The Mipro Guide toStarting a Business in Japan

Manufactured Imports and Investment Promotion Organization (MIPRO)
6th Floor, World Import Mart Bldg., 3-1-3, Higashi-Ikebukuro, Toshima-ku, Tokyo 170-8630, Japan
TEL.03（3971）6571 FAX.03（3590）7585
URL：https://www.mipro.or.jp/

The Mipro Guide to Starting a Business in Japan ～ Public Insurance and Employment Management ～外国人のための起業ガイドブック（公的保険・雇用管理編）～ Public Insurance and Employment Management ～外国人のための起業ガイドブック（公的保険・雇用管理編）

MIPRO

How to use this guidebook“The Mipro Guide to Starting a Business in Japan”is designed to provide information that will help
foreigners wishing to start business in Japan.
This Public Insurance and Employment Management edition explains the public health insurance,
pension, and labor insurance systems to support the basic quality of life of foreign businessproprietors and their employees. It also explains matters to be considered before and after hiring
employees.
The table of contents provides a quick overview to help identify important information, which saves
precious time by alleviating the need to read through the entire guidebook.

I. Public InsuranceThis chapter provides an explanation of the public insurance required by foreigners establishingbusinesses in Japan using a Q&A style and examples from the perspective of both a sole
proprietorship and a corporation to show the difference between them. It explains the public
insurance required in both cases for the business proprietor him/herself, his or her dependents, andemployees followed by the enrollment procedures and the costs of public insurance.
It covers the public insurance of a small-size enterprise with fewer than 10 employees.
Please note that branch offices of foreign-capitalized companies in Japan are treated as corporations,and representative offices in Japan are treated as sole proprietorships.

II. Employment Management
While the requirements regarding employment of sole proprietorships and corporations are thesame, this chapter provides an explanation of basic issues to be aware of when starting a businessand hiring employees.
As in chapter I, it covers the employment management of a small enterprise with fewer than 10
employees.

March 2019
Manufactured Imports and Investment Promotion Organization (MIPRO)

1

Glossary

The terms listed below are used frequently throughout this guidebook. To get the most out of thisuseful document, please take a few moments to familiarize yourself with the meaning of each term.

Regular employees:
Regular employees are generally defined as permanent, full-time workers hired without apredetermined limit to the period of employment to work full-time during the hours and days
determined by the workplace.

Part-time employees:
Part-time employees are defined as workers hired to work less than full-time hours or days. There are
two types of part-time employment; namely, with and without a predetermined period of
employment. Part-time employees in this guidebook include employees both with and without apredetermined period of employment.

Fixed-term employees:
Fixed-term employees are defined as workers hired for a predetermined period of employment.
Working hours and days vary depending on the conditions of employment, with some fixed-term
employees working the same hours and days as full-time employees, and others working fewer hours
or days. Fixed-term employees in this guidebook include both types. For clarity, full-time fixed-term
employees are identified as such throughout this guidebook.

Permanent employees:
The definition of permanent employee varies depending on laws and regulations. Permanent
employees in this guidebook are defined as workers who meet the requirements for social insurance
coverage.

Full-time employees:
Full-time employees are defined as workers hired to work full-time during the hours and days
determined by the workplace. Regular employees are included; however, there is also a full-time,
fixed-term employee category.

2

Table of Contents

I. Public Insurance
1． The Japanese Public Insurance System 

6

2． Public Health Insurance and Pension Overview 8

3. Public Health Insurance for the Dependent Family Members 

94. Enrollment in and Change of Health Insurance andPension Plans for Founders 

10

5. Labor Insurance Overview 12

6. Public Insurance for Employees 146-1    Obligation to Enroll in Public Insurance          (for different workplaces) 15

6-2    Employees Eligible for Insurance 

16

6-3    Public Insurance for Family Employees, Business Partners, etc. 

17

7. Public Health Insurance, Pension Premiums, and Payment Methods 187-1    National Health Insurance Premiums 18

7-2    National Pension Premiums 197-3    Social Insurance Premiums (premiums for healthcare, long-term care,          employees' pension, and child and child care contribution) 

8. Labor Insurance Premiums and Payment Methods 1921

8-1    Workers' Accident Compensation Insurance Premiums 218-2    Employment Insurance Premiums 228-3    Labor Insurance Payment          (fiscal year renewal of labor insurance) 

22

9. Notification of Public Insurance Enrollment 

24

10. Resignation of Employees 25

II. Employment Management
1. Japanese Laws and Regulations regarding Employment 27

2. Preparation and Procedures for Hiring 

28

3

3. Recruiting 

29

3-1    Informing Potential Employees about the Working          Conditions for the Advertised Position 

29

3-2    Recruiting Reminders 303-3    Recruiting 30

4. Hiring 

31

4-1    Indication of Working Conditions 

31

4-2    Probation Period 

324-3    Notifications regarding Employment of Foreign Residents 

33

5. Preparation for Employment 34

5-1    Documents to be Submitted by Employees 34

5-2    Three Documents Designated by Law 

34

5-3    Enrolment in Social Insurance and Employment Insurance 35

6. Japanese Labor Law and Practice 36

7. Work Rules 37

7-1    Matters to be Stipulated by Work Rules 377-2    Obligation to Establish Work Rules 

