Japan is internationally recognised for its highly-skilled workforce and advanced legal framework, which, together, foster an innovative working environment. However, navigation of Japanese labour laws and employment regulations is known for its complexity. For example, misclassifying employees, failing to compensate for overtime work, or engaging in unfair hiring practices can result in significant fines for employers.
Labour laws in Japan have been changing more rapidly than in many other developed nations. These transformations are geared towards enhancing workplace conditions and employee well-being. To aid businesses in navigating these intricate legal landscapes, Japan has the Sharoushi system.
A Sharoushi, a legally certified expert for both employers and employees, plays a pivotal role in ensuring the smooth adherence to labour regulations and social security safety nets, thereby preserving operational efficiency. Below, we walk you through what a Sharoushi is, the services they provide, the types of Sharoushi, and the role they play in the Japanese society.
What is a Sharoushi? What do they do?
The mission of a Sharoushi, as stated on The Act of Concerning Labour and Social Security Attorney (Sharoushi Act) of 1968, explains, “A Sharoushi shall contribute to the smooth implementation of labour and social security related laws as well as to the welfare of employees and the sound growth of industries.” The national qualification to certify as one is known to be one of the most difficult certificate examinations in Japan.
While a Sharoushi provides legal advisory services to all businesses, small and medium-sized enterprises (SMEs) are typically the clients for the independent-type Sharoushi, as larger businesses often have an in-house ones.
A Sharoushi typically provides a one-full stop service including making employers aware of the latest legal requirements. They also have exclusive services permitted by Japanese laws. This is work that only lawyers and Sharoushi can do for a certain fee. It is strictly prohibited by Japanese law for anyone else to engage in this as a profession.
Read also: Q4 Asia Labour Law Update
What services do they provide?
- Preparation and submission of documents
designated by the Japanese law under the Ministry of Health, Labour, and
Welfare (MHLW):
- Initial labour and social insurance set up for businesses,
- Annual reporting and renewal of social insurance reports, labour insurance reports,
- Application for subsidies,
- Revision of rules of employment,
- Registration of new team members,
- Deregistration of existing team members.
- Providing HR Consultation / Advisory Services for Labour Management
- Conducting Payroll Calculation on Behalf of
Employers
- All employers in Japan are required to maintain payroll records.
- Preparation of Books and Documents Designated by Law
- Preparation of books and documents in accordance with labour and social insurance laws and regulations,
- Preparation of worker lists and wage ledgers,
- Preparation of work regulations and various labour-management agreements, etc.
- Proxy Service for the Procedures for Dispute Resolution
- They can act as a proxy on mediation for either party and take the role of a mediator.
- Consultation on Pensions
Note: “Preparation and submission of documents designated by the Japanese law under the Ministry of Health, Labor, and Welfare (MHLW)” and “Preparation of Books and Documents Designated by Law” are exclusive services provided by Sharoushi professionals.
How many types are there?
There are three types of Sharoushi:
- Independent-type: This type runs their own office and practices services for clients on an individual basis. They are allowed to work for multiple companies and act as an agent for the respective companies.
- In-house: This type is employed by a company as an internal practitioner. They are only allowed to perform the business of that company and does not act as an agent for the company.
- Other registration Sharoushi: This type is only registered with the Sharoushi Association, which means they cannot engage in any activities as a Sharoushi outside the association.
What role does they play in Japanese society?
- Complementary role to the Government – Sharoushi collaborate closely with various administrative agencies of the Ministry of Health, Labour, and Welfare (MHLW), including labour inspection offices, public employment security offices, pension offices, and health insurance offices. This collaboration is significant as social security enrolment continues to expand in Japan.
- Employer Obligations, Advisory Function to Businesses – Many employers, particularly SMEs often lack sufficient knowledge about labour and social insurance laws, frequently engaging an independent- type Sharoushi to play the role of a legal consultant.
- Contribution to the Stability of Industry Relations – A Sharoushi who passed a specific examis entitled to act as proxy in the Alternative Dispute Resolution (ADR) procedures and to serve as an attorney and mediator.
- Enhancing Favourable Work Environments – Sharoushi initiatives contribute to the enhancement of favourable working conditions and elevating productivity within businesses, ensuring workplace compliance. Moreover, there is a growing need for labour audits conducted by Sharoushi professionals.
What is it like working with an in-house service vs. outsourcing?
| Working with an in-house service | Outsourcing (Independent-type) |
| Easier to maintain consistency | A more flexible option as can be cost-effective in the short term, especially for small businesses |
| Can be more cost-effective in the long term if there is a high volume of Sharoushi needs | Gives you access to a wider pool of Sharoushi with different skills and experience |
| Allows for close collaboration with related parties in other departments within the company, making it easier for the entire company to resolve issues | Can free up your time and resources to focus on other aspects of your business |
| Can be easier to scale up or down as quickly as needed |
The Strong Potential of Sharoushi in Emerging Economies
Today, other emerging economies are enhancing their labour laws and social insurance systems through the implementation of new laws and the establishment of fresh systems including:
- Indonesia – The Japan Federation of Labour and Social Security Lawyers Association helped establish the Sharoushi system in Indonesia. Learn more about doing business in Indonesia.
- Vietnam – Sharoushi Federation introduces Sharoushi System in Vietnam – a delegate from the Vietnam Social Security (VSS) visited Japan to study about the country’s social security system in April 2023. Learn more about doing business in Vietnam.
- South Korea – The Sharoushi system has been applied. Learn more about doing business in South Korea.
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