Staffing Licences in Japan: Worker-Dispatch (労働者派遣) and Recruitment (職業紹介)

Running a staffing business in Japan means holding a licence, not filing a notification, and the rules that govern it are among the most frequently rewritten in Japanese labour law. Since a 2015 reform, every worker-dispatch operator needs a licence from the labour ministry, with real capital and structural requirements behind it, and the substantive rules on how long dispatch can be used and how dispatched workers must be paid have all changed within recent memory.

Worker dispatch (労働者派遣) is the model in which a dispatch agency employs a worker and sends them to work under a client company’s direction. It is governed by the Worker Dispatch Act (労働者派遣法), administered by the Ministry of Health, Labour and Welfare, and it sits alongside two neighbouring models, placement and contracting, that it is constantly at risk of being confused with. Its sibling, fee-charging recruitment placement (有料職業紹介事業), is a separate licence under a separate act, and a firm that introduces candidates rather than dispatching its own staff needs that one instead, or, for temp-to-perm, both. For a foreign staffing, HR, or professional-services firm entering Japan, and for any company planning to use dispatch or recruitment services, these are licensing gates and, in the dispatch case, a moving compliance target.

What follows maps both licences, the models they must be distinguished from, the rules that bound them, and why the dispatch regime in particular keeps changing. It is an orientation, not licensing advice for a specific business.

One licence, since 2015

The single most important structural fact is recent. Until 2015, worker dispatch operated on a two-tier system: a general dispatch business required a licence, but a “specified” dispatch business, one dispatching only its own permanently-employed workers, needed only to file a notification. The 2015 reform abolished that split. Now all worker dispatch requires a licence (許可) from the Minister of Health, Labour and Welfare under Article 5 of the Act. Operating without one is unlawful.

This matters for any foreign entrant who researched the market before 2015 or relied on older summaries: the notification route is gone, and there is no lighter tier. Every dispatch business faces the full licensing requirements.

Dispatch, placement, contracting: three different things

Before the licence, get the model right, because Japanese law treats three superficially similar arrangements very differently:

• Worker dispatch (労働者派遣): the agency employs the worker and sends them to work under the client’s direction. Needs a dispatch licence.
• Placement / recruitment (職業紹介): the agency introduces a candidate whom the client then hires directly. Needs a separate placement licence under the Employment Security Act (職業安定法).
• Contracting (請負): a company delivers a result using its own workers under its own direction. No dispatch relationship, and no dispatch licence.

The dangerous zone is the line between dispatch and contracting. Structuring what is really dispatch as a “contract” to escape the dispatch rules, disguised contracting (偽装請負), is a serious violation and is actively enforced. Many foreign firms that believe they have a clean contracting arrangement are, on the facts of who directs the workers, running unlicensed dispatch. Getting the classification right at the outset is not a technicality; it decides whether you need a licence at all and whether your existing model is lawful.

What the licence requires

The dispatch licence is a substantive approval with financial and structural thresholds:

• Asset base: broadly, base capital on the order of twenty million yen per business unit, with a cash floor beneath it. The thresholds are deliberately high enough to keep undercapitalized operators out.
• Office standards: premises meeting defined requirements.
• A responsible person for dispatch management (派遣元責任者): a designated, trained individual accountable for compliance.
• Suitability and conduct criteria for the applicant.

The licence runs for three years initially and is renewable for five years thereafter. The financial requirements in particular mean a dispatch business is a capitalized undertaking, not something a thinly-resourced entrant can stand up casually.

The rules that bound the business

Two substantive rules shape how dispatch can actually be used, and both are recent enough that older market research misses them.

The period limits (the “three-year rule”). The Act restricts how long dispatch can be used in one place. An individual dispatched worker generally cannot be kept in the same organizational unit of a client for more than three years, and a client site faces a three-year limit on receiving dispatch workers that can only be extended after formally consulting its workforce. The purpose is to prevent dispatch from becoming a permanent replacement for direct hiring, and it constrains both agencies and clients planning long-term arrangements.

Equal pay for equal work. Since April 2020, agencies must ensure dispatched workers receive treatment balanced against the client’s regular employees doing comparable work, either by matching the client’s treatment or through a compliant labour-management agreement. This obliges the agency to obtain the client’s internal pay data and build its economics around it, and it is one of the heaviest ongoing obligations in the regime.

The excluded sectors

Worker dispatch is prohibited for certain work: principally port transport, construction, security, and most medical services (with defined exceptions). A staffing model aimed at any of these hits the exclusions directly, and a client in those sectors cannot use dispatch to solve a labour shortage. Confirming the intended work is not an excluded category is a threshold question, not a detail.

