Section 4. Human Resource Management

4.9 Japan's social security system

Japan has a universal insurance system whereby everybody residing in Japan must, in principle, take part in the public health (medical) insurance and pension insurance system.

4.9.1 Labor and social insurance systems

Japan has four different kinds of insurance system which companies are legally obliged to take part in; all workers that meet certain criteria are covered by the insurance.

  1. (1)

    Workers' Accident Compensation Insurance

    This covers any illness or injury at work or while commuting to or from work.

  2. (2)

    Employment Insurance

    This provides for workers that become unemployed and helps to maintain stable employment such as by providing financial aid and subsidies.

  3. (3)

    Health Insurance and Nursing Care Insurance

    These cover medical and nursing care expenses incurred by workers.

  4. (4)

    Employees' Pension Insurance

    This provides benefits for old age, death or disability.

Generally, Workers' Accident Compensation Insurance and Employment Insurance are known collectively as "labor insurance," while Health, Nursing Care and Employees' Pension Insurances are referred to collectively as "social insurance."

A company must enter these insurance systems when first incorporating or hiring staff/workers by submitting labor and social insurance notification forms to the relevant authorities. The company usually pays insurance premiums by deducting the portion of the premiums payable by employees/workers from their wages, and paying these together with the portion of the premiums payable by the company to the relevant authorities.

Also, from April 2020, corporations, mutual companies, investment corporations, and special purpose companies with share capital or owners’ equity exceeding 100 million yen are required to file procedures for social insurance and labor insurance electronically as a general rule.

4.9.2 Workers' Accident Compensation Insurance

(Table 4-4) Overview of Workers' Accident Compensation Insurance
Application As a rule, this is compulsorily applicable to all workers. However, some workers such as officers of corporation or relatives living together may not be applicable. Principals of small and medium businesses (representative director, etc.) may be specially approved for coverage if they apply.
Benefit Benefits are paid for any illness, injury, disability or death incurred as a result of an accident caused by a work or while commuting to or from work.
Premium Premiums are generally calculated as a certain percentage of total amounts of each worker's wage. Premium rates depend on the kind of business carried out at the workplace; the maximum premium rate is 8.8% (for metal/non-metal/coal-mining industries) and the minimum is 0.25% (for finance, insurance telecommunications and broadcasting industries) (revised on April 2018). The employer bears the whole cost of premiums.
0.002% is added to the above premium to fund benefits for asbestos-induced diseases.
Notification Notifications shall be submitted to the local Labor Standards Inspection Office within a period of 10 days starting on the day following that on which participation in the insurance program was established.

4.9.3 Employment Insurance

(Table 4-5) Overview of Employment Insuranc
Application In principle, this applies to all general workers. However, to qualify for Employment Insurance, prescribed working hours must not be less than 20 hours per week, and they must expect to be employed for not less than 31 days. Employees dispatched to Japan from an overseas company head office who enroll in a scheme equivalent to employment insurance overseas are exempt from this insurance.
Benefit Benefits are paid for a predetermined period when the insured worker leaves his/her job; the amount of benefits are determined according to the reason for leaving the job, the length of time for which the insured was covered, the insured party's age, etc. There are also a number of benefits available for the purpose of maintaining stability of employment.
Premium Premiums are calculated as a certain percentage of each worker's total wage. The insurance premium rate was 0.9% (the employer paying 0.6% and the worker paying 0.3%) with the exception of a few kinds of job (revised on April 2017).
Notification Notifications must be submitted to the local Public Employment Security Office within a period of 10 days starting on the day following that on which participation in the insurance program was established.

