Japan Employment Agency License: Requirements and Application

Running a fee-charging recruitment (employment placement) business in Japan requires a license from the Minister of Health, Labour and Welfare under Article 30 of the Employment Security Act (職業安定法). Applications are made through the Prefectural Labour Bureau with jurisdiction over the business operator. You must meet requirements covering financial base, an employment placement manager, the business office, and systems for managing personal information, among others.

What is a fee-charging employment placement business?

Employment placement means receiving job offers and job applications and arranging for an employment relationship to be established between employers and job seekers. It is divided into fee-charging and free placement depending on whether fees are received. A recruitment firm that receives placement fees from companies is a fee-charging employment placement business.

Job sites that merely post vacancies are treated as job information provision businesses and are distinguished from employment placement. However, activities that amount to arranging employment, such as selecting job seekers and recommending them to companies, may be judged to be employment placement.

Carrying on fee-charging employment placement without a license is subject to penalties under the Employment Security Act. An overseas recruitment firm introducing candidates to Japanese companies may also need a license depending on how its business in Japan is structured, so check in advance.

How it differs from worker dispatch

If you run both businesses, you need each license. The dispatch license is explained in Worker dispatch business license. Note that a fee-charging employment placement business cannot place people in port cargo handling or construction work.

Licensing requirements for fee-charging employment placement

The main requirements are as follows. For a corporation, the review also checks that none of the directors falls under any grounds for disqualification.

How the financial base is assessed

The financial base is generally assessed on the balance sheet for the most recent fiscal year. For a newly established corporation, it is checked using documents from incorporation. If you incorporate with low capital, you may not meet this requirement. If you plan to run a recruitment business, decide the amounts at the incorporation stage.

Employment placement manager training

The training is delivered by organizations designated by the Ministry of Health, Labour and Welfare. For a new license application, the course must have been completed within the five years before the date the application is accepted. Sessions can fill up, so book early.

Application process and required documents

1. Consult the Labour Bureau in advance to confirm the requirements and required documents
2. Have the employment placement manager complete the training course
3. Secure a business office and update the business purposes in the articles of incorporation
4. Prepare the application documents and submit them to the Labour Bureau
5. After review by the Labour Bureau and consultation with the Labour Policy Council, the Minister of Health, Labour and Welfare grants the license
6. Receive the license certificate and start the business

The business purposes in the articles of incorporation (定款) should state that the company conducts employment placement business. How to draft business purposes is explained in Drafting business purposes in the articles of incorporation.

Internal rules to put in place before applying

The rules on proper management of personal information set out who is responsible for handling personal information, staff training, and how to respond to requests from individuals for disclosure or correction. The rules on business operations set out the procedures from receiving job offers and applications through placement to handling complaints. If you also run other businesses such as worker dispatch, the review checks that employment placement is managed separately from them.

Main application documents

• Application for an employment placement business license (Form 1)
• Employment placement business plan (Form 2)
• Articles of incorporation and certificate of registered matters
• Copies of directors’ certificates of residence and their résumés
• Most recent balance sheet, income statement and similar documents
• Documents proving the right to use the business office (such as the lease)
• Rules on proper management of personal information, rules on business operations and similar
• Documents proving the employment placement manager’s completion of the training course

License costs and validity

Licensing takes a certain amount of time, including the council procedure. Work back from your planned launch date and apply with time to spare. Rent for the office and the manager’s salary are incurred while you prepare and wait for the license, so include them in your funding plan. Each Labour Bureau publishes its submission cutoffs and indicative license dates.

Fee rules and post-license obligations

Placement fees are in principle received from the employer. You choose between a “capped fee” system, with a ceiling set by Ministry of Health, Labour and Welfare ordinance, and a “notified fee” system based on a fee schedule filed in advance. With limited exceptions, fees cannot be collected from job seekers.

Under the notified fee system, fees are commonly set as a percentage of the hired person’s annual salary. Fees actually received are limited to the range of the notified fee schedule. Whether you offer a refund scheme if a hire leaves early is also one of the items to be disclosed.

After licensing, the main obligations are as follows.

• Disclose information such as fees, the number of people placed, the number who left early and any refund scheme, online or by other means
• Clearly state working conditions, fees and other terms to employers and job seekers
• Handle job seekers’ personal information only within the scope of the business purpose
• Submit a business report every year
• File notifications of any changes to offices, directors or other matters

Since April 2021, revised guidelines have prohibited encouraging job applications by offering job seekers money under names such as a “congratulatory hiring bonus”. You must also not encourage people placed through your firm to change jobs for two years after they are hired.

Points to note for foreign companies and placing foreign talent

Running a placement business from overseas without a base in Japan makes it complicated to determine what is covered by the license and which procedures apply. The common approach is to establish a Japanese company and obtain the license through it.

• If a representative or director is a foreign national, copies of certificates of residence, résumés and similar documents must still be submitted. Documents in foreign languages must be accompanied by Japanese translations.
• Choose as employment placement manager someone who has completed the training and can manage the business in line with Japanese law.
• When placing people living overseas with Japanese companies, you may be asked to confirm the laws of the other country and provide information on partner organizations there.
• People you place need a status of residence (在留資格) that matches the job in order to work in Japan. For the hiring company’s procedures, see Hiring foreign employees and work visas.

Arranging employment for someone who is not permitted to work may expose you to the offense of facilitating illegal employment under the Immigration Control Act. Put in place a process to check work eligibility on the residence card (在留カード) at the placement stage.

How TIMOA can help

For a fee-charging employment placement license, the asset requirements, manager training, office and internal rules all need to be in place before you apply. If you want to start recruitment at the same time as incorporation, plan from the amount of capital and the content of the articles of incorporation. After licensing, annual reporting and renewal preparation continue.

Working with partner labor and social security attorneys (社会保険労務士) and administrative scriveners (行政書士), TIMOA supports company formation, preparation of the license application and building your post-license operating framework. For details of our services, see Permits & Financial Licenses.