38

7-3    Procedures for Establishing Work Rules 38

8. Wages 

39

8-1    Five Principles of Payment 39

8-2    Bonuses 

39

8-3    Resignation and Retirement Allowances 408-4    Transport Allowances 408-5    Minimum Wage 40

8-6    Allowance for Absence from Work 40

9. Working Hours, Breaks, and Holidays 

41

9-1    Statutory Working Hours 41

9-2    Work Breaks 41

9-3    Holidays 

41

9-4    Flexible Working Hour Systems 429-5    Discretionary Working Hour System for Specialized Work 

42

9-6    De Facto Working Hour System for Work outside the Workplace 43

10. Overtime Work, Holiday Work, Late-Night Work 

44

10-1    36 Agreement 

44

10-2    Premium Wages 

45

10-3    Exclusion of Managers from Stipulations regarding Working Hours,             Work Breaks, and Holiday Work 446

11. Annual Paid Leave System 4711-1    Number of Annual Paid Leaves to be Provided 

47

11-2    Employer's Right to Change the Period of Annual Paid Leaves 48

11-3    Designation of the Period of Paid Leaves 48

11-4    Wages for Paid Leaves 48

12. Other Statutory Holidays and Leaves 4912-1    Leave to Exercise Civil Rights 49

12-2    Leave for Maternal Healthcare 

49

12-3    Child Care and Family Care Leave 49

13. Safety and Health 5113-1    Obligation to Ensure Safety in the Workplace 51

13-2    Medical Examinations 

51

14. Resignation, Retirement, and Dismissal 52

14-1    Types of Termination 

52

14-2    Retirement and Continual Employment 52

14-3    Dismissal 5214-4    Procedures for End of Employment 54

15. Individual Labor-Related Dispute Resolution System 

55III. Reference
Contact List 57

Statutes 

57Japanese-English Glossary 

58

Appendix: Labor-Management Agreement regarding Overtime Workand Work on Holidays (Example) 

61

Noriko Yashima
Head of International HR Partners Corporation
Labor and Social Security Attorney
Industrial Counselor

After engaged in HR general affairs for foreign companies, opened Yashima International HR
Consulting in 2005. In 2016, reorganized and renamed into International HR Partners
Corporation. Specialized in providing HR services to foreign affiliated companies and foreignlabor including statutory social insurance filing, payroll management, drawing up work rules,
HR consulting and foreign worker employment.
Also served as a lecturer for MIPRO Startup Seminars.

5

I. Public Insurance  

I. Public Insurance
1

The Japanese Public Insurance System〜 What should we know about the Japanese public insurance system? 〜

QA

What insurance is required for foreign residents wishing to start businesses inJapan? Are business proprietors required to cover the cost of public insurance for
their employees?
Japan has a universal healthcare and pension system, which all residents are
required to join. This also applies to foreign residents in Japan beyond a certain
period of time. Employers are required to enroll employees in Workers' Accident
Compensation Insurance and the Employment Insurance.

The Japanese public insurance system consists of Health Insurance, Pension, and Labor (Accident,
Employment) Insurance. Important points related to these aspects of the public insurance system aredescribed below.
（1）Sole proprietorships and corporations are required to enroll in different health insurance andpension systems. (See p. 8, I. 2).
In principle, sole proprietors and their employees are required to enroll in the National Health
Insurance and National Pension System, while corporations are required to have social insurance(Employees' Health Insurance and Employees' Pension Insurance System). Enrollment in the National
Health Insurance and Pension System is the responsibility of the individual requiring insurance.
Enrollment in the social insurance system is the responsibility of each workplace of the corporation.
Subjects of social insurance are permanent employees; however, part-time employees may
also require social insurance depending on the number of hours and days worked (See p. 14, I. 6).
Individuals listed as representatives and directors of a corporation require social insurance because
they are classified as employees of the corporation rather than owners.
（2）Labor insurance consists of Workers' Accident Compensation Insurance and Employment
Insurance. There are no differences in the labor insurance requirements between sole proprietorships
and corporations. If a proprietor or corporation hires at least one employee, the proprietor or every
workplace of the corporation requires labor insurance.
Workers' Accident Compensation Insurance is required for all employees, both permanent and parttime. The requirement for individual Employment Insurance, however, is determined by the period
and prescribed working hours of employment of said individual. The employer is responsible fordetermining whether Employment Insurance is required and for enrollment if required (See p. 12, I. 5,
p. 14, I. 6).

6

  I. Public Insurance

Table 1 Public Insurance System
1. Employees' Health InsuranceSocial Insurance

Public Health Insurance
2. National Health Insurance

Representative and employees
of a corporation
Apply to 1. + 3. as a set

3. Employees' Pension Insurance
Public Pension

for Sole Proprietorships
4. National Pension System

5. Workers' Accident Compensation Insurance
Labor Insurance
6. Employment Insurance

The term “Social Insurance” is used in two ways in Japan. One is referring to public insurance in general and the other is referring to
Employees' Health Insurance (1) and Employees' Pension Insurance (3) collectively. It is used in the latter way in this guidebook.

