Gender Pay Gap Disclosure Law Introduced in Japan

Posted on 21 August 2023 by IRIS FMP

17 countries across the globe currently report on the gender pay gap and Japan is soon to be the 18th on that list. From the 8th of July 2023, certain companies with operations in Japan will need to introduce gender pay disclosure reporting across their organization and make this information public-facing. From increasing opportunities for development to encouraging more women into the workplace, gender pay disclosure reporting aims to promote greater equality in Japan.

Of any G7 nation, Japan demonstrates the largest gender pay gap at 22%. While this figure might seem impressively low, the G7 average equals 11.7%, making the gender pay gap 10.3% more than the average. In the 2021 edition of the Gender Gap Index, Japan placed 120 out of 156 countries, highlighting that, out of all the developed countries on the list, it scored low for gender equality.

This has led Japan to take further action and greater steps to introduce women into the workplace. As well as government targets, larger corporations are now responsible for empowering women within their operations.

What is the Gender Pay Gap Disclosure law in Japan?

The gender pay gap disclosure law in Japan has been designed for larger corporations to report on gender balance throughout their organization. As a result, within three months of the end of the fiscal year (March-June), companies with more than 300 employees will need to produce and submit a report that covers the overall gender pay gap within their business.

In addition to this, they must also submit evidence of workplace initiatives and improvements to support work-life balance. Doing so should see more women introduced into the workplace and improved opportunities for progression. The country has set itself a target to integrate women into at least 30% of managerial and executive roles by 2030.

Why is a gender pay gap disclosure happening in Japan?

It’s no secret that Japan has been trying to increase the number of women in the workplace for a while now. From improving job opportunities to creating career ambition, Japan is aiming to improve workplace equality. However, this comes as a potential solution to another problem the country is facing: an aging population and a declining birth rate.

The correlation between these points is that caregiving is still widely regarded as a woman’s responsibility within Japan. In one study, around 50% of Japanese households saw women acting as caregivers for one or more family members, with women in their 30s and 40s more likely to assume responsibility for care. Essentially, this drives a conflict among women who want to expand their careers but feel their family’s caregiving lies solely on them.

The idea behind Gender Pay Gap disclosure is to create a shift in cultural expectations of women. By reinforcing these measures across larger corporations, it should start to trickle down into society and inspire younger women to work. Likewise, it will also aim to tweak other perspectives of women, especially from those who don’t see women as valuable assets in the workplace.

As well as inspiring a cultural shift, employers are also trying to reach employment targets that were previously set but have not been achieved. For example, Japan has been working to see around 30% of managerial positions being held by women. Unfortunately, in 2022, this figure had only reached 9.4%. The expectation now is that this will be achieved by 2030.

Colleagues gathered around a laptop

What are the regulations required for the Gender Pay Gap Disclosure law in Japan?

The gender pay gap disclosure law is currently being introduced for larger corporations with 301+ employees on their payroll. As a result, larger companies will need to disclose information based on requirements from two categories. These are shown below.

It’s worth noting that small and medium-sized corporations, with less than 300 employees, are exempt from full reporting on the gender pay gap, but there are some expectations that it will be brought in within the near future. At the moment, the expectation for companies with 101-301 employees is to produce and report on certain gender balance information.

Companies with 301+ employees

What is the requirement for large companies?

Larger organizations will need to annually disclose the gender pay gap difference between male and female employees. The report must be completed within three months of the end of the fiscal year, meaning organizations have until the end of June to submit it.

What will large corporations need to report on?

An accurate reflection of gender balance must be reported within the gender pay disclosure. This will include topics like the percentage of male and female employees taking paid leave and the total number of women who have been hired to work at the company within the fiscal year.

For larger companies, information must be disclosed in two categories. These ensure every aspect of the gender pay gap in an organization can be explored and understood. The report will also form part of the Status of Employees section within an organization’s annual securities report. This will enable companies to demonstrate their commitment to reducing the gap and reintroducing women into the workplace.

Category 1

What must be included here?

  • Progress achievements made by the company to expand professional development and opportunities for women.
  • Gender pay gap report for the organization.
  • Percentage of women in different pay grades or scales.
  • The overall gender balance between jobs and roles.
  • Percentage of women hired to work at the company.
  • The total number of men and women that have been reemployed or employed through mid-career hiring initiatives.

Category 2

What must be included here?

  • Initiatives and reports on work-life balance improvements throughout the organization.
  • Average continuous service differences between men and women.
  • Percentage of employees taking some form of parental leave.
  • The overall percentage of men and women who have been continuously employed for over 10 years.
  • Percentage of male and female workers taking paid leave.
  • An average monthly overtime figure for men and women, as well as employment category.

What are the regulations for companies with 101 to 300 employees?

At present, companies of this size aren’t legally required to go into as much detail as larger organizations are. However, there is some expectation that this could change as we head into the future, so corporations should be prepared.

The Gender Pay Gap Disclosure Report isn’t necessary for small businesses

One key difference for companies with 300 employees or less is that there is no legal requirement to disclose the gender pay gap for their company. Instead, companies will need to demonstrate an internal interest and plan to increase opportunities for women in their workplace.

Action plans to be in place for women’s equality across the workplace

Although there’s no requirement to complete the report, companies should be considering how to empower women throughout their business. This will need to be done through data analysis determined by one or more targets from either of the categories above.

Organizations will be responsible for collecting their own data, such as the percentage of women on certain pay grades or the percentage of male and female employees taking paid leave, to determine how their business can provide better opportunities for women.

Additionally, these plans will need to be made available to the general public and submitted to relevant labor bureaus. The idea behind this is that companies will be held accountable for promoting equality in the workplace, while also demonstrating their commitment to reaching government targets.

Colleagues gathered around a laptop

How will the Gender Pay Gap Disclosure law affect US businesses?

US corporations operating in Japan will need to be compliant with incoming legislation. Any organization with over 300 employees must legally produce a gender pay gap report within three months of the fiscal year ending. Smaller corporations with 101-300 employees, must demonstrate action plans across their operational sites.

Data, such as total pay, percentages, and averages, will need to be available across organizations so they can be analyzed and critiqued. A secure payroll system will enable data to be easily retrieved for the report. Companies will need to introduce initiatives that demonstrate a commitment to workplace equality and are backed up by data.

How can IRIS FMP help your organization with the Gender Pay Gap Disclosure law in Japan?

At IRIS FMP, we’ve supported companies in over 135 different countries with payroll and HR solutions. If your organization must now file the gender pay gap disclosure for Japanese businesses, our international payroll service offers a compliant and fully managed solution for you. Enquire now.