4.9 Japan's Social Security System
Section 4: Human Resource Management
This section covers Japan’s labor laws and regulations. Topics include recruitment, employment contracts, wages, working hours, work rules, workplace safety, hygiene requirements, resignation and dismissal procedures, and Japan’s social security, health, and pension systems.
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 Work Rules
4.7 Safety and Hygiene
4.8 Resignation and Dismissal
4.9 Japan’s Social Security System
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.
- Workers' Accident Compensation Insurance
This covers any illness or accident incurred by workers as a result of work or while commuting to or from work. - Employment Insurance
This provides for workers that become unemployed and helps to maintain stable employment such as by providing financial aid and subsidies. - Health Insurance and Nursing Care Insurance
These cover medical and nursing care expenses incurred by workers. - Employees' Pension Insurance
This provides for benefits to workers in their old age, or in the case of 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 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 from their wages, and paying these together with the portion of the premiums payable by the company to the relevant authorities.
4.9.2 Workers' Accident Compensation Insurance
Table 4-4
| Application | As a rule, this is compulsorily applicable to all workers. 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 each worker's total wage. The rate of premium depends on the kind of business carried out at the workplace; the maximum premium rate was 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 2015). The employer bears the burden of paying premiums. 0.002% is added to the above premium to fund benefits for asbestos-induced diseases. |
| Notification | Notifications must 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
| Application | In principle, this applies to all general workers. However, to qualify for Employment Insurance, part-time workers' 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 1.35% (the employer paying 0.85% and the worker paying 0.5%) with the exception of a few kinds of job (revised on April 2015). |
| 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
| Application | Applicable businesses | All incorporated companies and sole proprietorships with five or more regular employees are generally 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. |
|---|---|---|
| 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. 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, and Hungary to Japan who are enrolled in medical insurance in these countries are exempt from enrolling in Japan. | |
| 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. | |
| 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. |
| 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. | |
| 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." | |
| Premium |
General insurance premiums for the Japan Health Insurance Association Run Health Insurance are 9.97% (in Tokyo *1 ) of each insured party's standard monthly remuneration *2 (maximum: 1,210,000 yen) and standard bonus *3 (maximum: 5.4 million yen per year). For Nursing Care Insurance, premiums are 1.58%. In either case, the insured party and the employer share the premiums equally (revised on April 2015). In the case of Union Run Health Insurance *4 , 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 | 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. |
|---|---|
| *2 | Standard monthly remuneration refers to the division of the total amount of wages and other such payments into predetermined brackets. |
| *3 | Standard bonus refers to the amount of the bonus rounded down to the nearest unit of 1,000 yen. |
| *4 | 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 Employers' Pension Insurance
Table 4-7
| Application | Applicable businesses | All incorporated companies and sole proprietorships those (with five or more regular employees) are generally 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. |
|---|---|---|
| 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 approximately 75% of those of full-time employees. 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 Employees' Pension Insurance premiums (or been officially exempted from paying premiums) for not less than 25 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. |
| 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. | |
| Survivor's Pension | If an insured party, a person who is eligible to receive an old-age pension or a highly disabled person receiving a disability pension dies, a survivor's pension shall be paid to that person's surviving family. | |
| Premium | Rate | Under the latest revision in September 2015, insurance premiums are 17.828% 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 premiums equally. |
| Pension agreement | Japan has social security agreements with Germany, the U.K., South Korea, the U.S., Belgium, France, Canada (except Quebec), Australia, the Netherlands, the Czech Republic, Spain, Ireland, Brazil, Switzerland, and Hungary. Any person insured in the pension system of one of these countries who is sent to Japan is exempted from enrolling in the Japanese pension system upon submitting the appropriate notification at a Pension Office or other appropriate agency. Japan has already signed agreements with Italy, India and Luxembourg, and governmental talks are underway with Sweden, China, the Philippines, and Turkey. Preliminary talks are also underway with Slovakia, Austria, and Finland. | |
| Payment upon leaving | When a foreign national returns to his/her country without having received a pension, a portion of the premiums he/she paid shall be refunded. The amount of a refund is calculated according to the length of time that person was covered under Employees' Pension Insurance and the amount of premiums paid. | |
| 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. | |
| 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. Premiums are a fixed amount per month (15,590 yen from April 2015 to March 2016) and participants in the system are eligible for Old-age Pension, Disability Pension and Survivor's Pension as well as a payment upon leaving similar to that of the above-mentioned Employees'Pension Insurance system. |
|---|
Labor insurance (Workers' Accident Compensation/Employment Insurance): From the aspect of legal theory, the labor insurance coverage of an individual, who is employed by a foreign corporation and working at the representative office that has not been registered in Japan, varies depending on whether or not the individual, including the representative of the office, falls under the definition of "workers" under the Labor Standards Act in Japan. However, since there are no established official documents issued in Japan regarding the foreign corporation which is the employer as well as no handling standards used by the government in such a case, it is currently difficult for the government to recognize the representative of the office as a "worker". On the other hand, with regard to other workers, if the representative is set as the employer, the workers can follow the procedure in order to be covered by the insurance. Therefore, in many cases, the representatives are not covered by the insurance. However, it does not mean that the representatives cannot be covered by the insurance.
