HR Business Management SR Corporation (HRBM) is an expert on payroll calculations and HR management consulting for foreign companies doing business in Japan.

81-3-5402-8491
81-3-5402-8494

E-mail : info@hrbm.co.jp

HR Business Management SR Corporation
ST Bldg. 4F
1-2-4 Shiba-Koen, Minato-ku
Tokyo, Japan 105-0011

Social Security System in Japan

The social security system in Japan consists of "Social Insurance Programs" and
"Labor Insurance Programs".

Social Insurance Programs

Outline

The purpose of these social insurance systems is to help employees maintain a stable life
by providing them or their families with medical or pension benefits for an illness, injury,
disability or post-retirement. Insurance premiums are determined in accordance with an
insured person’s income.

Japanese insurance and pension systems can be broadly divided into two groups.
One is "the Health Insurance and Employees" Pension Insurance, and the other is
"the National Health Insurance and National Pension".

Health Insurance and Employees’ Pension Insurance

Health Insurance and Employees’ Pension Insurance apply to all corporations and individual
offices which regularly employ 5 or more persons. Those who are required to join this
insurance, are employees who work regularly for an applicable company, and an employees’ 
ordinary working days or hours are three quarters or more of those of full-time employees.
An employer must apply for this insurance at the Pension Office unless the company has its
own Health Insurance Society.

The monthly premiums of Health Insurance are determined in accordance with an employee’s wages and are shared equally between an employer and an employee. As an employer must
pay both the shared premiums together each month, an employee’s portion shall be deducted from his/her monthly salary and bonus.

In addition, an employee between the age of 40 and under 65 shall pay premiums for
Long-term Nursing-care Insurance.

Contribution

Insurance premiums are calculated by multiplying the monthly standard remuneration and
bonuses payment with the following rates.

Premium rates differ by prefecture (for the insurance managed by Japan Health Insurance
Association) and for different health insurance societies. The rates for Tokyo (for the insurance managed by Japan Health Insurance Association) at:

〇Health Insurance (effective March 1, 2017)

①Those paying additional premiums for nursing-care insurance: 11.56%
(half paid by employer and half by employee)

②All others: 9.91% (half paid by employer and half by employee)

〇Employees' Pension Insurance (from September 2017 to August 2018)

18.3% (half paid by employer and half by employee) 

Dependent Family Members

Family members of an insured employee may be provided with some of the benefits as
dependents, if they meet the following conditions:

① Relatives within the third degree, who are supported by the Insured employee’s income.

② Their annual income should be less than ¥1,300,000 (less than¥1,800,000 if the person
is age 60 or over or disabled.)

③ Their annual income should be less than a half of the annual income of the insured
employee.  

Health Insurance Benefits

Available “Health Insurance Benefits” are:

① When an insured person or his/her dependents received medical treatment for illness or
injury;

Medical care benefits (individual payment: 30% of medical fees for both outpatient and
inpatient expenses), high medical care benefits, transportation benefits, etc.

② Absence from work due to an injury or illness;

Disability benefits (of two-thirds of standard remuneration per day, starting on the fourth day of absence up to one year and six months)

③ Maternity leave;

Maternity allowance (of two-thirds of standard remuneration for days on maternity leave)

Lump-sum allowance for childbirth and nursing (420, 000) or lump-sum family allowance
for dependent’s childbirth and nursing (420, 000)

④ When an insured person dies;

Funeral allowance or dependent’s funeral allowance

Pension Benefits

The Japanese pension system consists of a National Pension and an Employee’s Pension
Insurance, etc. The National Pension is the basis of the public pension systems, and it pays
"basic pension benefits" commonly to all insured persons. The Employees’ Pension Insurance
is a system for paying insured person’s remuneration-related pension in addition to the "basic pension benefits" of the National Pension. Therefore, the members of the Employees’ Pension Insurance, etc. automatically join the National Pension, as well.