The public insurance system includes many special cases and exceptions. Before determining which
public insurance is required, please read the relevant chapters and contact the jurisdictional officelisted therein.
The table below gives an overview of public insurance related to the start-up of a business.

Table 2 Public Insurance Required by Employers
Sole Proprietorships(Fewer than 5 employees)

Corporation

Proprietor

・National Health Insurance
・National Pension

・Employees' Health Insurance
・Employees' Pension Insurance

Spouse・National Health Insurance・National Pension (Need tobear insurance premium)・Employees' Health Insurance (Dependent)・National Pension(No need to bear insurance premium)

Regular Employee

・Worker's Accident
Compensation Insurance
・Employment Insurance・Employees' Health Insurance・Employees' Pension Insurance
・Worker's Accident Compensation Insurance・Employment Insurance

Application forworkplaces
eligible forthe insurance

・Labor Insurance
Registration Form・Labor Insurance Premiums
Estimate Declaration Form・Employment Insurance
Covered Office
Establishment Report・Labor Insurance Registration Form・Labor Insurance Premium Estimate Declaration Form・Employment Insurance Covered Office
Establishment Report・Notification of New Application for Employees'
Health Insurance and Employees' Pension Insurance

Application for
insured person

・Employment Insurance
Insured Worker
Qualification Acquisition
Report・Employment Insurance Insured Worker Qualification
Acquisition Report・Employees' Health Insurance/Employees' Pension
Insurance Insured Worker Qualification Acquisition
Report・Application for Dependent's Coverage

Insured Person

Application

・“Workplaces eligible for the insurance” means workplaces required to enroll in one of the public insurance systems. New
companies are required to submit notification to the relevant administrative organ to determine whether they are eligible for the
insurance.
・See p. 24, Table 12 and 13 for more details about the procedures and period of application.

7

I. Public Insurance  

2

Public Health Insurance and Pension Overview〜 Which insurance is required to start a business? 〜QAIs a sole proprietor required to enroll in the National Health Insurance and Pension
System, and should a corporate founder that is not planning to hire anyone for thepresent enroll in the National Health Insurance and National Pension System like asole proprietor? What is the difference between“Employees' Health Insurance and
Employees' Pension Insurance”and“National Health Insurance and National Pension
System?”Sole proprietors are required to enroll in the National Health Insurance andNational Pension System. That is, sole proprietors are not covered by the social
insurance system.
Corporations require Employees' Health Insurance and Employees' Pension
Insurance. Employees' Health Insurance and Employees' Pension Insurance areintended to assure employees' security of life. That is why they provide benefits for
employees who are unable to work due to sickness and injury.

Table 3 Individuals Covered by Public Health Insurance and Public Pension
Type
National Health Insurance
National Pension System
Social Insurance
Employees' Health Insurance
Employees' Pension Insurance
Note: E mployees' Health Insurance and Employees'
Pension Insurance are provided as a set inprinciple, and cannot be chosen separately.

Insured Individuals

Responsibility

・Sole proprietors and employees・Individuals not insured by social
insurance

InsuredIndividuals
themselves

・Representatives, full-time executives,and permanent employees・Permanent employees working at asole proprietorship employing 5 ormore permanent employees

Employer

Individuals covered by Public Health Insurance pay only a certain percentage of the cost oftreatment for non-occupational injury or illness. Expenses related to childbirth or the insured
individual's death are also reduced.
The Public Pension Insurance System is a form of mutual assistance paid to eligible members andtheir families to ensure their quality of life after retirement and in the case of disability or death of theeligible member.
Contact
Pensions: Pension Service Office, Local municipal office
Health Insurance: Japan Health Insurance Association (Prefectural Offices), Local municipal office8  I. Public Insurance3

Public Health Insurance for the Dependent
Family Members〜 What Public Health Insurance is available for dependents? 〜

QA

Is it also possible for family members to be insured as dependents under the sole
proprietor or the corporate founder's insurance?
National Health Insurance covers dependent members of the same household. If
dependent family members have separate incomes, the insurance premium will bebased on the total income of the household, including the income of said family
members. However, Employees' Health Insurance is provided for the person
employed at the corporation. To enroll dependent family members in the same
health insurance plan, the employee simply needs to submit an application.
Dependents are added at no additional charge. Conditions for the enrollment ofdependents are shown below.

Conditions for the enrollment of dependents in the Employees' Health Insurance system
Dependents of the insured individual must be dependent on said individual's income to be eligible
for enrollment in the insured individual's Employees' Health Insurance. Dependents are required tomeet conditions such as maximum annual income limits and dependence on the insured person formaintenance of livelihood (living together or separately, amount of financial assistance from theinsured person, etc.). A spouse with an annual income of less than 1,300,000 yen is eligible to becovered as a dependent. Please contact the office below for more detailed information.