Social insurance (Health/Employees' Pension Insurance): In case of a representative office with less than 5 employees, voluntary coverage with the representative of the office as the employer (the representative does not become the person insured) or voluntary coverage as the association without right capacity (registration) (including the representative) are available. If a representative office has n 5 or more employees and fall under the prescribed kinds of businesses, as a general rule, insurance coverage is mandatory. However, with regard to the procedure of including the representative as the person insured, the government does not have the specific rules for handling this matter; therefore, it is currently difficult. Accordingly, it is recommended to request the expert if necessary.
4.9.7 Review of Labor and Social Insurance Systems
Table 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. | 0.35% (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 full-time workers employed at incorporated companies, as well as part-time workers whose prescribed working hours were not less than 75% of full-time workers. | 4.985% (5.775% if aged 40 or over) | 4.985% (5.775% if aged 40 or over) | This premium rate applies only to Japan Health Insurance Association Run Health Insurance (in Tokyo). |
| Employees' Pension Insurance | Benefits are paid for old age, disability and death. | 8.914% | 8.914% | A system exists under which premiums are partially returned to foreign nationals upon withdrawal from the insurance program. | |
| 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. | 0.15% | - | ||
| Total | 15.249% (16.039% if aged 40 or over) | 14.399% (15.189% if aged 40 or over) | |||
As of September 2015
Table 4-9 Social Security Agreements Issued
| Country | Issue month of agreement | Aggregate period | Social security system subject to duplication prevention | |
|---|---|---|---|---|
| Japan | Country | |||
| Germany | February 2000 | Exist | Public pension system | Public pension system |
| U.K. | February 2001 | Not exist | ||
| Korea | April 2005 | Not exist | ||
| U.S. | October 2005 | Exist |
Public pension system/ Public medical insurance system |
Public pension system/ Public medical insurance system |
| Belgium | January 2007 | Exist |
Public pension system/ Public medical insurance system/ Public accident compensation insurance system for workers/ Public employment insurance system |
|
| France | June 2007 | Exist |
Public pension system/ Public medical insurance system/ Public accident compensation insurance system for workers |
|
| Canada | March 2008 | Exist | Public pension system |
Public pension system (excluding Quebec) |
| Australia | January 2009 | Exist | Retirement pension security system | |
| Netherlands | March 2009 | Exist |
Public pension system/ Public medical insurance system |
Public pension system/ Public medical insurance system, employment insurance system |
| the Czech Republic | June 2009 | Exist | ||
| Spain | December 2010 | Exist | Public pension system | Public pension system |
| Ireland | December 2010 | Exist | ||
| Brazil | March 2012 | Exist | Public pension system | Public pension system |
| Switzerland | March 2012 | Exist |
Public pension system/ Public medical insurance system |
Public pension system/ Public medical insurance system |
| Hungary | January 2014 | Exist |
Public pension system /Public medical insurance system |
Public pension system /Public medical insurance system, employment insurance system |
As of August 2015