4.9.4 Health Insurance and Nursing Care Insurance

(Table 4-6) Overview of Health Insurance and Nursing Care Insuarnce
Application:
Applicable businesses
All incorporated companies without exception and a representative office which has 5 or more regular employees and falls under the prescribed kinds of businesses are obliged to take part in the insurance. Branches and sales offices of overseas companies are treated as incorporated businesses, and representative offices are treated as sole proprietorships.
Application:
Insured parties
Generally, all employees of the aforementioned applicable businesses are covered. Part-time employees are covered where their prescribed working hours are not less than 75% of those of full-time employees*1. Employees dispatched from overseas company head offices are covered, as are presidents and representative directors of incorporated companies. However, persons dispatched from the United States, Belgium, France, the Netherlands, the Czech Republic, Switzerland, Hungary, and Luxembourg to Japan who are enrolled in medical insurance in these countries are exempt from enrolling in Japan.
Application:
Dependents
Insured parties' lineal ascendants, spouses, children, grandchildren and siblings whose livelihood is maintained mainly by the insured party are eligible to receive insurance benefits.
Application:
Nursing care insurance
This applies only to those of 40 years or over.
Benefit:
Medical expenses
70% of expenses incurred for medical treatment at designated Insurance Medical Institutions (this refers to medical institutions which have been designated as acceptable for medical insurance purposes; almost all medical institutions in Japan are designated) are covered by insurance, while the insured party must pay the remaining 30%. This also applies to dental expenses.
Benefit:
Overseas expenses
If an insured party incurs medical treatment expenses at a medical institution while staying or traveling overseas, he/she can apply to be reimbursed after returning to Japan. The amount of medical expenses incurred overseas is converted into a comparable amount of Japanese medical expenses, and 70% of that amount is reimbursed. It should be noted that this also applies to foreign nationals insured under this system who receive medical treatment in their own countries or other countries outside of Japan.
Benefit:
Excessive medical expenses
If the amount of medical expenses (e.g., the portion of medical expenses payable by the insured party) an insured party pays to a single medical institution within a single calendar month exceeds a predetermined amount, the amount of expenses excess of that predetermined level shall be reimbursed to the insured party as "Excessive medical expenses."
Contribution General insurance premiums for the Japan Health Insurance Association Run Health Insurance are 9.97% (in Tokyo*4, those of 39 years or under) of each insured party's standard monthly remuneration*2 (maximum: 1.39 million yen) and standard bonus*3 (maximum: 5.73 million yen per year). For those of 40 years or over, 11.66%. In either case, the insured party and the employer share the premiums equally (revised on April 2020).
In the case of Union Run Health Insurance*5, a certain amount of leeway in deciding insurance premiums is granted to the managing union.
Notification Notifications must be submitted to the local Pension Office or Health Insurance Union Office within a period of five days starting on the day following that on which participation in the insurance program was established.
Ineligibility for Health Insurance (National Health Insurance)
Application People who are not eligible for Health Insurance coverage as described above must enter into the National Health Insurance scheme run by their local city, ward, town or village government.
Benefit With a few exceptions, National Health Insurance benefits are virtually the same as those under the above-described Health Insurance.
Premium Premiums are determined by each operating local government within certain limitations.
  1. (Note)

    In Japan, everybody has an obligation to take out one of the above forms of public health (medical) insurance. Because you will therefore inevitably have Health Insurance in Japan, if you choose to take out private insurance with an overseas company, it is better to ensure that the coverage of that private insurance does not overlap with your Japanese public insurance coverage.

  1. *1

    Part-time employees of an enterprise with 501 or more employees (more than 100 from October 2022 and more than 50 from October 2024) who work at least 20 hours per week and receive a monthly pay of at least 88,000 yen with a prospect of continuous employment of at least one year are also insured. At an enterprise with 500 or fewer employees, part-time employees meeting the same requirements become insured based on the agreement between the employer and employees (excluding students).

  2. *2

    Effective from September 2009, premium rates for health insurance administered by the Japan Health Insurance Association have changed from a uniform rate to one that varies depending on prefecture.

  3. *3

    Standard monthly remuneration refers to the division of the total amount of wages and other such payments into predetermined brackets.

  4. *4

    Standard bonus refers to the amount of the bonus rounded down to the nearest unit of 1,000 yen.