Table 4 Health Insurance for Dependent Family Members
Type

SystemInsurance Premium

National Health Insurance

Enrolled as a member of the same
householdBased on the total income of thehousehold

Employees' Health Insurance

Enrolled as a dependent of theinsured person

Insurance premium for the
insured person only

Contact
National Health Insurance: Local municipal office
Conditions for dependent family members: Japan Health Insurance Association (Prefectural Offices) or
Pension Service Office located in the area where theinsured person works

9

I. Public Insurance  

4

Enrollment in and Change of Health Insurance
and Pension Plans for Founders〜 How do founders enroll in and change health insurance
and pension plans? 〜

QA

If an individual who is currently a student covered by National Health Insurance
becomes a sole proprietor, who thus requires National Health Insurance, is there any
special procedure that needs to be followed regarding insurance?
Does a company employee covered by social insurance who establishes a
corporation, and thus requires social insurance need to do or change anything?
A student who has National Health Insurance doesn't need to do anything if thechange from student to sole proprietor does not involve a change of address.
Individuals who were granted a special payment system for students during theirstudies begin paying premiums following graduation. The Japan Pension Service will
send a premium invoice.
The social insurance that an employee has ends when employment at the company
ends. After said employee establishes a corporation, the corporation needs to be
newly enrolled in social insurance.

◆ Special Payment System for Students:
https://www.nenkin.go.jp/international/english/nationalpension/nationalpension.html
Every resident of Japan, including foreign residents, is legally obligated to join the National Pension
System from the age of 20. However, students are eligible for an postponement of payment.
<For new enrollment>（1）Sole Proprietors
The application for National Health Insurance and National Pension System should be submitted at
the local municipal offices where the individual resides.
（2）Corporations“Notification of New Application for Employees' Health Insurance and Employees' Pension
Insurance”should be submitted to the Pension Service Office in the area where the business islocated. Applications for representatives and their dependent family members should also be
submitted (See p. 24, I. 9).
・Health insurance carriers are the Japan Health Insurance Association, which provides coverage for small- and medium-size
enterprises, and Health Insurance Societies, which provide coverage for major corporations and industries. Generally, the insurance
provided by the Health Insurance Societies (Kumiai Kenpo ) have lower insurance premiums and grant more benefits; however,conditions for enrollment are much more severe, which makes it quite difficult for newly established corporations to qualify. This
guidebook, therefore, focuses on enrollment in the insurance provided by the Japan Health Insurance Association (Kyokai Kenpo ).

<To change insurance plans>（1）Change from Social to National Insurance① Employee [Social Insurance] ➡ Sole Proprietor [National Health Insurance]
T he application for enrollment in National Health Insurance should be submitted with acertificate of retirement issued by the former employer to the local municipal office in the area
where the individual resides. Application for the National Pension System is not required.
Contact : Local municipal office

There are some differences in the documents required depending on the local municipal office.

② Employee [Social Insurance] ➡ Corporate Founder [Social Insurance]
When establishing a corporation, an application for social insurance needs to be submitted for10  I. Public Insurance

the corporation as an eligible workplace. Applications for enrollment in social insurance(Employees' Health Insurance and Employees' Pension Insurance) for the founder and eligible
dependents also need to be submitted. Even if the individual had been enrolled in social
insurance during the previous employment, a new application must be submitted for the newcorporation because individual enrollment in social insurance ends with the end of the previous
employment.
Contact : Pension Service Office in the area where the new workplace is located.
<Reference>
   Application for continuing status as an Insured Person with Voluntary and Continuous Health
Insurance Coverage
Individuals enrolled in health insurance for two months or longer prior to the day that
employment ends are eligible to continue enrollment in said health insurance for two years after
employment ends. In order to qualify, the application must be submitted within 20 days after thedate employment ends.
Contact : Submit the application to the previous company you worked for.
The premium for an Insured Person with Voluntary and Continuous Health Insurance Coverage
is based on the individual's Standard Monthly Remuneration. To calculate the premium, either theStandard Monthly Remuneration at the time employment at the company ended or the average
Standard Monthly Remuneration of persons insured by Employees' Health Insurance (280,000 yen
for the Health insurance issued by the Japan Health Insurance Association as of September 2018),
whichever is lower, is multiplied by the insurance premium rate. Insurance premiums will also
include the employer's contribution. However, dependent family members are still covered at no
extra charge.

（2）  Change from National Health Insurance and National Pension System for students and sole
proprietors① [ National Health Insurance, National Pension System] ➡ Sole Proprietor [National Health
Insurance, National Pension System]
If there is no change of address, then nothing is required.
In the case of a student using special payment system for students, the Japan Pension Service
will send notification to begin or resume payment after graduation. The premium is then paid
afterward. However, those without income are eligible for other exemptions or extensions.
Please contact the office listed below.
Contact : Local municipal office (National Pension System Department)② [National Health Insurance, National Pension System] ➡ Corporate Founder [Social insurance]As in (1) ② above, a corporation is required to submit notice as an office eligible for social
insurance. At the same time, the founder is required to enroll in social insurance (Employees'
Health Insurance and Employees' Pension Insurance). The individuals must withdraw from the
National Health Insurance System by submitting proof of new health insurance. There is no needto withdraw from the National Pension System because enrollment in social insurance
automatically cancels enrollment in the National Pension System.
Contact : Local municipal office in the area where the individual resides (for withdrawal from the
National Health lnsurance)
Contact
Pension Service Office and local municipal office in the area where the workplace is located11I. Public Insurance  

