The benefits of a flexible workforce are well known in many parts of the world. However, some businesses in Japan remain cautious about hiring professional contractors.
Unfortunately, a number of misconceptions prevail regarding the bureaucracy, legality and quality of talent available for non-permanent postings.
Japan offers a number of options for hiring temporary workers that may suit the needs of individual firms. Understanding the benefits and drawbacks of each contract type may be valuable for employers looking for a competitive advantage.
Haken (temporary) contracts allow recruitment firms to employ an individual and dispatch them to work for a business. The employer supervises and manages the temporary staff (temps), providing tasks and day-to-day management, while the recruitment firm handles all other administrative aspects. In addition, the recruitment firm will typically issue monthly invoices based on the hours worked by a temp.
The invoice covers all recruitment fees, as well as direct costs (wages) and indirect costs (employment insurance, health insurance, and paid holiday entitlements). The duration of the contract is agreed in advance, according to a firm’s business needs.
The firm has the option—rather than obligation—of offering the temp a permanent post at any time, while their contract may be extended as required.
The main disadvantage of haken contracts is that some Japanese professionals have a negative view of temporary positions. They often prefer permanent, temporary-to-permanent or direct-contract employment options.
Although haken workers are now treated similarly to permanent employees and have gained more employment rights, it can sometimes be difficult to attract in-demand professionals to haken contracts.
However, because haken staff are often available at short notice, this type of contract is ideal for employers who are looking to fill short- or long-term needs such as covering one day of sick leave or strategically adding professionals to an existing team for longer-term projects.
Shokai yotei haken (temporary-to-permanent) contracts are a great solution for firms that require a worker on a permanent basis but cannot offer a permanent position straightaway. This may be for a number of reasons: the firm want to see how a new role will evolve, customer demand is uncertain, or the firm is waiting for permanent headcount or budget approval. In addition, prospective candidates may require time to prove themselves in the role.
During the first six months of a shokai yotei haken contract, the recruitment firm employs the professional. After six months, the hiring firm must convert the worker to a permanent employee or end the contract.
While the six-month time limit is a drawback, employers have to make a hiring decision. This period is useful for assessing a worker before committing to a permanent hire. Another benefit is that more job seekers are attracted to shokai yotei haken than to haken opportunities, because the firm is showing their intent to hire on a permanent basis within a six-month period.
Keiyaku (direct) contracts are very common in Japan. Unlike haken and shokai yotei haken contracts, the worker is employed directly by the hiring firm, and not by the recruitment firm.
The recruiter sources, screens and submits candidates but has no actual employment responsibilities. While this arrangement provides employers with greater control of their workers, all employment costs and administrative duties fall to the hiring firm.
The duration of keiyaku contracts vary significantly but typical assignments range from three to 12 months.
In recent years, the Japanese labour law has evolved to offer workers stronger rights and protection, while more attractive opportunities have become available on contract as businesses try to compete globally in increasingly volatile market conditions.
As a result, more professionals are considering contract work as part of their career plan and the stigma surrounding temporary contract work has eased. This has helped increase the number of skilled workers that are open to all professional contracting options.
When selecting a professional contracting option, employers should consider factors such as their immediate skills shortages, short- and long-term staffing goals, and budget restrictions.
Professional contracting is a great way for businesses to add skilled staff while maintaining a flexible workforce.