  5. *5

    Union Run Health Insurance refers to an insurance scheme provided by a union run by a company or a group of companies.

4.9.5 Employees' Pension Insurance

(Table 4-7) Overview of Employees' Pension Insurance
Application:
Applicable businesses
All incorporated companies without exception and a representative office which has 5 or more regular employees and falls under the prescribed kinds of businesses are obliged to take part in the insurance. Branches and sales offices of overseas companies are treated as incorporated businesses, and representative offices are treated as sole proprietorships.
Application:
Insured parties
Generally, all employees of the aforementioned applicable businesses are covered (with the exception of those over 70 years old). Part-time employees are covered where their prescribed working hours are not less than 75% of those of full-time employees*1. Employees dispatched from overseas company head offices are covered, as are presidents and representative directors of incorporated companies.
Benefit:
Old-age Pension
This is generally paid to people not less than 65 years old who have paid Employee's Pension Insurance premiums (or been officially exempted from paying premiums) for not less than 10 years in total (this need not be consecutive). The amount of benefit is calculated according to the amount of insurance premiums paid and the length of the period over which they were paid.
Benefit:
Disability
Pension
Where the illness or injury that causes disability occurs during the period when the disabled party is insured under the Employees' Pension Insurance system, the regular pension or lump sum shall be paid to the disabled party. The amount of benefit is calculated according to the degree of disability, the amount of insurance premiums paid and the length of the period over which they were paid.
Benefit:
Survivor's Pension
If an insured party, a person who is eligible to receive an old-age pension or a person receiving a disability pension who fulfills certain conditions dies, a survivor's pension shall be paid to that person's surviving family
Contribution:
Rate
Insurance Contributions are 18.3%of the insured party's standard monthly remuneration (maximum: 620,000 yen) and standard bonus (maximum: 1.5 million yen); the insured party and the employer share the Contributions equally.
Contribution:
Social security agreement
Japan has concluded social security agreements with Germany, the U.K., South Korea, the U.S., Belgium, France, Canada, Australia, the Netherlands, the Czech Republic, Spain, Ireland, Brazil, Switzerland, Hungary, India, Luxembourg, the Philippines, the Slovak Republic, and China. If any person is sent from one of these countries to Japan to work temporarily and is insured under the pension system of the sending country, that person shall be exempted from coverage of the Japanese public pension systems.
Presenting the certificate of coverage issued in the sending country is requested by a Japanese relevant institution in case of necessity. Japan has already signed the agreements with Italy, Sweden and Finland, and governmental talks are underway with Turkey. Preliminary talks are also underway with Austria and Vietnam.
Contribution:
Lump-sum Withdrawal Payments
When a foreign national who has at least 6 months of coverage periods under Employees' Pension Insurance and returns to his/her country without fulfilling entitlement period of the public pension systems, he/she can claim Lump-sum Withdrawal Payments for the amount basically corresponding to the coverage periods under Employees' Pension Insurance, 36 months at most.
Notification Notifications must be submitted to the local Pension Office within a period of five days starting on the day following that on which participation in the insurance program was established.
Ineligibility for Employees' Pension Insurance (National Pension Insurance)
Application Every person aged between 20 and 59 (inclusive) residing in Japan and without Employees' Pension Insurance must be a part of the national pension system. Contributions are a fixed amount per month (16,540 yen from April 2020 to March 2021) and participants in the system are eligible for Old-age Pension, Disability Pension and Survivor's Pension as well as Lump-sum Withdrawal Payments for a foreign national similar to that of the above-mentioned Employees' Pension Insurance system.
  1. *1

    Part-time employees (more than 100 from October 2022 and more than 50 from October 2024) working for an enterprise with 501 or more employees are also insured where their working hours are at least 20 hours per week receiving a monthly pay of at least 88,000 yen with a prospect of continuous employment of at least one year. At an enterprise with 500 or fewer employees, part-time employees meeting the same requirements become insured based on the agreement between the employer and employees (excluding students).

