Japan Labor and Social Insurance systems

Japan's social security system

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

Labor and Social Insurance systems

Japan has 4 kinds of insurance system that companies are legally obliged to participate and all employees that meet certain criteria are covered by the insurance.

  1. Workers' Accident Compensation Insurance
    This covers any illness or accident incurred by employees as a result of work or while commuting to or from work.
  2. Employment Insurance
    This provides for employees that become unemployed & helps to maintain stable employment such as by providing financial aid & subsidies.
  3. Health Insurance and Nursing Care Insurance
    It cover medical and nursing care expenses incurred by employees.
  4. Employees' Pension Insurance
    This provides for benefits to employees 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 Branch office” or a “local subsidiary company” of a foreign corporation must enter “Labor & Social Insurance” upon incorporation and hiring employee by submitting notification forms to the relevant local authorities (#).

The company normally pays insurance premiums by deducting the portion of the premiums payable by employees from their salary and paying it together with the portion of the premiums payable by the co. to the relevant local authorities.

Employer & Employee burden of premium (based on annual salary %) for Social & Labor insurance:

Employer: 15.321% (16.111% for employees age 40 & over) plus 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.

Employee: 14.471% (15.261% for employees age 40 & over)

Jointly for employer & employee the total burden of premium is approx. 30% of annual salary.

Annual procedure timing: Every May for labor insurance & every July for social insurance. Withholding premiums for social insurance is payable monthly & for labor insurance at the time of annual renewal every year in May by employer to the local authority. Other additional ongoing procedures required are as follows:-

#1] Since Oct-2016 part-time employees working for a co. with more than 500 employees will also be insured where their prescribed 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.
#2] Effective Sept-09 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 salary 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 figure.
#5] Union Run Health Insurance refers to an insurance scheme provided by a union run by a company or a group of companies.

Japan Labor and Social Insurance systems for more details please download the PDF file

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