company employees working at the tables in an open office

The recruitment and working culture in Japan differs somewhat from other countries and finding the right employee with the necessary set of skills might be difficult. That is why recruiting agencies are vital players in matching the available talents with the companies so that both can benefit from the cooperation.

As the demand for the highly skilled professionals is growing fast, so does the need for the recruitment agencies. This guide will explain what types of recruitment licenses there are in the recruitments business in Japan and how to obtain them. Please note, that this is the general outline, and the requirements may differ case-to-case. Thus, make sure to consult the Ministry of Health, Labour and Welfare before applying for the license.

What to keep in mind when starting a recruitment business?

Most of the points mentioned below will be explained in more details in the “requirements” section. However, while you are in the preparation stage, consider the following specifics of the recruitment business in Japan.

You will need at least two people to start your recruiting company: the head of the company and the manager. Quite often you will also be required to appoint a manager’s representative. As your agency develops, a career development manager will come into play to guide and consult your workers. Thus, consider your future partners in advance.

You will have to take care of insurances for your employees (at least employment insurance and compensation insurance). This will be a part of your business expenses that the government pays a lot of attention to.

Employment types where you cannot dispatch workers

Below are the categories of work that require special education and training. Thus, you cannot dispatch the workers to these industries. Also, these areas may need a separate license to operate as an individual professional or as a company:

  • Port transport industry
  • Construction industry
  • Security industry
  • Medical treatment at hospitals
  • Lawyers’ services industry

Types of recruitment licenses

There are two ways to group the recruitment licenses. One is by the type of incorporation, the other one is by the type of the business you are involved into.

As for the type of incorporation, a recruitment license can be issued to the private entity (individual) or a legal entity (corporation, company, etc.).

Depending on the kind of services you offer the recruitment licenses can be divided into the following categories and subcategories:

  • The employment placement service license (presuming the HR company for job searching and headhunting for permanent employment):
    • Free charging employment license, or
    • Free employment placement license.
  • Work dispatching service license (presuming introduction of workers for temporary employment with the possibility of further permanent employment, provided that candidate suits the company):
    • License for general worker dispatching
    • Specified worker dispatching (no longer available*)

* The so-called special recruitment agencies have been replaced by the small-scale recruiting agencies due to new regulations of 2016. Current licenses for running a special recruitment agency are valid until September 29th, 2018. If you have started this type of company, you need to renew the license.

This guide will explain how to get the free charging employment license and a license for general worker dispatching as the two most popular types of licenses in the recruitment business. There are some differences in the scope of action for these recruitment licenses and the associated agencies, and subsequently, in the set of documents you need to prepare. If you are not sure what type of recruitment license you should proceed with, consult the local department of the Ministry of Health, Labour and Welfare in your area.

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Requirements for the recruitment license

The requirements for the recruitment license in order to start a free charging employment placement company are but not limited to:

  • Net assets of 20 million yen per every office. The amount of assets should be more than 1/7 of the total debt. However, the bank loan to start a company is not considered to be a debt.
  • Cash or bank deposit of a 1.5 million yen per each office in your network. It serves as a safety buffer for salaries.
  • Appointing a manager (also referred to as an administrator or a responsible person). The license of a manager is valid for 3 years. The person appointed:
    • should be a full-time worker. The future manager cannot be an employee of another company when he or she is appointed as a manager in your company. However, this person can continue working in another company while the documents for your agency are being processed (it takes about 2-3 months). As soon as you get the license, the manager should only be working for your company.
    • should have at least 3 years of relevant experience (supervisor, manager, head of the department, etc. where he or she had had the subordinates); or
    • can take a lecture* at the local office of the Ministry of Health, Labour and Welfare (links). It lasts about 7 hours and there is no test after the lecture. The cost of the lecture is 10 000 yen.
    • There should be at least one manager per every 100 workers. If your agency has less than 100 people, you still need to appoint a full-time manager.
    • Auditors cannot be managers.
  • Appointing a representative manager for when the main manager is absent. In order to become a representative manager:
    • Having experience as an executive is not required.
    • Taking a lecture is not required.
  • Appointing a career consultant. This person will be responsible for the developing careers of the dispatched workers. For example, for the development of skills and overseeing their overall experience. In order to become a career consultant one should:
    • take a lecture in human resources development promotion.
    • have at least 3 years of experience in HR.
    • prepare a manual about human resources development in your agency.
  • Setting up an office space over 20 m2 (but not in the area of adult entertainment business). You have to have a meeting room and a seat for the manager.
  • Fulfilling any additional requirements that the authorities might set for your particular case.

