---
title: "Commission-only sales teams in Japan: where the risk is"
description: Japan's regulator tied Prudential Life's misconduct partly to full-commission pay. What that means for foreign firms building a sales team in Japan.
image: https://nobusato.jp/hubfs/covers-2026-10/commission-only-sales-risk-japan-cover-en-2026-10.png
---

[Nobu Sato](https://nobusato.jp/en?hsLang=en)

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[Launching in Japan](https://nobusato.jp/en/blog/tag/launching-in-japan)

# Commission-only sales teams in Japan: where the risk is

[Nobu Sato](https://nobusato.jp/en/profile?hsLang=en)

![Timeline of Prudential Life Insurance Japan's 2026 misconduct case and the regulator's suspension order](https://nobusato.jp/hs-fs/hubfs/covers-2026-10/commission-only-sales-risk-japan-cover-en-2026-10.png?width=1200&height=630&name=commission-only-sales-risk-japan-cover-en-2026-10.png)

If you plan to build a commission-only sales team in Japan, read what Japan's Financial Services Agency wrote about Prudential Life Insurance Japan this month. Alongside a suspension of new sales, the regulator wrote in its order to the group's holding company that full-commission pay had drawn in sales staff with a strong attachment to money. In Japan, commission design is a hiring filter, a labor law question and a supervision bill, all at once.

## Prudential's year, January to October

Here is the sequence, from company announcements, the regulator's order and wire reports.

On January 16, 2026, Prudential Life Insurance Japan, the Japanese life unit of US-based Prudential Financial, said more than 100 current and former employees had taken about 3.1 billion yen from more than 500 customers. The schemes included fictitious investments, cash swindling and misuse of borrowed money. President Kan Mabara stepped down on February 1. His successor, Hiromitsu Tokumaru, said at a January 23 press conference that a pay system tied tightly to new policies was one of the causes, and that part of it would become fixed salary.

From February 9 the company paused new sales for 90 days. On April 22 it extended the pause by 180 days. By then the company counted 498 affected customers, with 3.08 billion yen involved.

On October 8 an external committee of lawyers published its report. It blamed a sales pay system that overvalued new contracts, together with weak management controls. The company disciplined 157 current and former sales staff, including dismissals, and said it would introduce a minimum guaranteed salary for sales staff from 2027. Kyodo put the damage at about 5.2 billion yen; Jiji reported self-declared receipts of about 6.17 billion yen, apparently a different measure.

The next day the Financial Services Agency ordered the company to stop soliciting and signing new policies from October 13, 2026 to January 31, 2027. Gibraltar Life, a sister company, got the same suspension.

Japan's regulator named full-commission pay as one of the causes

Prudential Life Insurance Japan misconduct, 2026 timeline. Sources: company announcements, Kyodo and Jiji reports, Financial Services Agency order (October 9, 2026)

1. Jan 16100+ staff took about ¥3.1B from 500+ customersCurrent and former employees. The president resigned on February 1
2. Feb 9New sales paused for 90 daysExtended by 180 days on April 22. Affected customers: 498, ¥3.08B
3. Oct 8157 disciplined, guaranteed minimum pay from 2027External committee blamed pay that overvalued new contracts, and weak controls
4. Oct 9Regulator orders suspensionNo new policies until January 31, 2027. Full commission drew in staff strongly attached to money

Pay design decides who applies. This time a regulator wrote that into an enforcement order.

Figure 1. Prudential Life Insurance Japan disclosed in January 2026 that more than 100 current and former employees took about 3.1 billion yen from customers; on October 8 it disciplined 157 staff and promised guaranteed minimum pay from 2027, and on October 9 the regulator, citing full-commission pay, suspended new sales until January 31, 2027.

I'm not using this to judge the insurance industry, which has its own long history with this model. I'm using it because foreign companies building sales teams in Japan face the same temptation.

## If they're employees, zero base pay isn't an option

Article 27 of Japan's Labor Standards Act says that for workers paid by output or piece rate, the employer must guarantee a fixed amount of wages according to hours worked. The law sets no figure. The labor ministry's guidance says, based on administrative notices, that guaranteeing at least around 60% of average wages is considered appropriate. The minimum wage also applies to commission pay, converted to an hourly rate.

So the sales model "no sale, no pay" doesn't fit an employment contract in Japan. Prudential's move to a guaranteed minimum is interesting in that light. How its old system was treated legally isn't clear from public sources, so I'll leave it there.