4.9.6 Labor and social insurance coverage of representative office

Labor insurance (Workers' Accident Compensation/Employment Insurance): In principle, when the individual, who is working at the representative office of a foreign corporation, falls under the definition of "workers" under the Labor Standards Act in Japan, he/she is eligible for Industrial Compensation Insurance. Whether the representative of the office is applicable to the definition of "workers” or not is respectively determined based on the actual situation of work. When the representative of the office is not a worker, the labor insurance does not apply. However, under certain conditions, there is a scheme in place to allow the representative insured by Worker’s Accident Compensation Insurance as a special enrollment at his/her own cost.

Social insurance (Health/Employees' Pension Insurance): In case of a representative office with less than 5 employees, in principle voluntary coverage with the representative of the office as the employer (the representative does not become the person insured) is available. If a representative office has 5 or more employees and falls under the prescribed kinds of businesses, as a general rule, insurance coverage is mandatory. In principle, a representative does not become the person insured, because a representative is an employer of sole proprietorship. However, as an exception, a representative can sometimes be granted eligibility to be insured if documents certifying the representative’s status as an employee of the overseas head office are submitted. However, the ultimate decision to allow for this exception lies with each local competent authority.

4.9.7 Review of labor and social insurance systems

(Table 4-8) Review of labor and social insurance systems

4-8
Insurance Benefit Coverage Premium rate
(% of total annual wage)
Remarks
Employer pays Worker pays
Workers' Accident
Compensation Insurance
Benefits are paid as compensation for medical expenses, work missed, disability or death incurred as a result of work or while commuting to or from work. All businesses that employ workers must have this insurance. 0.3% (In cases of import and trade, and sales industries)
  • Special coverage available for employers
  • Premium rates differ according to industry
Employment Insurance Benefits are paid to unemployed workers, workers on child care leave and the elderly. All workers whose prescribed working hours are not less than 20 hours per week must have this insurance. 0.6% 0.3% Persons enrolled in unemployment compensation programs overseas are exempt.
Health Insurance and Nursing Care Insurance Benefits are paid for illness or injury not arising as a result of work or while commuting, and for childbirth, etc. All incorporated companies without exception and sole proprietorships with five or more regular employees are generally obliged to take part in the insurance 4.935%
(5.83% if aged 40 or over)
4.935%
(5.83% if aged 40 or over)
This premium rate applies only to Japan Health Insurance Association Run Health Insurance (in Tokyo).
Maximum standard monthly remuneration: 1,390,000 yen
Employees' Pension
Insurance
Benefits are paid for old age, disability and death. 9.15% 9.15% Lump-sum Withdrawal Payments for a foreign national when returning to his/her country. Maximum standard monthly remuneration: 650,000 yen
Child Benefits
Contribution
Contribution to a social welfare system for child benefit, and differs in nature from the welfare benefits offered to workers through their employers. 0.36% Maximum standard monthly remuneration: 650,000 yen
Total 15.345%
(16.24% if aged 40 or over)
14.385%
(15.28% if aged 40 or over)
  1. *

    0.002% will be added to the premium rate for Workers' Accident Compensation Insurance for the time being in order to fund benefits for asbestos-induced diseases.

  2. *

    When the remuneration exceeds the maximum amount of standard monthly remuneration, the insurance premium at the maximum amount of standard monthly remuneration shall be applied.

