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)

Workers' Accident Compensation Insurance

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

Health Insurance and Nursing Care Insurance

These cover medical and nursing care expenses incurred by workers.
(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 4-5) 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 4-6) Overview of Employment Insurance
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 is 1.35% (the employer paying 0.85% and the worker paying 0.5%) with the exception of a few kinds of job (revised in October 2022).
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 4-7) 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 9.81% (in Tokyo4, those of 39 years or under) of each insured party's standard monthly remuneration2 (maximum: 1.39 million yen) and standard bonus3 (maximum: 5.73 million yen per year). For those of 40 years or over, 11.45%. In either case, the insured party and the employer share the premiums equally (revised in March 2022). In the case of Union Run Health Insurance5, 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.

(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

Part-time employees of an enterprise with 101 or more employees (51 or more from October 2024) who work at least 20 hours per week and receive a monthly pay of at least 88,000 yen are also insured. At an enterprise with 100 or fewer employees, part-time employees meeting the same requirements become insured based on the agreement between the employer and employees (excluding students).
*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

Standard monthly remuneration refers to the division of the total amount of wages and other such payments into predetermined brackets.
*4

Standard bonus refers to the amount of the bonus rounded down to the nearest unit of 1,000 yen.
*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 4-8) 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: 650,000 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, China, Finland, and Sweden. 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, and governmental talks are underway with Turkey and Austria. Preliminary talks are also underway with Vietnam, Thailand, and Poland.
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 (16,590 yen from April 2022 to March 2023) 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

Part-time employees of an enterprise with 101 or more employees (50 or more from October 2024) 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 4-9) Review of labor and social insurance systems

4-9
Insurance	Benefit	Coverage	Premium rate (% of total annual wage)		Remarks
Insurance	Benefit	Coverage	Employer pays	Worker pays	Remarks
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.	0.85%	0.5%	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	4.905% (5.725% if aged 40 or over)	4.905% (5.725% 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.	All incorporated companies without exception and sole proprietorships with five or more regular employees are generally obliged to take part in the insurance	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.	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			15.565% (16.385% if aged 40 or over)	14.555% (15.375% if aged 40 or over)

Swipe Scroll Table

*

Premium rates are as of December 2022.
*

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.
*

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 4-10) 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
Country	Agreement effective from	Totalization of coverage periods	Japan	Counterparty country
Germany	February 2000	Exist	pension	pension
U.K.	February 2001	Not exist	pension	pension
Korea	April 2005	Not exist	pension	pension
U.S.	October 2005	Exist	pension / medical insurance	pension / medical insurance
Belgium	January 2007	Exist	pension / medical insurance	pension / medical insurance / accident compensation insurance for workers / employment insurance
France	June 2007	Exist	pension / medical insurance	pension / medical insurance / accident compensation insurance for workers
Canada	March 2008	Exist	pension	pension (except Quebec Pension Plan)
Australia	January 2009	Exist	pension	Retirement pension
Netherlands	March 2009	Exist	pension / medical insurance	pension / medical insurance, employment insurance
the Czech Republic	June 2009	Exist	pension / medical insurance	pension / medical insurance, employment insurance
Spain	December 2010	Exist	pension	pension
Ireland	December 2010	Exist	pension	pension
Brazil	March 2012	Exist	pension	pension
Switzerland	March 2012	Exist	pension / medical insurance	pension / medical insurance, employment insurance
Hungary	January 2014	Exist	pension / medical insurance	pension / medical insurance, employment insurance
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
Finland	February 2022	Exist	pension / employment insurance	pension / employment insurance
Sweden	June 2022	Exist	pension	pension
Italy	In preparation	Not exist	pension / employment insurance	pension / employment insurance

As of November 2022

Section4: Table of Contents

4.1

Application of laws
4.2

Recruitment
4.3

Labor contracts
4.4

Wages
4.5

Legislation on working hours, breaks and days off
4.6

Rules of Employment
4.7

Safety and hygiene
4.8

Resignation and dismissal
4.9

Japan's social security system

(Reference): International Comparisons of Dismissal Regulations

Labor unions

Coverage of temporary workers by labor law

Consultation with specialists on human resource management

(Flowchart): Social and labor insurances procedures when setting up a company or hiring staff/workers

Annual procedures

Section4: Documents businesses are required to submit to authorities

Section	Documents	Where documents are listed within the URL	The competent authorities and relevant web pages
4-3	Notice of Employment	See "pdf"	Ministry of Health, Labour and Welfare
4-5	Notification of Agreement on Overtime work Working on Holidays		Ministry of Health, Labour and Welfare
4-6	Rules of Employment	See "The Model Rules of Employment"	Ministry of Health, Labour and Welfare
4-9	Notification of Acquisition of Employment Insurance Qualification		Ministry of Health, Labour and Welfare(3.2MB)
4-9	Application to Enroll in Employees' Health Insurance / Employees' Pension Insurance	See "Application form"	Japan Pension Services
4-9	Labor insurance Estimated insurance premiums / Increased estimated insurance premiums / Final insurance premiums Declaration		Ministry of Health, Labour and Welfare(3.2MB)
4-9	Basic amount for calculation of monthly remuneration of person insured Health insurance Employees' pension insurance		Japan Pension Services
4-9	Report of Dependents (change)	See "Report form" under "Coverage of Your Dependents" section.	Japan Pension Services
4-9	Notification of the Establishment of a Labor Insurance Relationship		Ministry of Health, Labour and Welfare(3.2MB)
4-9	Notice of establishment of the business place to which employment insurance is applied		Ministry of Health, Labour and Welfare(3.2MB)
4-9	Application for Workplace Coverage	See "Application form"	Japan Pension Services
4-9	Declaration of Tax Exemption for Salaried Employees (Change)	See the format	National Tax Agency
4-10	Income Tax Withholding Certificate		National Tax Agency

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.

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