Japan Payroll Outsourcing With a Global Vendor: Gaps and a RACI

A global payroll vendor can calculate gross-to-net pay and issue payslips for your Japan entity, but Japan payroll also includes statutory steps that sit outside that template. Five of them need to be checked against the vendor's scope: the social and labour insurance filings that only a licensed sharoushi may prepare for a fee, the year-end adjustment, the municipal resident tax and salary payment report filings, the bonus payment report, and the monthly overtime check against the 36 Agreement.

Each of the five needs a named owner in Japan. The RACI below splits them across HQ, the vendor, the Japan entity and AQ Partners working with a licensed sharoushi. It closes with the questions to put to a vendor in an RFP.

• The vendor runs the calculation, not the filings. Check whether your contract covers more than pay calculation, payslips and a payment file. In Japan the employer files the insurance, tax and municipal steps.
• Some filings are reserved by law. Under the Sharoushi Act, only a sharoushi or sharoushi corporation may prepare or submit labour and social insurance filings for another company for a fee.
• October to January is the pressure point. Year-end adjustment runs in the December payroll, and the withholding slips and salary payment reports are due January 31.
• An EOR and a global payroll vendor are not the same. An EOR is the legal employer and files for its own staff. Once you hire through your own KK or GK, every filing in this post belongs to your entity.
• Write the split into the contract. A RACI that the vendor, the Japan entity and the sharoushi have all signed stops a filing from falling between them.

Why a global payroll template stops short in Japan

A global payroll template covers the work that looks the same in every country: collect inputs, calculate pay, withhold tax and social contributions, produce payslips and a bank file. Japan adds filings that the employer must make to the Japan Pension Service, Hello Work, the labour bureau, the tax office and every municipality where an employee lives. If these filings sit outside the vendor's standard scope or go to a local partner, HQ needs that partner's name. Our month-by-month Japan payroll calendar lists when each of these filings falls due across the year.

The bigger structural reason is the sharoushi rule. Article 27 of the Certified Social Insurance and Labour Consultant Act (社会保険労務士法, Shakai Hoken Romushi Ho), as published on e-Gov states that anyone other than a sharoushi or a sharoushi corporation may not, at another person's request and for remuneration, carry on as a business the work listed in Article 2(1)(i) to (ii).

The reserved work covers preparing applications and notifications under the labour and social insurance laws, submitting them on the employer's behalf, acting as agent in those procedures, and preparing the statutory ledgers. The article has narrow exceptions, for cases another law provides for and for work incidental to certain businesses set by Cabinet Order.

In practice the rule means a vendor that is not a sharoushi corporation must either pass these filings to a sharoushi partner or hand them back to your Japan entity. Either is workable. The risk is assuming the vendor covers them because they appear on a global "statutory filings" line in the contract. Your entity is the employer and the filer for every one of these steps, so a missed notification is your entity's problem, whoever's system holds the data.

An EOR works differently. The EOR is the legal employer, so it files in its own name for the staff it employs. The gap opens when a group moves from an EOR to its own KK or GK and keeps the payroll vendor but loses the EOR's local filing team. Our comparison of EOR and entity payroll options in Japan covers that decision. This post assumes the entity exists and is the employer.

The five Japan steps to check in a vendor's scope

Each step below has a fixed deadline set by a Japanese statute or agency, and each needs data the global system holds. Ask whether the vendor delivers that data in the formats Japanese authorities accept.

1. Sharoushi-only social and labour insurance procedures

When an employee joins, the employer must file the health insurance and employees' pension acquisition notification within 5 days of the event, according to the Japan Pension Service enrolment page (2026). A loss notification follows the same 5-day window when someone leaves.

Employment insurance (雇用保険, koyo hoken) is filed separately with Hello Work. The employer submits the acquisition notification (雇用保険被保険者資格取得届) by the 10th of the month after the employee becomes insured, and the loss notification (資格喪失届) within 10 days of the day after the employee leaves, according to the Hyogo Labour Bureau (MHLW) guide to employee procedures.

Each July the employer files the standard remuneration base report (算定基礎届, santei kiso todoke) by July 10, using April, May and June pay. The resulting standard monthly remuneration applies from September to the following August, per the Japan Pension Service santei kiso guidance.

