment agency, Venture Japan only deals in the bilingual recruitment market for English-speaking Japanese and Japanese-speaking foreigners and does not (at least at this time) provide a temp staff service. In our business services division though, we are often approached by foreign firms and entrepreneurs who see the lucrative market in Japan and want to bring in engineers and other workers from abroad to dispatch to clients in Japan.

Every temporary staff agency in Japan must hold a valid government license (a “dispatch worker business business license” as it’s referred to in Japan’s Act for Securing the Proper Operation of Worker Dispatching Undertakings and Improved Working Conditions for Dispatched Workers aka the Worker Dispatch Act). Unlicensed dispatch worker businesses are illegal and will cause severe liability issues, both for the business illegally dispatching workers and the company receiving them. Licensed temporary staff agencies must follow stringent rules and maintain relatively high cash reserves and net asset value, whereas unlicensed operators are unlikely to know or care.

So your company is a temporary staff agency in India or elsewhere and wants to start a branch to send engineers to Japan, or maybe you’re an entrepreneur who sees an opportunity to start a dispatch worker business in Japan to bring housekeeping staff, restaurant staff, etc. from Eastern Europe. How do you apply for and receive a Japanese dispatch worker business license?

The Ministry of Health, Labour and Welfare’s minimum requirements for a dispatch worker business license are:

  1. Completed application form.
  2. Company (must be a Japanese KK or GK company or Japanese branch-office of a foreign company):
    1. Articles of Incorporation (which must include a business purpose specifically for recruitment).
    2. Company certificate.
    3. Copy of most recent tax-return (not required for a new company with no financial history).
    4. Copy of the receipt of taxes paid.
  3. Office:
    1. Lease agreement and floor plan for each office at which the dispatch worker business will operate (each office must be at least 20 square meters usable space).
    2. Map showing the closest rail-station to the office.
  4. Directors:
    1. Each director’s Japanese residence certificate.
    2. Each director’s resume.
  5. Proof of Assets:
    1. Net asset value must be more than JPY20,000,000 (JPY20,000,000 paid-in capital for a new company in its first financial year).
    2. Cash at bank must be more than JPY15,000,000.
  6. Dispatch Worker Business Manager (at least two):
    1. His or her resume (must have at least 3 years HR experience).
    2. His or her Japanese residence certificate.
    3. Certificate proving she or he has attended a government-approved dispatch worker business management seminar within the past 3 years.
  7. Dispatch Worker Business Division:
    1. Written regulations for personal information management.
    2. Workplace rules or employment agreement.
    3. Administration guidelines for dispatching workers.
    4. Details of seminars for employee career improvement.
    5. Company pamphlets (website included).
    6. Social insurance registration documents .

Temporary staff agencies in Japan must renew the dispatch worker business license every three years. It’s important to ensure any changes to a dispatch worker business’s registered address, business address, directors, or dispatch worker business manager, are notified to the Labour Standards Inspection Office within thirty days of occurring, so as to avoid administrative penalties or even loss of license.

If you need help, we can manage the entire application procedure for you.

Why both kanji and katakana or hiragana?

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Enrolling Japanese company employees with Japan Pension Service (for health insurance, pension insurance, and long-term care insurance), with the Labour Standards Inspection Office (for workers’ accident compensation insurance, child benefits contribution, and Asbestos-related Health Damage Relief Fund contribution), and with the Public Employment Security Office aka “Hello Work” for unemployment insurance, is part of our core Japan HR and payroll business. Our standard procedure is to send a personal information form to the employer for the new Japanese company employee to complete, and upon return, our licensed Japanese HR specialist processes the enrollment.

I suppose that having lived in Japan for 26 years, some of the vagaries of Japanese life became “normal” for me years ago, but not so our clients, the Financial Controller of one of whom (a very exciting Irish financial services company) asked the following question yesterday: “Just so I understand, is kanji different to katakana? I note in the attached file their names are completed in katakana – is this different to kanji?”.

The simple answer is yes, katakana is different from kanji. The longer answer is written Japanese uses kanji, katakana, hiragana, and romaji, as follows:

  • Kanji; these are the characters derived from Chinese characters that Japanese use for verb stems, adjectives, nouns, etc.
  • Hiragana; these are syllabaries (46 characters, each representing a phonic) used for verb endings (such as past, present, and future tenses), conjugation, etc.
  • Katakana; these are also syllabaries (actually 46 simplified forms of the corresponding hiragana character) used to write foreign nouns, both for objects and people names.
  • Romaji; these are the alphabet characters, generally restricted to advertising use and acronyms.