The other staffing licence: fee-charging recruitment

Dispatch has a sibling that entrants routinely conflate with it: fee-charging employment placement (有料職業紹介事業), the recruitment-agency model. It is a separate licence under a separate act, and choosing between the two, or realizing you need both, is often the first thing a foreign staffing or HR firm gets wrong.

The difference is the one drawn earlier. In dispatch, the agency employs the worker and sends them to work under the client’s direction. In placement, the agency introduces a candidate whom the client then hires directly; the agency’s role is the introduction, and the employment relationship it creates is between the worker and the client, not the agency. A pure headhunting or recruitment business is doing placement, not dispatch, and needs the placement licence, not the dispatch one.

That licence comes from the Minister of Health, Labour and Welfare under the Employment Security Act (職業安定法), and its structure deliberately mirrors the dispatch licence:

• Asset base: broadly, base assets on the order of five million yen per place of business, with a cash floor.
• A placement responsible person (職業紹介責任者): a designated, trained individual accountable for the business.
• Office and privacy standards, including the handling of applicants’ personal information.
• Three years initially, renewable for five.

Two rules define its economics. First, the employer pays, not the job seeker. The agency charges the hiring company a placement fee, commonly a percentage of the placed person’s first-year compensation under a notified fee schedule, and charging the job seeker is generally prohibited, with narrow exceptions for a few defined occupations. Second, the excluded work is drawn differently from dispatch. Fee-charging placement is excluded for port-transport work, and construction-work placement is carved out into a separate special regime under the construction-labour law rather than sitting under the general licence, a distinction that catches firms assuming the dispatch exclusions map across unchanged.

And there is a hybrid worth knowing: temp-to-perm (紹介予定派遣), where a worker is first dispatched and then, if it works out, hired directly. Because it combines both models, it requires both a dispatch licence and a placement licence. A firm building a temp-to-perm offering cannot do it on one; it needs the pair.

The practical rule: a pure temp/staffing business needs the dispatch licence; a pure recruitment/headhunting business needs the placement licence; a firm doing both, or temp-to-perm, needs both. Deciding which model you are actually running is the first question, and getting it wrong means holding the wrong licence.

Where this becomes a public affairs question

Getting licensed and staying compliant is regulatory and legal work, and specialist advisers handle it. The reason worker dispatch is a public affairs matter, more so than most licensing regimes, is that it is exceptionally politically live.

Dispatch sits at the centre of Japan’s long argument about non-regular employment, job security, and wages. The Act has been amended repeatedly and in opposite directions: expanded to widen the labour market, then restricted amid concern about precarious work, then overhauled in 2015, then loaded with the equal-pay obligation in 2020. That trajectory is not finished. The scope of permitted work, the period limits, the treatment of dispatched workers, and the balance between flexibility and protection are continually contested through the labour-policy councils and the Diet. For a business whose entire model is dispatch, a change to any of those parameters can reshape the economics overnight, which is why staffing operators have a direct interest in tracking, and where they have a stake, engaging, the policy process, not just complying with the current text.

If your Japan business depends on how the dispatch rules evolve, get in touch.

How to plan it

• Classify the model first. Dispatch, placement, and contracting are legally different and carry different licences. Disguised contracting is enforced; get the line right before you build.
• Get the right licence, or both. A temp/staffing business needs the dispatch licence; a recruitment/headhunting business needs the placement licence; temp-to-perm needs both. Confirm which before you apply.
• Budget for the capital threshold. The asset requirements make dispatch a capitalized business. Confirm you meet them before committing.
• Design around the period limits. The three-year rules constrain how long dispatch can run in one place; build them into client arrangements from the start.
• Build equal-pay compliance into pricing. The 2020 obligation requires the client’s pay data and reshapes your economics. It is not an afterthought.
• Track the policy, because it moves. Dispatch law changes often and in both directions. A staffing business needs to monitor it continuously, not check it once.

Why this matters for public affairs in Japan

A staffing licence looks like a one-time regulatory hurdle: meet the capital test, appoint the responsible person, clear the review. But worker dispatch is not a settled regime you comply with once. It is one of the most frequently amended areas of Japanese labour law, sitting on the fault line of the country’s politics of work, and its rules are pushed back and forth by every shift in the balance between labour-market flexibility and worker protection. For a business built on dispatch, the licence is the entry ticket and the ongoing policy trajectory is the real risk and the real opportunity. Knowing where the rules are heading, and having a voice where they are decided, is what separates a staffing operator that merely keeps its licence from one that is not blindsided by the next amendment.

Gemini Group helps staffing, recruitment, HR, and professional-services firms monitor and engage Japan’s labour and employment policy, including the worker-dispatch and placement regimes and the councils where they are rewritten. Contact us to discuss your Japan position.

Further reading: our market-entry regulatory checklist maps which rules apply to your sector, and the policy calendar guide covers when in the cycle to engage.