Labour insurance has its own annual cycle. The labour insurance annual renewal (労働保険年度更新, rodo hoken nendo koshin) settles the prior year's premium and declares the new year's estimate. The Tokyo Labour Bureau (MHLW) notice for FY2026 sets the window as June 1 to July 10. All of these are filings under the labour and social insurance laws, so a third party that prepares them for a fee must be a sharoushi. For the onboarding sequence itself, see our step-by-step guide to shakai hoken enrolment.

2. Year-end adjustment

Year-end adjustment (年末調整, nenmatsu chosei) recalculates each employee's annual income tax in the last payroll of the year and refunds or collects the difference. Under NTA Tax Answer No. 2665 (Income Tax Act Arts. 190 and 194), it applies to employees who have submitted the dependents declaration (扶養控除等申告書, fuyo kojo to shinkokusho) by the time of the adjustment. Employees whose annual salary exceeds 20 million yen are excluded and file their own returns.

The work is mostly data collection. In October and November the Japan entity sends employees the declarations for dependents, insurance premiums and housing loans, then checks the answers against the year's payroll. Check whether the vendor loads the refund or collection into the December run. Ask whether it also chases forms in Japanese, judges whether a dependent qualifies, and reconciles pay made outside the Japan payroll during the year. Our guide to year-end adjustment for a foreign-owned subsidiary walks through the full cycle.

3. Municipal filings: resident tax and salary payment reports

Resident tax is collected by the employer through special collection (特別徴収, tokubetsu choshu). Under Local Tax Act Art. 321-5 (e-Gov), the employer deducts the amount on the municipality's notice in monthly installments from June to May and remits each one by the 10th of the following month. When an employee leaves, the employer stops collecting and, under Local Tax Act Art. 321-5(3), files a notice with the municipality showing what was already collected. Each municipality sends its own notice, so the Japan entity may deal with several municipalities.

Each January the employer also files the salary payment report (給与支払報告書, kyuyo shiharai hokokusho) with the municipality where each employee lived on January 1, by January 31. According to NTA Tax Answer No. 7411 (Income Tax Act Arts. 225 and 226), the withholding slip (源泉徴収票, gensen choshu hyo) goes to the tax office by the same January 31 deadline. For filings made by December 31, 2026 this covers only employees above set thresholds, for example over 5 million yen for a year-end-adjusted employee. From January 1, 2027 it covers almost every employee.

The same NTA page states that a salary payment report filed with the municipality on or after January 1, 2027 counts as filing the withholding slip with the tax office. That makes the January 2027 cycle the first one where a complete municipal filing does double duty. A missed municipality from January 2027 leaves a gap in both places.

4. The bonus payment report

Every bonus triggers a social insurance filing. The employer must submit the bonus payment report (賞与支払届, shoyo shiharai todoke) to the Japan Pension Service within 5 days of the payment date, per the Japan Pension Service bonus guidance. The standard bonus amount is the gross bonus rounded down to the nearest 1,000 yen. It is capped at a cumulative 5,730,000 yen per fiscal year for health insurance and 1,500,000 yen per month for pension.

A global vendor may withhold correctly on the bonus but stop there.

5. The 36 Agreement overtime check

An employer may require overtime or holiday work only after concluding a written labour-management agreement under Article 36 (36協定, saburoku kyotei) and filing it, per Labour Standards Act Art. 36 (e-Gov). Article 36 sets a ceiling of 45 hours a month and 360 hours a year. A special clause can raise this to 720 hours a year, with overtime plus holiday work under 100 hours in any month, an average of no more than 80 hours over any 2 to 6 months, and no more than 6 months a year above 45 hours.

The payroll vendor sees overtime hours, so it is the first to know when an employee is close to a limit. Check whether its template only calculates the premium. The Japan entity has to compare the monthly hours with the agreement and act before the limit is crossed. Someone also has to renew the agreement before it expires. Our post on the 36 Agreement and working-hours rules a global HR team does not expect covers the agreement itself.

A RACI for Japan payroll across HQ, the vendor, the Japan entity and AQ

The table assigns one accountable party (A) per step. R is responsible for doing the work, C is consulted or supplies data, and I is informed. The Japan entity is accountable throughout because it is the employer and the filer. AQ is responsible for the Japan-specific work, with the sharoushi-reserved filings prepared and submitted by the licensed sharoushi we coordinate with.