There are several thousand kanji characters, but Japanese only need to memorise 2,136 of them (the “joyo kanji” or “standard kanji”) for everyday use such as reading newspapers. One challenge is there are many family and first names written using kanji that are not in the 2,136 standard kanji. Worse, kanji are generally written in pairs, and their reading can change dramatically depending on which kanji they are paired with. To avoid confusion, government and other official forms require people to write their name both in kanji and either hiragana or (as in the case of Japan Pension Service, the Labour Standards Inspection Office, and Hello Work!) katakana, so the person reading the name will know how to pronounce it. This is also the purpose of the tiny “furigana” aka “yomigana” characters written by law above non-standard (that is, not in the 2,136 joyo kanji) kanji in newspapers and magazines.

Our client’s response? “I’m starting to appreciate the simplicity of only having to know the Roman alphabet!”

How to Start a Recruitment Agency in Tokyo, Osaka, or elsewhere in Japan

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Tokyo recruitment agencies charge 30% – 35% success fees based on each placed candidate’s full first-year salary, including base salary, commissions, bonuses, and allowances (disclaimer: Venture Japan charges as low as 15% of base salary for an identical service). Some Tokyo recruitment agencies even charge upfront or monthly retainers on top of success fees (Venture Japan does not). It’s hardly surprising there are so many recruiters in Tokyo, many of them one-man shops run by retirees farming the networks they grew over their 40 years of employment.

Whether a private individual working from a home-office, or a company working from a glass-sided office building, every recruitment agency in Japan must hold a valid government recruiting license (a “fee-charging employment placement business license” as it’s referred to in Japan’s Employment Security Act). The only exception is for recruiters operating exclusively online with no individual contact with candidates (such as job-boards). Unlicensed recruiters are illegal and cause legal liability issues downstream if something goes wrong with the employer’s relationship with an employee an unlicensed agency introduced. This is in part because licensed recruitment agencies in Japan must follow stringent rules regarding how they advertise and introduce candidates, whereas unlicensed recruiters are unlikely to know or care.

So your company is a recruitment agency in the UK or elsewhere and wants to start a recruitment agency in Tokyo, or maybe you’re an entrepreneur who wants to start a Tokyo recruitment agency. How do you apply for and receive a Japanese government recruitment license (a “fee-charging employment placement agency license” as it’s referred to in Japan’s Employment Security Act)?

We only deal with company applications for recruitment licenses, for which the Ministry of Health, Labour and Welfare’s minimum requirements are:

  1. A set of completed recruitment license application forms (Venture Japan has the entire set translated to English).
  2. The company, which must be a Japanese KK or GK company or Japanese branch-office of a foreign company, must provide:
    1. A copy of its Articles of Incorporation (which must include a business purpose specifically for recruitment).
    2. A valid (issued within three months of the application date) Certificate of Registration.
    3. A copy of its most recent tax-return (not required for a new company in its first financial year).
    4. Proof that its net asset value is more than JPY5,000,000 (JPY5,000,000 paid-in capital for a new company in its first financial year).
    5. Proof that its cash at the bank is more than JPY1,500,000 plus JPY600,000 for each additional office at which the recruitment agency will operate.
    6. A copy of the office lease agreement and floor plan for each office at which it will operate the recruitment business (there is no minimum office size, but it must not be a virtual office).
  3. Each of the company’s directors must provide:
    1. His or her Japanese residence certificate.
    2. His or her current resume.
  4. The Recruitment Business Manager must provide:
    1. His or her resume.
    2. His or her Japanese residence certificate.
    3. A certificate proving she or he has attended a government-approved recruitment business management seminar within the past 3 years.

Tokyo recruitment agencies, as elsewhere throughout Japan, must renew the recruitment license every three years. It’s important to ensure any changes to a recruitment agency’s registered address, business address, directors, or recruitment business manager, are notified to the Employment Security Office within thirty days of occurring, so as to avoid administrative penalties or even loss of license.

If you need help, we can manage the entire application procedure for you.

Starting business in Japan?

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In December 1991, I made my first business trip to Japan and was staggered by the differences to my native UK, especially the language and the energy.

In January 1993, I relocated to Tokyo and was staggered by the prices of everyday food in the supermarket close to my apartment (how many business travelers ever really look closely at menu prices on their travels?).

In February 1994, I was recruited to a lush company President position and was staggered by the salary I was earning.

In October 1996, I was part of a successful IPO on the US exchanges, but was staggered by how little my stock options were worth!

In March 2003, I finally gave-up on a very promising, but hopelessly underfunded, 3D software startup, and started to write a website, this website, and was staggered by how difficult it was.

In June 2019, I am at last publishing my first blog post, this post, and am staggered at how easy it is!

This blog is for random articles that don’t, at present, fit into the main “Doing Business in Japan” section of the website. There will be no comments section, at least not at first, but maybe we’ll add something in the future.

I hope the information in these posts will help you start your journey through Japanese business, which is maybe, just maybe, easier now than it was 26 years ago.