(Table 4-9) Social security agreements already effective and in preparation

Social security agreements already effective and in preparation
Country Agreement effective from Totalization of coverage periods Social security system subject to coordination of application
Japan Counterparty country
Germany February 2000 Exist pension pension
U.K. February 2001 Not exist
Korea April 2005 Not exist
U.S. October 2005 Exist pension /
medical insurance
pension /
medical insurance
Belgium January 2007 Exist pension /
medical insurance /
accident compensation insurance for workers /
employment insurance
France June 2007 Exist pension /
medical insurance /
accident compensation insurance for workers
Canada March 2008 Exist pension pension
(except Quebec Pension Plan)
Australia January 2009 Exist Retirement pension
Netherlands March 2009 Exist pension /
medical insurance
pension /
medical insurance, employment insurance
the Czech Republic June 2009 Exist
Spain December 2010 Exist pension pension
Ireland December 2010 Exist
Brazil March 2012 Exist
Switzerland March 2012 Exist pension /
medical insurance
pension /
medical insurance,
employment insurance
Hungary January 2014 Exist
India October 2016 Exist pension pension
Luxembourg August 2017 Exist pension / medical insurance pension /
medical insurance /
accident compensation insurance for workers /
employment insurance
Philippines August 2018 Exist pension pension
The Slovak Republic July 2019 Exist pension pension /
accident compensation insurance for workers/
employment insurance
China September 2019 Not exist pension pension
Italy In preparation Not exist pension / employment insurance pension / employment insurance
Sweden In preparation Exist pension pension
Finland In preparation Exist pension / employment insurance pension / employment insurance

As of October 2020

Section4: Table of Contents


Section4: Documents businesses are required to submit to authorities

Section Documents Where documents are listed within the URL Reference The competent
authorities's URL
4-3a Notice of EmploymentExternal site: a new window will open See PDF Ministry of Health,
Labour and WelfareExternal site: a new window will open
4-3b Employment Agreement ReferencePDF File(227KB)
4-5 Notification of Agreement on Overtime work Working on Holidays Ministry of Health,
Labour and WelfareExternal site: a new window will open
4-6 Rules of Employment ReferencePDF File(1.9MB) Ministry of Health,
Labour and WelfareExternal site: a new window will open
4-9a Notification of Acquisition of Employment Insurance Qualification ReferencePDF File(1.1MB) Ministry of Health,
Labour and WelfareExternal site: a new window will open
4-9b Notification of the Acquisition of Health insurance Qualification Employees' Pension Insurance Qualification ReferencePDF File(245KB) Japan Pension ServicesExternal site: a new window will open
4-9c Labor insurance Estimated insurance premiums / Increased estimated insurance premiums / Final insurance premiums Declaration ReferencePDF File(919KB) Ministry of Health,
Labour and WelfareExternal site: a new window will open
4-9d Basic amount for calculation of monthly remuneration of person insured Health insurance Employees' pension insurance ReferencePDF File(216KB) Japan Pension ServicesExternal site: a new window will open
4-9e Notification of Dependent Under Health Insurance (Change) ReferencePDF File(731KB) Japan Pension ServicesExternal site: a new window will open
4-9f Notification of the Establishment of a Labor Insurance Relationship ReferencePDF File(1.1MB) Ministry of Health,
Labour and WelfareExternal site: a new window will open
4-9g Notice of establishment of the business place to which employment insurance is applied ReferencePDF File(520KB) Ministry of Health,
Labour and WelfareExternal site: a new window will open
4-9h Notice of New Application Health insurance Welfare pension insurance ReferencePDF File(263KB) Japan Pension ServicesExternal site: a new window will open
4-9i Declaration of Tax Exemption for Salaried Employees (Change)External site: a new window will open See the format National Tax AgencyExternal site: a new window will open
4-10 Income Tax Withholding Certificate ReferencePDF File(309KB) National Tax AgencyExternal site: a new window will open

Materials listed as ‘Reference’ contain samples of documents regarding registration, visa, taxation, personnel and labor matters that are necessary when a foreign company establishes a corporation or other entity in Japan. These documents are not published by competent authorities and therefore are not official. For those who are going through the official procedures, please obtain the latest official documents from the competent authorities and related bodies or consult a person who specializes in advising on such information and procedures.

The information contained in this documents should be used at the reader’s independent discretion. While JETRO makes every effort to ensure the accuracy of the information it provides, no responsibility is accepted by JETRO for any loss or damage incurred as a result of actions based on the information provided in these documents or provided by the external links listed on these pages.

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