Those covered by a pension system for 10 years or more receive a pension when they turn
65 and thereafter. Disability pensions and survivor’s pensions are also provided to eligible
persons.

Lump-sum Withdrawal Payment System

If a foreign employee who had been a member of a Pension Insurance for 6 months or more has returned home without receiving any pension benefits, he/she may receive a lump-sum
withdrawal refund on request, which should be submitted within two years after returning
home.

To receive the "lump sum withdrawal payment", a claim form must be obtained from a
pension office before leaving Japan and filled in and mailed to the Japan Pension Service from overseas. The amount of payment shall be calculated based on the period of enrollment.   

Social Security Agreement

When an employee who has been posted to Japan from a country which has entered into a
social insurance agreement with Japan and who continues to pay his/her social insurance
premiums to the social insurance system of the original country, the employee is exempted
from paying premiums to the Employees’ Pension Insurance and Health Insurance of Japan.

As of August 2017, the countries that have social security agreements in effect with Japan
are Germany, the United Kingdom, Korea, the United States, Belgium, France, Canada,
Australia, the Netherlands, Czech Republic, Spain, Ireland, Brasil, Switzerland, Hungary, India, and Luxembourg. (The agreement has been signed with Italy and Philippines, and is to be
effective shortly.)

There is also a scheme to prevent "dual enrollment" and it allows summing up of enrollment
periods between Japan and the following countries: Germany, the United States, Belgium,
France, Canada, Australia, the Netherlands, Czech Republic, Spain, Ireland, Brasil,
Switzerland, Hungary, India, and Luxembourg.

Labor Insurance Programs

Outline 

Labor Insurance System consists of "Industrial Injury and Workers' Accident Compensation
Insurance" and "Employment Insurance".

Industrial Injury and Workers' Accident Compensation Insurance

The Labor Standards Law stipulates an employer shall have a duty to pay an employee’s
medical care expenses and temporary disability compensation, when he/she is injured or
suffers an illness attributed to his/her employment.

All employers, with one or more employee, whether corporate or individual proprietorship,
are required to take out a policy in workers’ accident compensation insurance at their own
cost in order to meet the aforementioned obligation regardless of their financial status.
When an employee suffers injury or illness while on work, the insurance will cover the
expenses and compensation except for the compensation for the first three days of the
employee’s absence, which is borne by the respective employer.

Employees who sustain injury while commuting to and from work are provided with the same benefits as those offered for job-related accidents from the Workers’ Accident Compensation
Insurance.

Workers' Accident Compensation Insurance Benefits

An employee’s accident application for compensation should be filed with the Labor Standards Inspection Office in the area where the company is located. It should be submitted by the
employee himself/herself or by the bereaved family. The employer is required to support the
employee in the procedures of Workers’ Accident Compensation Insurance Benefits.
The following benefits shall be provided;

① Medical treatment (compensation) benefits:

All employees are entitled to free medical treatment for the injury or illness until full recovery. As a general rule, employees should seek treatment at a Rosai-designated hospital, but the
expenses incurred shall be reimbursed for treatment received elsewhere if claimed through
a specified procedure.

② Temporary disability (compensation) benefits:

“Compensation benefits for absence from work,” equivalent to 60% of the average daily wage, and “special benefits for absence from work,” equivalent to 20% of the average daily wage,
starting on the fourth day of absence and thereafter. (Employers shall pay 60% or more of
the daily wages for the first three days as stipulated by the Labor Standards Law.)

③ Injury and disease (compensation) benefits:

“Injury and disease compensation pension” to be provided, instead of “compensation benefits for absence from work”, if ① an employee does not recover from the injury or illness, suffered in the course of employment, after 18 months of medical treatment; ② the injury or illness
suffered is severe and of a disability grade 1, 2 or 3; ③ the employee is unable to return to
work for a length of time. In the meantime, “medical compensation benefits” shall be
continuously provided.