5

Labor Insurance Overview〜 What labor insurance is required when employees are hired? 〜QAWhat is labor insurance and is it required when employees are hired?
Labor insurance consists of“Workers' Accident Compensation Insurance”and“Employment Insurance.”Employers are required to have labor insurance when theyhire employees. Because Workers' Accident Compensation Insurance covers
employees through the workplace, there is no need to apply separately for individual
employee coverage. Eligibility for Employment Insurance varies depending on the
period of employment and the prescribed working hours of the individual employee.
Enrollment requires submission of a notice of eligibility (See p. 24, I. 9).
There are no differences in labor insurance enrollment between sole proprietors
and corporations. Workers' Accident Compensation Insurance premiums are borneby the employer and Employment Insurance premiums are born by both theemployer and employee at predetermined rates (See p. 21, I. 8).

Workers' Accident Compensation Insurance : The purpose of this insurance is to grant benefits for
employment- or commute-related injury, disease, disability or death. The Labor Standards Act
stipulates that if a worker suffers injury or illness in the course of employment, the employer shall bear
the expense of necessary medical treatment and other requirements. The Workers' Accident
Compensation Insurance system was established to ensure that employees receive secure andprompt insurance benefits and to reduce the burden of expense placed on employers. All employers
with more than one employee are required to enroll in this insurance (See p. 15, I. 6-1).
 However, Workers' Accident Compensation Insurance does not cover all expenses. For example,
compensation for absence from work is provided from the fourth day of the absence; therefore, theemployer is obligated to cover the first three days at the rate of 60 percent of the employee's average
wage.
Employment Insurance : The purpose of this insurance is to provide benefits for workers who are
unemployed, who are taking child/family care leave, or who are receiving job-related training. The
government provides“Stabilization of Employment”and“Human Resources Development”services(Two Major Employment Insurance Services) including the provision of subsidies and other necessary
aid and assistance for employers who take measures to prevent unemployment.

Table 5 Subjects of Labor Insurance (Insured Person)
Insured Individuals
Workers' Accident
Compensation
Insurance
Employment
Insurance

12

Responsibility

All employees
Note: In the case of Special enrollment for Workers' Accident Compensation
Insurance premiums for small and medium-sized employers, etc.,
employers, family employees, and directors are all eligible.

Employees meeting predetermined criteria
・Details are explained in p. 14, I. 6.

Employer

I. Public Insurance◆ Special enrollment for Workers' Accident Compensation Insurance premiums for small and  
medium-sized employers:
L abor insurance is for employees; however, it was established for the purpose of providing
coverage for family members and directors working in small and medium-sized enterprises as
employees. There are slight differences in the determination of insurance premiums and benefits
between the insurance for employees and for employers. The requirements are as follows:(1) Eligible persons and workplaces

  Employers of workplaces with 300 ＊ or fewer employees including family employees and directors
engaged in the business.
＊

50 or fewer employees for financial business, insurance business, real estate business, and retail business. 100 or fewer
employees for wholesale business and service business.

(2) Employers with more than one employee and reporting as a covered workplace(3) Administration of labor insurance should be entrusted to the Labor Insurance Administration
Association. ＊＊＊＊ Labor Insurance Administration Association is installed at federations or associations consisting of employers of small andmedium-sized enterprises including business cooperatives or federations of cooperatives. If the administration of labor
insurance is entrusted to certified social insurance labor consultants, related administration associations handle theprocedures.

13

I. Public Insurance  

6

Public Insurance for Employees〜 I heard some sole proprietors and part timers are required
to enroll in social insurance and labor insurance. 〜QAWhich public insurance is required when hiring employees?
What are the differences in public insurance required for regular and part-time
employees hired by a sole proprietor and corporations? Are part-time employees
also required to enroll in labor insurance? Is a corporation required to enroll parttime employees in social and labor insurance?
First, the case of regular employees: Sole proprietors are required to enroll in labor
insurance; and corporate representatives are required to enroll in both social andlabor insurance. Second, the case of part-time employees: Enrollment in labor
insurance is required for both sole proprietorships and corporations. However, in thecase of employment periods of less than 31 days, enrollment in Employment
Insurance is not required whereas Workers' Accident Compensation Insurance is.
There are some exemptions which will be explained in a later chapter.

○ Obligation to enroll regular employees in insurance
Corporations
Type of insurance required
Social Insurance (Employees' Health Insurance, Employees' Pension Insurance)
Labor Insurance (Employment Insurance, Workers' Accident Compensation Insurance)

Sole Proprietorships (Hiring less than 5 permanent employees)
Type of insurance required
Labor Insurance (Employment Insurance, Workers' Accident Compensation Insurance)・Sole proprietors are not required to obligate employees to enroll in social insurance nor are they required to bear the cost of
insurance premiums. Individual employees are responsible for enrolling in the National Health Insurance and National Pension
System.
・In the case of 5 or more permanent employees, sole proprietorships are considered the same as corporations.

