Most agency recruiting in Japan is done on contingency. The employer briefs one or several licensed agencies, each submits candidates, and the agency whose candidate is hired earns the fee. Nothing is paid upfront. The fee is set by the agency's filed fee schedule and is usually a percentage of the hire's theoretical annual pay, meaning twelve months' salary plus expected bonus. Refund clauses, scaled by how soon the hire leaves, are standard.
Japan's fees are high by international standards. For senior roles they commonly start around 30 to 35% of first-year pay, against roughly 18 to 25% in the United States, United Kingdom or Singapore. Technology start-ups often pay 40 to 50%, and some niche specialist searches go far higher. The rates reflect a market with more vacancies than candidates and few people actively looking.
The model shapes recruiter behaviour. A contingency recruiter is paid for speed and probability, so they put their time into the roles most likely to close and the candidates they can reach fastest. That is often the same visible group of bilingual professionals, already registered with several agencies.
What it means for a foreign employer
- It suits visible, repeatable roles. For volume hiring and roles where active candidates are acceptable, contingency can be efficient and low-risk.
- More agencies is not more coverage. Four agencies on one role often send the same CVs. Each invests less in understanding the business, because each has only a one-in-four chance of being paid.
- Set the rules for duplicate submissions. Agree in writing that the first agency to introduce a candidate with that candidate's consent owns the introduction, and record the date.
- Agree the fee base. Specify whether "annual pay" includes target bonus, allowances and sign-on payments, and make sure the refund terms cover departures during probation.
- Brief well and give feedback quickly. Agencies rank clients as well as roles. Responsive clients get the strongest candidates first.
Sources
- Employment Security Act, Articles 30 and 32-3.
- Ministry of Health, Labour and Welfare, published fee and refund data for licensed placement businesses.
- Fee ranges by market from the author's book.