Japan's social security system

Japanese social and labor insurance - At a Glance

Japan's social security system

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

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Labor and Social Insurance systems

Japan has four (four) kinds of insurance systems that companies are legally obliged to participate in. These insurance systems cover all employees who meet specific criteria.

Japanese Social and Labor Insurance

1. Workers' Accident Compensation Insurance: This covers any illness or accident incurred by employees due to work or while commuting to or from work.
2. Employment Insurance: This provides financial aid and subsidies to employees who become unemployed and helps them maintain stable employment.
3. Health Insurance and Nursing Care Insurance: It covers employees' medical and nursing care expenses.
4. Employees' Pension Insurance: This benefits employees in their old age or 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 company's premiums to the relevant local authorities.

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

Employer: 15.321% (16.111% for employees age 40 and over) plus 0.002% will be added to the premium rate for Workers' Accident Compensation Insurance for the time being to fund benefits for asbestos-induced diseases.

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

Jointly for employer and employee, the premium's total burden is approximately 30% of annual salary.

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

# At the time of bonuses are paid

# For any major changes in salary amount

# When hiring a new employee

# When an employee resigns etc.

#1] Since Oct-2016, part-time employees working for a company with more than 500 employees will also be insured where their prescribed working hours are at least 20 hours per week receiving a monthly payment 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 the 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.

Japanese Social and Labor Insurance Systems for more details, please download the PDF file.