Step	Deadline	HQ	Global vendor	Japan entity	AQ coordinating a licensed sharoushi
Monthly gross-to-net and payslips	Each payday	I	R	A	C (checks Japan inputs)
Withholding tax remittance	10th of the following month	I	R (amounts)	A (pays)	C
Health and pension acquisition and loss notifications	Within 5 days of hire or leaving	I	C (hire and leaver data)	A	R
Employment insurance acquisition and loss notifications	By the 10th of the following month / within 10 days of leaving	I	C	A	R
Bonus payment report	Within 5 days of the bonus	C (approves amount and date)	C (bonus payroll)	A	R
Labour insurance annual renewal	June 1 to July 10	I	C (annual wages)	A	R
Standard remuneration base report	By July 10	I	C (April to June pay)	A	R
Resident tax special collection and leaver notices	Monthly from June; remit by the 10th	I	R (deducts)	A	R (loads notices, files leaver notices)
36 Agreement drafting and annual refiling	Before overtime starts; before expiry	I	C	A	R
Monthly overtime check against the agreement	Monthly	I (escalations)	C (hours data)	A/R	C
Year-end adjustment	December payroll	C (pay made outside Japan payroll)	C (loads refund or collection)	A	R
Withholding slips and salary payment reports	January 31	I	C (annual totals)	A	R
Report on benefits granted by a foreign parent (equity)	March 31	C (grant and vesting data)	I	A	R
Vendor contract and this RACI	Before go-live	A	C	R	C

The withholding remittance date follows NTA Tax Answer No. 2505. Employers with fewer than 10 employees on a regular basis can apply to remit twice a year instead, by July 10 and January 20. The equity row applies only when HQ grants shares or options to Japan staff. The NTA filing guide for the report on economic benefits from a foreign parent (Income Tax Act Art. 228-3-2) sets the deadline at March 31 of the following year.

Where the split usually breaks

The common failures are handoffs, not calculations. The first is the leaver. HQ HR closes the employee in the global system, the vendor runs a final payslip, and nobody files the insurance loss notification or the resident tax leaver notice. The fix is a leaver checklist that the vendor's termination event sends to the Japan side on the day it is entered, not at month end.

The second is the bonus approved late. When HQ confirms a Japan bonus a few days before payday, the 5-day bonus payment report window starts on the payment date whether or not anyone in Japan knows the bonus was paid. Put the Japan entity and the sharoushi on the bonus approval distribution list.

The third is pay outside the Japan payroll. Sign-on bonuses, allowances paid by HQ and equity vesting all affect year-end adjustment or the March equity report. HQ is the only party that sees them. Make it a standing December data request from the Japan entity to HQ payroll, with a named sender and a date.

The fourth is the provider change mid-year. If the vendor or the local partner changes during the year, the year-end adjustment needs the full year's figures from both systems. Our guide to transitioning Japan payroll between providers without a compliance gap sets out the cut-over sequence.

Questions to ask a global payroll vendor in an RFP

Ask these in writing and attach the answers to the contract.

1. Which Japan filings are in the standard fee, and which are extra? List the acquisition and loss notifications to the Japan Pension Service and Hello Work, the bonus payment report, the standard remuneration base report, the labour insurance annual renewal, year-end adjustment, the salary payment reports and the withholding slips one by one.
2. Who prepares and submits the social and labour insurance filings? If it is a partner, give the sharoushi corporation's name and registration, and say whose name appears on the filings.
3. Does the year-end adjustment include collecting and checking employee declarations in Japanese, or only loading results we supply?
4. How do you handle resident tax notices from several municipalities, including mid-year changes and leaver notices?
5. What triggers a Japan filing when an employee joins, leaves or receives a bonus? How many days after the event does your Japan team receive the data?
6. Do you report monthly overtime against the limits in our 36 Agreement, or only calculate premiums?
7. Can your system produce the April to June figures for the July base report and the annual totals for the January 31 filings in the formats the authorities accept?
8. If we change provider mid-year, what data do you hand over for year-end adjustment, and by when?
9. Who on your side reads Japanese government notices sent to our registered office, and how fast do they reach you?

The software question deserves its own review. Our comparison of global and domestic payroll software for Japan covers which Japanese outputs each type produces natively.

Working with AQ Partners. Our Tokyo team provides monthly payroll coordination with a licensed sharoushi, payroll software setup and transition, year-end adjustment and the annual payroll statutory reports for foreign-owned subsidiaries whose payroll runs through a global vendor. We can take the Japan column of the RACI above and work alongside your existing provider. Book a consultation to review your Japan payroll split.