○ Obligation to require part-time employees (whose period of employment is 31 days or more) toenroll in insurance
Regardless of the business structure, corporation or sole proprietorship, the required insurance is
as indicated below:
Type of insurance required
Labor Insurance (Employment Insurance＊, Workers' Accident Compensation Insurance)＊In the case that the period of employment is estimated to total less than 31 days, the employee is not eligible for Employment
Insurance.

Part-time employees who meet prescribed criteria for working hours per day or week, or numberof working days per month are treated as permanent employees and required to enroll in social
insurance as regular employees.

14  I. Public Insurance

6-1 Obligation to Enroll in Public Insurance (for different workplaces)
Covered workplaces, subjects of the enrollment of social insurance and labor insurance for
employees, are predetermined by business structure, such as sole proprietorship or corporation, andnumber of employees.
<Social Insurance>
Corporations are required to enroll in social insurance. Therefore, full-time employees are required
to enroll.
Sole proprietorships with fewer than 5 permanent employees are not required to enroll in social
insurance. With some exceptions (see notes on Table 6), however, sole proprietorships with 5 or morepermanent employees are required to enroll.
Sole proprietorships with fewer than 5 permanent employees can also enroll in social insurance if ahalf or more of the employees agree and the sole proprietor submits an application for enrollment.
(This is“voluntary enrollment.”See p. 16,〈Reference〉for more details.)
However, the sole proprietor him/herself cannot be enrolled in social insurance even with 5 or morepermanent employees nor the case of eligible workplace for voluntary enrollment.
<Labor Insurance>
Labor insurance is compulsory for all workplaces except sole proprietorships with fewer than 5
employees engaged in agriculture, forestry and fisheries.

Table 6 Classifications of Workplaces Covered by Social and Labor Insurance
Type of BusinessCorporation
Sole
ProprietorshipSocial Insurance

Labor Insurance

Compulsory

Compulsory

Less than 5 permanent
employees

VoluntaryCompulsory＊

5 or more permanent
employees

Compulsory＊＊

Compulsory＊

Workplaces engaged in agriculture, forestry and fisheries with fewer than 5 permanent employees can voluntarily enroll inlabor insurance.
＊＊ 
Workplaces engaged in specific fields, such as agriculture, forestry and fisheries, barbers and hair salons, hotels,
restaurants, law firms, tax accountants, with 5 or more permanent employees can voluntarily enroll in social insurance.

<Reference>
    Voluntary enrollment in social insurance     (Employees' Health Insurance, Employees' Pension Insurance)
If one half or more of the total number of permanent employees agree, the employer can apply
to the Minister of Health, Labor and Welfare for approval to enroll in social insurance. If enrolled,
the employer would have the obligation to pay the premiums just as they would undercompulsory enrollment. Employers are not, however, required to apply.
Enrollment in social insurance increases the cost for employers. However, enrollment may also
be seen as advantageous because the improvement in benefits for employees leads to theacquisition of better human resources.
In the case that the corporation is not eligible for voluntary enrollment in social insurance,
employees need to enroll in and pay for the National Health Insurance and National Pension
System individually. If a family member is covered by Employees' Health Insurance, the employee
can be covered as a dependent of the family member if he/she meets the requirements.

15

I. Public Insurance  

6-2 Employees Eligible for Insurance
The criteria for public insurance eligibility are explained by a comparison of criteria for part-time andregular employees. There are no differences in business type, such as sole proprietorship or
corporation.
<Social Insurance>
Full-time regular and fixed-term employees are the subjects of social insurance coverage. Part-time
employees meeting the two requirements shown below are deemed to be permanent employees
and required to enroll in social insurance in the same way full-time regular and fixed-term employeesare.
(1) Employees whose working hours per day or week equal or exceed approximately three quartersof the hours of full-time employees ＊(2) E
 mployees whose working days per month equal or exceed approximately three quarters of thedays of full-time employees ＊＊Working hours of regular employees are generally set at 40 hours per week, and “approximately three quarters or more”
means 30 hours or more per week. However, rather than being strictly calculated, working hours are roughly determinedconsidering the content and form of work. Part-time employees working for 28 hours per week can also enroll in social
insurance the same as regular employees working 40 hours per week. Please address questions to the Pension Service
Office in the area where the business is located.

Fixed-term employees whose period of employment is 2 months or less are deemed temporary
employees even if they work full time, and are not eligible.
<Labor Insurance>
Regarding labor insurance, Workers' Accident Compensation Insurance is required for all
employees while Employment Insurance is only required for those who meet the two requirements
listed below.
(1) Employees who will be employed for 31 or more days.
(2) Employees whose prescribed working hours per week are 20 or more hours.
・E mployees need to enroll in the Workers' Accident Compensation Insurance; however, employees whose period of
employment will definitely be less than 31 days are exempted.
・Part-time employees who are students and work part time during the daytime are deemed temporary employees and not
eligible to enroll in Employment Insurance even if they meet the two above-mentioned requirements.

