7 Employee insurance

Doing business in Japan

Corporations are required to be an insured employer in accordance with social insurance laws, and violations will lead to penalties. The contribution rates are shown in the table below.

Expatriates are required to contribute to both the Japanese social insurance system and the one in their mother country, except for citizens of the following countries that have treaties in place to avoid double payments: Germany, UK, South Korea, USA, Belgium, France, Canada, Australia, Holland, Czech Republic, Spain, Ireland, Brazil, Switzerland and Hungary. This list is currently growing and more countries may pass a similar treaty at any time. For foreigners who are not exempt from making double contribution payments, the only remedy is to obtain a (possibly partial) refund from the pension system when they leave Japan.

Social/labor insurance
contribution rates
(as of April 2016)

Monthly Pay
Company Employee Total Ceiling
(rates applied to employees’ average monthly pay)
Social Insurance
Health Care
(Tokyo as example)
4.980% 4.980% 9.960% ¥1,390,000
Long-term Care* 0.790% 0.790% 1.580% 1,390,000
Pension 8.914% 8.914% 17.828% 620,000
Child care 0.200% 0.200% 620,000
Labor Insurance
Unemployment 0.700% 0.400% 1.100%
Disability** 0.300% - 0.300%

 

Bonus
Company Employee Total Ceiling
Social Insurance
Health Care***
(Tokyo as example)
4.980% 4.980% 9.960% ¥5,730,000
Long-term Care**** 0.790% 0.790% 1.580% 5,730,000
Pension**** 8.914% 8.914% 17.828% 1,500,000
Child care 0.200% 0.200% 1,500,000
Labor Insurance
Unemployment 0.700% 0.400% 1.100%
Disability** 0.300% 0.300%

 

* Surcharge for elder care premium is levied for those aged 40 and over.** This rate varies from industry to industry and 0.3% is applicable to office workers. A detailed table of various rates by industry has been prepared by the labor department and is available to the public. (e.g. Coal miner: 8.8%, Lumberjack: 6%)*** These rates are applied to the employee’s total annual bonus pay (April 1 through March 31), rounded down to the thousand and capped.**** These rates are applied to the employee’s monthly bonus pay, rounded down to the thousand and capped.