④ Physical disability (compensation) benefits:

Either a physical disability compensational annuity or a lump-sum shall be paid depending on depending on the grade of disability if an employee suffering an injury or illness in the course of employment remains physically disabled after recovery. “Special disability benefits” and
“special disability pension (or lump-sum compensation)” may be provided in addition in some cases.

⑤ Survivor’s (compensation) benefits:

“Compensation for bereaved family” (either pension or lump-sum compensation) in the event an employee dies in the course of employment. “Special benefits for bereaved family” or
“special lump-sum compensation for bereaved family” shall also be provided.

⑥ Funeral expenses (benefits):

The person who conducts the funeral shall be paid with 315,000 plus 30 days of the basic
daily benefit amount, or 60 days of the basic daily benefit amount, whichever sum is higher
when an employee has died.

Contribution

Insurance premiums shall be paid only by employer, and the premium ratio is between
0.25% and 7.9% (as of April 2015) shall be fixed by business category.

Employment Insurance

The employment insurance system shall provide benefits which ensure displaced employees
a stable life until they find a new job. This insurance shall also be provided to foreign
employees. However, overseas public servants and those who are covered by any overseas
unemployment compensation system are unable to join this insurance system.

The insurance enrollment procedures will be undertaken by employers at the appropriate
public employment security office. Insurance premiums shall be paid by both employer and
employee, each of their shares defined according to the employee’s salary/wages.
(as of April 2017)

〇 Agriculture, forestry and fishery, and brewing: 11/1000

(employer 7/1000, employee 4/1000)

〇 Construction: 12/1000

(employer 8/1000, employee 4/1000)

〇 All other industries: 9/1000

(employer 6/1000, employee 3/1000) 

Employment Insurance Benefits

Unemployment benefits are provided when an employee covered by employment insurance is forced to leave employment (e.g. dismissal, bankruptcy) or leaves employment for his or her own reasons and is unable to find a new job despite having a positive will to get employment and the ability to take up a job anytime. In case of voluntary resignation or having reached
the retirement age, the employee needs to have been covered by employment insurance for
at least 12 full months in two years preceding the day of his or her becoming unemployed.
If a person was made jobless for the reason of bankruptcy or dismissal, benefits eligibility is
to have been insured for six months or more in total for one year prior to the date of
becoming jobless.

Regarding the calculation of the insured period, the following method will be applied. If a
person worked eleven days or more per month, it is acknowledged that he/she has one
month of the insured period. The maximum benefits period is one year from the day after
becoming unemployed and the number of payable days is stipulated according to the insured period and the age of the worker as given below.

The amount of daily allowance given by the Employment Insurance is called “the basic daily
allowance.” The basic daily allowance amounts to about 50% to 80% (45% to 80% for 60 to
64 year old) of “daily wages” during employment, the value of which is obtained by dividing
the total wages of the past six months just before leaving work by 180). However, the
maximum amount of daily allowance is ¥7,775 and the minimum amount of daily allowance
is ¥1,832 (as of August 2016).

“Restriction on benefits” which is usually for 3 months may be applied, in cases where an
insured person (an employee) has been discharged due to serious reasons concerning
his/her responsibility, or when an insured person has resigned owing to his/her personal
circumstances without any valid reason.

To receive unemployment benefits, the “letter of separation” issued by the former employer
and the “insurance card” (for employment insurance) must be submitted to and registration
as a job seeker must be completed at public employment security office in the area of the
job seeker’s residence. Those without residential status that allows work cannot register as
job seekers and, therefore, are not eligible for unemployment benefits.

Applications and Inquiries

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info@hrbm.co.jp

Where to contact

Payroll / HR Services in Japan
HR Business Management SR
Corporation

ST Bldg. 4F 1-2-4 Shiba-Koen,
Minato-ku Tokyo, Japan 105-0011

81-3-5402-8491
81-3-5402-8494

"Hi, I am Teizo Hirasawa,
representative of HRBM.
If you have any queries,
please do not hesitate to
contact us."