Making them contractors doesn't solve it either. The labor ministry says worker status is decided case by case from the substance of the contract, how the work is done and how it is paid, whatever the contract is called. If you assign the work, set the hours and send them out with your business card, a contractor agreement may not hold. I covered this in [Contractors instead of employees in Japan: does it hold?](https://nobusato.jp/en/blog/contractors-instead-of-employees-in-japan?hsLang=en)

## Who does a commission-only job attract?

People who want high income and don't mind uncertainty. That's fine in itself. But how someone behaves in a month with no sales is a different trait, and interviews mostly test whether they can sell.

This is the line in the regulator's order I'd underline. A pay system is a filter on who applies, before it is an incentive for the people already inside.

There's a second effect. Top sellers end up with more say than their managers. Jiji reported that the committee found top performers had overpowered their supervisors, and the regulator asked Prudential to review award systems that put too much weight on top performers. It's one reason I argue you [shouldn't promote your best salesperson to country manager](https://nobusato.jp/en/blog/dont-promote-your-best-seller-to-country-manager?hsLang=en).

## The fixed cost you save comes back as supervision

High commission makes sales payroll variable. In exchange you pay to watch for misconduct: banning private money dealings with customers and checking that the ban holds, running a whistleblowing line, keeping eyes on branch offices. Prudential says it will consolidate branches to tighten control. The regulator noted that branch-based management had weakened head-office oversight.

And if something goes wrong, the bill is time. Prudential paused new sales on its own for about eight months before the regulator's suspension began. For a new entrant living on new contracts, a pause like that is close to starting over.

## How I'd set it up instead

This is my opinion, not a finding from data.

Make the base salary big enough that one bad quarter doesn't change behavior. Keep commission, but don't let rent depend on it.

Put things other than revenue into the review: cancellation rates, complaints, paperwork errors, record accuracy. Strong sales with bad scores here should cost commission.

Defer part of the commission until the contract has lasted a while. Pay that lands in full at signing teaches people to stop caring after signing.

Don't pay managers on team revenue alone. If looking away from a problem raises their bonus, you've given them a reason to look away.

All of this raises fixed cost in the first year or two. On paper, the commission-only model from home is cheaper, and I won't pretend otherwise. I still choose this side because in Japan one incident can cost years of the payroll you saved. Whether a Japan entity with two or three salespeople needs the full setup from the first hire, I haven't settled.

This article is general information, not legal advice. Whether a pay plan or a contractor agreement is lawful depends on the facts, so consult a Japanese lawyer or a licensed labor and social security attorney (sharoushi). The account of Prudential Life is based on public announcements, the regulator's order and news reports.

Sources (as of October 2026)

- [Financial Services Agency, administrative actions against Prudential Life Insurance, Gibraltar Life Insurance and Prudential Holding of Japan (October 9, 2026)](https://www.fsa.go.jp/news/r8/hoken/20261009/20261009.html)
- [Jiji Press via nippon.com, Prudential Life's Past, Present Staff Scam Customers Out of 3.1 B. Yen (January 16, 2026)](https://www.nippon.com/en/news/yjj2026011600605)
- [Kyodo via Akita Sakigake Shimpo, president's apology press conference (January 23, 2026)](https://www.sakigake.jp/news/article/20260123CO0082/)
- [Kyodo via Akita Sakigake Shimpo, 90-day sales pause (February 4, 2026)](https://www.sakigake.jp/news/article/20260204CO0035/)
- [AdverTimes, sales pause extended by 180 days (April 22, 2026)](https://www.advertimes.com/?p=541971)
- [Kyodo via Kumamoto Nichinichi Shimbun, external committee report (October 8, 2026)](https://kumanichi.com/articles/2044535)
- [Jiji Press via nippon.com, external committee report (October 8, 2026)](https://www.nippon.com/ja/news/yjj2026100800513/)
- [Ibaraki Labour Bureau, Labor Standards Act overview, Article 27](https://jsite.mhlw.go.jp/ibaraki-roudoukyoku/hourei_seido_tetsuzuki/roudoukijun_keiyaku/hourei_seido/kijun01/kijun01_04.html)
- [Ministry of Health, Labour and Welfare, Q&A on commission pay](https://www.startup-roudou.mhlw.go.jp/qa/zigyonushi/chingin/q14.html)
- [Ministry of Health, Labour and Welfare, Who is a worker under the Labor Standards Act](https://www.mhlw.go.jp/stf/seisakunitsuite/bunya/koyou_roudou/roudoukijun/keiyaku/index02.html)

---

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