The requirements for the recruitment license in order to start a general worker dispatching undertaking are but not limited to:

  • Net assets of 5 million yen per every office.
  • Cash or bank deposit of 1.5 million yen per each office in your network. It serves as a safety buffer for salaries.
  • Appointing a manager (also referred to as an administrator or a responsible person). The license of a manager is valid for 5 years. The person appointed:
    • should be a full-time worker. The future manager cannot be an employee of another company when he or she is appointed as a manager in your company. However, this person can continue working in another company while the documents for your agency are being processed (it takes about 2-3 months). As soon as you get the license, the manager should only be working for your company.
    • This person should have at least 3 years of work experience (it is not a problem if this person has no experience in a managerial position as an executive, supervisor, etc.)
    • can take a lecture* at the local office of the Ministry of Health, Labour and Welfare (links). It lasts about 7 hours and there is no test after the lecture. The cost of the lecture is 10 000 yen.
    • There should be at least one manager per every 50 workers. If your agency has less than 50 people, you still need to appoint a full-time manager.
    • Auditors cannot be managers.
  • Appointing a representative manager for when the main manager is absent. In order to become a representative manager:
    • Having experience as an executive is not required.
    • Taking a lecture is not required.
  • Appointing a career consultant. This person will be responsible for the developing careers of the dispatched workers. For example, for the development of skills and overseeing their overall experience. In order to become a career consultant one should:
    • take a lecture in human resources development promotion.
    • have at least 3 years of experience in HR.
    • prepare a manual about human resources development in your agency.
  • Setting up an office space over 20 m2 (but not in the area of adult entertainment business). You have to have a meeting room and a seat for the manager.
  • Fulfilling any additional requirements that the authorities might set for your particular case.

* A person can take both lectures if needed.

Needed documents

For a free charging employment placement company:

  • Application form.
  • Business plan (for each office you are setting). Make sure to include “operation of work dispatch business” as the business activity in your business plan.
  • Articles of incorporation.
  • Copy of the commercial register.
  • Certificate of director’s domicile with the address.
  • Certificate of manager’s domicile with the address.
  • Resume of the director. Try not to leave blank spaces. If there are periods of unemployment, one can write, for example, “looking for a job” or “making preparations to start a company”, etc.
  • Resume of the manager following the same rules as the directors’ resume.
  • Documents regarding the right to use an office space (lease contract, permit from the landlord, etc.).
  • A simple office plan depicting the organization of space in the room.
  • A rule to administer personal information: trainings for workers are considered to be a part of their working time and need to be paid accordingly.
  • A roster of all employees.
  • Documents explaining and proving that the company has the system and plan for a career development.

 

For a general worker dispatching undertaking:

  • Application form.
  • Business plan (for each office you are setting). Make sure to include “Operation of work dispatch business” as the business activity in your business plan.
  • Articles of incorporation.
  • Notification about the amount of fees.
  • Copy of the commercial register.
  • Certificate of director’s domicile with the address.
  • Certificate of manager’s domicile with the address.
  • Try not to leave blank spaces. If there are periods of unemployment, one can write, for example, “looking for a job” or “making preparations to start a company”, etc.
  • Resume of the manager following the same rules as the directors’ resume.
  • Latest balance sheets (statement of changes in the net asset).
  • Documents regarding the right to use an office space (lease contract, permit from the landlord, etc.).
  • A simple office plan depicting the organization of space in the room.
  • Chart of fees.
  • Rule of personal information: trainings for workers are considered to be a part of their working time and need to be paid accordingly.
  • Certificate proving that the manager has been to the seminar.
  • Explanation of the business type and area that your company is dealing with. If you do not have this one, you will not be able to turn down candidates from the areas that you are not specifying in.

Application procedure

  1. Consult the Ministry of Health, Labour and Welfare about the documents you need to prepare in order to be able to apply for your recruitment license. The set of requirements may differ case-to-case.
  2. Managers and managers’ representatives have to take lectures at the Ministry of Health, Labour and Welfare and receive their certificates before you apply for the recruitment license.
  3. Prepare an office space and make sure it complies with the requirements before you apply for your recruitment license.
  4. When your papers and office are ready, apply for the recruitment license.
  5. It will take about 2 or 3 months to process your application. If there is anything else you need to do or submit during this time, you will be informed about it.
  6. Wait for the decision.

Where to apply?

At the Labor Department of the Ministry of Health, Labour and Welfare in your prefecture.

Application Fee

The fee consists of 50 000 yen payment to the government and 90 000 yen payments for the application itself. Thus, the total sum is about 140 000 yen.

The renewal of the license costs 55 000 yen.

Summary

Recruitment license for the employment agencies comes with the responsibility to handle the career development of the potential employees and some of their insurances. Setting up the recruitment agency requires a lot of preparations: setting up an office, preparing the business plan and articles of incorporation, taking lectures and many more. Be sure to obtain your license before the start of operations in order to keep clear of fines and legal consequences for running a business without a license.

You can always find up-to-date information regarding the application fees and procedures as well as guidelines for your particular case from the Ministry of Health, Labour and Welfare.

Japanese Work Visa FAQ

How long does it take to obtain the recruitment license?

Processing of the applications usually takes around 2-3 months from the application date.

What laws regulate the recruitment license in Japan?

Workers Dispatching Law of 1985 with the amendments of  2004 (in Japanese). Other laws are listed by the Japan Institute of Labour Policy and Training.

Do I need a license if I introduce people free of charge?

Yes, if that’s your main line of business as the recruitment agency.

What will happen if I operate without a recruitment license?

The fine for operation in a recruitment sector without a license is up to one million yen.

Can my agency start working while I wait for the license?

No, it is impossible. You can only start operations after you get your license approved. If you will not get a license, technically you will be operating illegally without a license. You might get fined.

I want to run a small-scale recruitment company (former special recruitment company). What are the requirements?

First of all, you need to consult the Ministry of Health, Labour and Welfare. They will provide you with the most recent information about the matter. For a company that deals with 8-10 employees you will need around 10 million yen in assets and to meet the requirements described for other license types in the guide (hiring a manager, setting up an office, etc.)