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Full commission system in Japan

Full commission system in Japan

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1) You can not hire an employee with full commission system basis in Japan
2) Partial commission basis is addmitted in Japan
3) If your company hopes to adopt full commission basis, it can use Subcontracting system (Gyomu itaku).
4) How to use Subcontracting system
5) Demerit of Subcontracting system
 

You can not hire an employee with full commission system basis in Japan

Some companies in Japan hope to hire an employee with full commission basis (Kanzen Buai Sei = 完全歩合制).

In the case of full commission basis, if your employee does not make result, your company does not pay any fee to him.

For example, a real estate broker hires a person with full commission basis, if he does not find any purchasers of specific real estate, your company does not pay any salary to him.

However this treatment is against labor standard law of Japan.

Because if it is admitted, employees can not sustain their living.

Though your company takes over a person as employee, if it does not pay any salaries to him, it is unfair.

(Guaranteed Payment at Piece Rates)
Article 27 of Building standard law of Japan
With respect to Workers employed under commission system , the Employer shall guarantee a fixed amount of Wage proportionate to working hours.

Partial commission basis is addmitted in Japan

Though your company can not adopt full commission basis to your employee, it can use partial commission system.

If average salary of the work is 1,000,000 yen, your company needs to pay around 600,000 yen to the employee.

So, if an employees work in your company for 40 hours per a week and pays only 100 yen to him as monthly salary and as for other salary, it uses commission system, it is illegal.

If your company hopes to adopt full commission basis, it can use Subcontracting system (Gyomu itaku).

If your company does not take over a person as employee of your company, but it uses the person as sole proprietor, it is available.

The person is not employee of your company.

He is independent from your company and he operates his business according to his decision.

So, he will file tax return by himself every year.

How to use Subcontracting system

Your company can not designate his work place, working hour, manner of work.

As far as the person can make profit to your company, he can receive fee from your company. 

If your company designates work place, working hour, manner of work., even if name of contract paper is Subcontracting, it is deemed as employment contract.

If it is deemed as employment contract,the person is your employee.

So, he will charge your company to pay unpaid salary.

Demerit of Subcontracting system

In the case a person is not employee of your company, but he is independent sole proprietor, he can not use a license owned by your company.

Necessary license to operate business in Japan ➡”

In order to operate real estate broker business, recruitment business, insurance business, business operator needs to have necessary license.

Even if your company has these licenses, the independend sole proprietor can not use the license.

So, he can not operate the business legally.

If he uses necessary license by using name of your company and your company admits it, it will receive criminal penalty.

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