Hall Chadwick Insights

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The Wave of Side Jobs in Japan: Lessons for Taiwan

 

1. From Prohibition to Relaxation

For decades, Japanese companies strictly prohibited employees from engaging in side jobs. Most employment regulations explicitly stated that workers were not allowed to take on additional work, citing the need to focus on one's primary role and avoid conflicts of interest or overwork. This rule was closely tied to Japan's tradition of lifetime employment, where employees were expected to dedicate their careers to a single company. Yet with the rapid aging of the population and a shrinking labor force, the logic behind these restrictions became increasingly difficult to sustain. In 2018, the Ministry of Health, Labour and Welfare revised its Model Employment Regulations, removing the clause that banned outside work without company approval and adding new provisions to recognize side jobs and multiple employment. This change provided a legal foundation for side jobs and marked a turning point in Japan's labor market.

2. Current Trends and Data

Following the policy shift, several major companies were quick to take the lead. Fujitsu openly announced that employees could pursue paid activities outside of their main jobs. Mitsubishi Estate set limits of no more than 50 hours of side work per month, while Lion Corporation introduced a system requiring employees to have worked at the company for at least two years before applying for approval. Other large firms, including Hitachi and Shiseido, have also allowed side jobs under specific conditions, generally through an application and review process. These examples show that side jobs are not yet entirely unrestricted but are being gradually normalized through structured rules.

Statistics further illustrate the trend. According to the Ministry of Internal Affairs and Communications, about 3.05 million people held side jobs in 2022, roughly 5% of the workforce. A 2024 study by the Japan Institute for Labour Policy and Training put the figure at 6%. A survey conducted by the Persol Group found that 7% of full-time employees had side jobs, earning an average of 65,000 yen per month. This figure reflects a survey average, with actual income varying widely by industry and role. Notably, more than half of workers in their twenties and thirties expressed an interest in trying side jobs, suggesting that demand far exceeds the current level of participation. This growing appetite has prompted companies to reconsider why they should relax restrictions.

3. Why Companies Are Opening Up

Multiple factors are driving this shift. The Japanese government has framed side jobs as part of its Work Style Reform, aiming to create a more flexible labor market and, indirectly, revitalize local economies. For companies, allowing side jobs helps attract and retain talent, especially younger workers who increasingly value career diversity. A strict ban risks making firms less competitive in the job market. Companies have also recognized the “spillover effect” of side jobs: employees who gain skills in digital marketing, start-ups, or other fields often bring fresh perspectives back to their primary roles. In some cases, firms now view side jobs as a form of employee development, allowing staff to grow professionally in different environments while ultimately benefiting the organization.

4. Challenges and Risks

Relaxation does not mean complete freedom. One of the biggest challenges is managing working hours. Japanese labor law requires total hours across multiple jobs to be counted, and exceeding the legal limit can make employers liable. Confidentiality and non-compete issues also arise, as companies worry about sensitive information being exposed. Taxation and social insurance add another layer of complexity. Side income must be declared in comprehensive tax filings, while insurance contributions become more complicated when employees work for multiple employers. Improper handling can result in back taxes, penalties, or labor disputes.

5. Lessons for Taiwan

Taiwanese law does not explicitly ban side jobs, but many companies impose restrictions through employment contracts. In practice, side jobs remain relatively uncommon, though remote work and the gig economy are starting to change traditional work patterns. Taiwan can draw lessons from Japan by first creating transparent systems that define what types of side jobs are permitted and how employees should disclose them. Side jobs should also be recognized as a pathway for skill development, enabling employees to gain new expertise and apply it within their organizations. For small and medium-sized enterprises facing labor shortages, tapping into talent through side jobs could help meet short-term or project-based needs. That said, risks such as working hours, confidentiality, and non-compete clauses must be managed to avoid disputes.

6. Professional Services and Future Outlook

The rise of side jobs is reshaping Japan's labor market and highlighting new challenges in taxation, payroll, and compliance. Employees must understand how side income affects their personal tax filings, while cross-border activities may involve withholding tax and double taxation agreements. Companies that allow side jobs need systems for disclosure, review, and accurate social insurance calculations. These are complex tasks that often require professional guidance.

Accounting firms are well-positioned to support in this space. Professional advisors can help companies design payroll and compliance systems, provide employees with tax planning advice for side income and cross-border earnings, and incorporate side job policies into ESG reporting on human capital. These services give businesses the stability they need during regulatory changes and offer employees greater clarity and protection as they explore new career models.

Japan's experience shows that side jobs are moving from the margins to the mainstream, with social attitudes and institutional frameworks evolving together. Taiwan can benefit by learning from this transition and proactively introducing its own frameworks. The spread of side jobs represents both an organizational and personal challenge, and the role of professional advisors is to guide both employers and employees toward stability and compliance while maintaining competitiveness in a changing labor market.

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