Japan Background Checks

Overview

JAPAN VISA™ is able to assist clients with Japan pre-employment background checks.

It is extremely important that appropriate background checks are performed prior to hiring new employees in Japan. A Japan background check should include arranging for someone to interview the candidate in Japanese and undertaking (at least) a basic background check. The basic background check should confirm matters such as residential address, educational qualifications, and prior employment.

Japan Pre-Employment Background Checks Are Important

The cost and time required complete these pre-employment background checks needs to be compared to the cost of a failed hiring decision. Recruiters in Japan often charge around 35% of the candidates first year all in compensation. In addition, a failed Japan hire may do real harm to the business in Japan and tie the Japan entity in expensive litigation

Protection Against Risks Associated With Hiring In Japan

There are numerous risks involved when a foreign company makes hiring decisions in Japan. Japan hiring risks can be divided into four broad categories:
  1. Difficulty Terminating Employees: In Japan, employees have (very) strong rights. Even if an employee has no real basis for a claim, the employer can be forced to expend significant financial and management resources defending the allegations. In addition, the mere making of allegations can damage a foreign company’s reputation. Probation periods and fixed term contracts can useful though such provisions can be challenged in court by an aggrieved employee.
  2. Unsuitable Candidates Cause Damage to the Japan Business: A significant, expensive, and unfortunately common mistake made by foreign companies in Japan is to rely exclusively on interviews and background checks performed only in English. It needs to be remembered that the goal of hiring in Japan is to operate more effectively in the Japanese market. A typical mistake involves selecting a candidate who is fluent (and often charming) in English. These candidates will often have a good sense of what foreign interviewers want to hear. Unfortunately, the characteristics that make an individual suitable in the eyes of foreign management may not translate well when the person is dealing with Japanese clients and customers.
  3. Poor Hiring Choices Lead to Legal Liability: A Japan pre-employment background check can mitigate the legal risk that can flow from a bad hiring decision. Legal risk includes:
    • Suits Brought By the Employee: One goal of a Japan pre-employment background check is to avoid hiring an employee who has a history of making unreasonable claims against former employers.
    • Direct Legal Liability: Where an employee causes harm to a third party, the employer can be held liable for (the equivalent of) negligent hiring. This is especially so if the employee’s behavior could have been identified by a Japan background check.
  4. Internal Control: The Internal Control Environment of foreign companies in Japan is usually weak. The weak internal control environment is a result of –
    • Size of the Japan Operation: The Japan operations of foreign companies are typically small. This makes the proper segregation of duties (for example approving roles and payment roles) ineffective or even non-existent.
    • Source Documents are in Japanese: The language issue makes verification of source documents by non-Japanese staff (including internal and external auditors) difficult. Foreign management generally has to accept the word of Japan based employees that documents are what they are purported to be.
    • Banking in Japanese: Related to the issue of source documents, banking transactions are done in Japanese (English language banking is extremely limited). This makes financial oversight difficult.
    • Respect for Seniority and Age: Japan has a culture of respect for more senior employees and in general for anyone older. Less senior / younger employee will rarely question the actions of an older / more senior employee.
    • Japanese companies are legally bound by use of their company seal: Signatures are not used. This means that bank accounts can be opened / operated, loans entered, and contracts executed by anyone with possession of the company seal. Even if the company has internal rules regarding use of the Company Seal these rules are not effective against third parties.
In a weak internal control environment, it is critical that pre-employment background checks are undertaken in order to minimize risks associated with individual employees.

What Type Of Background Checks Should We Undertake In Japan?

The type of pre-employment background check undertaken in Japan will depend on the circumstances. Considerations include the seniority of the employee and the nature of the Japan operation.

There are broadly three types of background check available in Japan as follows:

  1. Database Checks: The focus of these basic checks is to check details such things as organized crime membership, bankruptcy status, and residential address of record.
  2. Basic In Person Checks: The focus here is for someone to physically confirm basic information such as residential address.
  3. Reference Checks: References are contacted and interviewed to confirm such thing as the applicants strengths / weakness, competence, tardiness, special achievements, etc.

What Are the Limitations of Japan Pre-Employment Checks?

Japan has strong protections in place with respect to personal privacy. Important implications for preemployment background checks include:
  • Need for Written Consent: Most meaningful Japan pre-employment background checks will start with obtaining the written consent of the candidate to undertake the pre-employment check.
  • No Credit Checks. It is generally not possible to undertake a pre-employment credit check in Japan.

Contact JAPAN VISA™ to learn more about our Japan Background Check Service.

The above is provided for general information purposes only and does not constitute advice to undertake or refrain from undertaking any action. Only qualified Japanese professionals are able to advise on Japan immigration, legal, and tax matters.