JAPAN Trends and Developments Contributed by: Hiroaki Matsui, Mari Ueki, Yui Omoteyama and Rei Yamaguchi, AI-EI Law Firm
Digital Money Payment of Wages As a general rule, employers must pay the full amount of wages in currency (Japanese yen) directly to the worker (Article 24, paragraph 1 of the LSA); however, if the worker agrees, employers may pay a worker’s wage by transfer to the worker’s account at a bank or other financial institution designated by the worker (Article 7-2 of the Ordinance for Enforcement of the LSA). In addition, with the increase in cashless payments and diversification of remittance services, there has been a certain demand to receive wages in digital money. Taking this into consideration, it has become possible to pay wages in digital money since April 2023.
However, in order to implement this system, it is nec - essary to select a fund transfer service provider from among those designated by the MHLW, conclude a labour-management agreement, and obtain the con - sent of each individual worker. Furthermore, this sys - tem is intended solely for payment and remittance purposes and is not a deposit system. As such, there is a maximum acceptance limit, and any transfers exceeding this limit will be automatically withdrawn to a deposit account. Additionally, payments in the form of non-cashable points or cryptocurrency are not permitted. Although this system has been operational since April 2023, it became possible for companies to actually pay wages using digital money on 1 April 2025, when four companies were designated as fund transfer ser - vice providers by the MHLW.
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