There are special cases and exemptions other than the above. Please contact the following offices
for more details about insurance for employees.
Contact
Social Insurance : Pension Service Office
Labor Insurance : Labor Standards Inspection Office, Hello Work16

  I. Public Insurance

6-3 Public Insurance for Family Employees, Business Partners, etc.

Q
A

Can family employees enroll in social and labor insurance? What kind of insurance isavailable for business partners?
Family employees can enroll in social insurance if the workplace is enrolled and said
family employees meet the criteria for working hours and other conditions. Family
employees living separately are eligible to enroll in labor insurance. In principle, family
employees living with the sole proprietors are not eligible to enroll in labor insurance;
however, family employees living with the employer of the corporation may be able toenroll in labor insurance in exceptional circumstances.
Enrollment of business partners in labor insurance differs depending on their status at
the corporation; namely, whether they are listed as directors or regular employees.

Family Employees:
・ Enrollment in Social Insurance
If the family employee working at a corporation or sole proprietorship eligible for social insurance(with five or more permanent employees or voluntarily applicable) meets the criteria to be eligible forsocial insurance, he/she is eligible to enroll in social insurance.
・If the family employee at a corporation does not meet the criteria and his/her annual income is less than 1,300,000 yen, he/she iseligible to enroll in social insurance as a dependent of a representative of the corporation (a person enrolled in social insurance). If
the family employee at a sole proprietorship does not meet the criteria and the annual income is less than 1,300,000 yen, he/she isrequired to enroll in the National Health Insurance and National Pension System (See p. 8, Table 3).

・ Enrollment in Labor Insurance
Family employees at both sole proprietorships and corporations are eligible to enroll in labor
insurance (Workers' Accident Compensation Insurance and Employment Insurance) if said family
members live separately from the employers. If the family employee lives with the sole proprietor or
corporate representative, he/she is not, in principle, eligible to enroll in labor insurance. However, inthe case of corporation, if the said family employee follow the representative's directions and istreated the same as other employees, he/she may be able to enroll in labor insurance as an exception.
Exceptions are evaluated by Hello Work on a case-by-case basis.
Non-representative Corporate Directors:
Full-time corporate directors are eligible to enroll in social insurance, but not in labor
insurance. In the case that the director is also listed as an employee, he/she is eligible to enroll inlabor insurance. However, the final decision is made by Hello Work based on the articles ofincorporation, minutes of director's meeting, wage ledger, etc. Therefore, it is necessary to checkindividually.
Directors and family employees enrolled in the“Special Enrollment for Workers' Accident
Compensation Insurance Premiums for Small and Medium-sized Employers (See p. 12, Table 5)”are
eligible to enroll in the Workers' Accident Compensation Insurance portion of labor insurance.
Contact
Hello Work, Labor Standards Inspection Office17

I. Public Insurance  Public Health Insurance, Pension Premiums,
7 	and Payment Methods〜 I heard there was a difference between the premiums of social insurance
and that of the National Health Insurance and Pension System. 〜QAHow are insurance premiums calculated?
The Premium calculations for National Health Insurance and National Pension
System, and social insurance are based on different factors.

Table 7 S tructure of National Health Insurance, National Pension System, and Social Insurance
Premiums
Base Income for
Calculation

Rate

National Health
Insurance

Household income

Determined by individual local governments

Insured person

National Pension
System

A fixed amountA nationally unified amountInsured person

Social Insurance

Monthly salary andbonus of insured
personEmployees' Health Insurance:
Determined by individual local governments
Employees' Pension Insurance:
A nationally unified rate

Shared by insured
person and employer

Bearer

7-1 National Health Insurance Premiums
National Health Insurance premiums are based on the household income for the previous year
(January 1 – December 31). Rates differ depending on the area in which the insured individual resides.
All local governments in the 23 wards of Metropolitan Tokyo calculate premiums for healthcare,
medical care assistance for people aged 75 and over, and long-term care, each of which includes aper-income and per-capita levy.
Example) A family living in Minato Ward of Metropolitan Tokyo:	A sole proprietor, 1 family dependent (spouse) (both younger than 40 years of age ＊ )Annual Income of the sole proprietor: ￥5,000,000 per year (Earnings: ￥3,460,000)
	Household earnings: ￥3,460,000 per year (spouse earns no income), Base amount forcalculation: ￥3,130,000 (￥3,460,000 – ￥330,000 predetermined exemption)
Based on the above base amount multiplied by the prescribed rate, the total amount of National
Health Insurance premium is calculated to be 400,602 yen per year as shown in the table below.
Per-Income Levy

Per-Capita Levy

For healthcare

7.32%¥229,116¥39,000 × 2¥78,000¥307,116

For medical care assistance

2.22%¥69,486¥12,000 × 2¥24,000¥93,486

For long-term care

1.18%

―

＊

¥15,600 × 0

Total
＊

18

Total

Because both are younger than 40 years of age, they pay no premiums for long-term care.

―

＊

―＊
¥400,602

  I. Public Insurance

The national government established upper limits on premiums, which are 580,000 yen for
healthcare, 190,000 yen for medical care assistance, and 160,000 yen for long-term care, or a total of
930,000 yen, as of April 2018. The 23 wards of Metropolitan Tokyo adopt these limits; however, somelocal governments have set lower limits.
The National Health Insurance System does not recognize dependents. Therefore, the system
includes the incomes of all dependents in calculating the insurance premium, and the number of
dependents is included in the calculation of the per-capita levy for the household. The premiums arepaid by the insured person using a payment slip sent by the local government in the area where theinsured person resides.

