The president of Japan's biggest advertising agency said he plans to resign, a year after an employee suicide linked to allegations of extreme overwork.

The announcement came as authorities referred Dentsu and one of its executives to prosecutors on suspicion of violating labor law by forcing the 24-year-old employee to work illegally long hours.

Matsuri Takahashi, a graduate of the prestigious University of Tokyo, committed suicide on Christmas Day 2015 at a company dormitory.

She had worked more than 100 hours of overtime every month having joined the company in April of the same year, Japanese media reported.

She had posted on Twitter a wish to die and said she "would be happier" if she did.

Hundreds of deaths from overwork - known as "karoshi" in Japan - due to strokes, heart attacks and suicides are reported every year, along with a host of serious health problems.

The phenomenon has sparked lawsuits and calls to urgently tackle the problem.

Tadashi Ishii, Dentsu president, announced late on Wednesday that he would leave his post next month.

"An excessive amount of work should never happen," he said. "I deeply regret and feel responsible for this.

"I will take full responsibility and resign as president at January's board meeting."

Ishii, however, said the company should not prevent employees from doing their best.

"But I deeply regret that I couldn't put a break on (excessive workloads) and that I couldn't set a certain standard," he added.

The socially influential agency is notorious for its demanding work culture, but has come in for harsh criticism since Takahashi's death.

While the popular image of Japanese salaried men and women toiling long hours for the company before taking the last train home is changing, many still spend far more hours at the workplace than their counterparts in other modern economies.

According to a government survey released in October, more than one in five Japanese companies have employees who work such long hours that they are at serious risk of death.

The survey was part of the nation's first white paper on "karoshi" endorsed by Prime Minister Shinzo Abe's cabinet.