7-2 National Pension Premiums
National Pension Premiums are set at a nationally unified amount. As of April 2018, that amount is
16,410 yen per month. Individuals covered by this plan pay using a payment slip sent by the Japan
Pension Service.

7-3 Social Insurance Premiums (premiums for healthcare, long-term care, employees'
pension, and child and child care contribution)（1）Base Income for the Calculation of Social Insurance Premiums
Social insurance premiums are calculated by multiplying the insured individual's Standard Monthly
Remuneration based on his/her monthly salary (which includes his/her basic salary, allowances, overtime,
and transport allowance) by the premium rate. Bonuses are rounded down to the nearest 1,000 yen(the result is referred to as a“Standard Bonus”) and multiplied by the premium rate to calculate
insurance premiums. Premiums are divided at fixed percentages and paid by both the insured person
and the corporation.
<Calculation of Standard Monthly Remuneration>
Standard Monthly Remuneration is determined by the regular determination based on the salarypaid between April and June, and changes in monthly remuneration made when the fixed salary ischanged.
・Regular Determination (Notification of determination of base income for calculation)
The Standard Monthly Remuneration of the insured individual between September of the current
year and August of the following year as of July 1 is determined by calculating the average monthly
remuneration between April and June of the current year and referring to the equivalent classification.
The base remuneration for calculation should be reported to the Pension Service Office between July
1 and July 10 every year.
・Occasional Revision (Report of changes in monthly remuneration)
The Standard Monthly Remuneration of the insured person is not, in principle, changed until thenext regular determination. However, if the monthly remuneration does change significantly, thereported Standard Monthly Remuneration should also be revised.
Occasional revision is performed for the fourth month from the month when ① the fixed salarychanged because of promotion or demotion, ② average monthly remuneration for the threesuccessive months after the fixed salary changes show a gap more than 2 or more levels with theexisting Standard Monthly Remuneration.

19

I. Public Insurance  （2）Employees' Health Insurance Premium Rates
The rate of Employees' Health Insurance premiums differs depending on the local office of theJapan Health Insurance Association. The local office in the area where the workplace has been
established determines the rate. Long-term care insurance premiums are added to the premiums
when the insured person becomes 40 years of age. Family dependents are not charged for
Employees' Health Insurance. The Tokyo Office sets the Health Insurance premium rate at 9.90%,
which includes both labor and management, and Long-Term Care Insurance premium rate at 1.57%,
as of September 2018.

Total

Employees' Health Insurance Premiums borne by both labor and management per month=(Standard Monthly Remuneration × Premium Rate) + (Standard Bonus × Premium Rate) ＊＊in the case where bonus is paid

Premium Rate
= Health Insurance Premium Rate + Long-Term Care Insurance Premium Rate ＊＊＊＊For individuals aged 40 years and over（3）Employees' Pension Insurance Premium rate
Employees' Pension Insurance premium rate is nationally unified. The premium rate for both laborand management has been set at 18.3% as of September 2018. Child and Child Care Contribution iscompletely borne by employers and is based on the Standard Monthly Remuneration used to
calculate Employees' Pension Insurance.

Total Employees' Pension Insurance Premiums borne monthly by both labor and management= (Standard Monthly Remuneration × Premium Rate) + (Standard Bonus × Premium Rate) ＊＊in the case where bonus is paid

Premium Rate
= Employees' Pension Insurance Premium Rate + Child and Child Care Contribution Rate ＊＊＊＊Employers need to pay Child and Child Care Contribution.

（4）Payment of Social Insurance Premiums
Employers pay social insurance premiums at a financial institution or via bank transfer based on thepayment slip sent by the Japan Pension Service by the end of the month following the month billed.
Social insurance premiums include the premiums to be paid by the employee covered by the
Employees' Health Insurance and Employees' Pension Insurance, which are deducted from theemployee's salary, and the premiums to be paid by the employer.

20  I. Public Insurance

8

Labor Insurance Premiums and Payment Methods〜 What labor insurance costs are employers responsible for? 〜

Q How are labor insurance premiums calculated? Are employers required to pay labor
insurance premiums every month, as is the case with social insurance premiums?

A Labor insurance premiums are based on the total income, and estimated premiums

are paid one year in advance. Because this differs significantly from the social
insurance system, employers should take note. Labor insurance premium rates varydepending on the degree of risk for the job. Workers' Accident Compensation
Insurance premiums are paid by the employer and Employment Insurance premiums
are borne by both labor and management at predetermined percentages.

◆ Total Income:Annual gross income, including base salary, allowances, overtime, transport allowance and bonus.

Table 8 L abor Insurance Premiums System
Base Income
For Calculation

Rate
Differs depending on the type of job
Addition of general contribution

Workers' Accident
Compensation Insurance

Responsibility
Employer

Differs depending on the type of job ＊Total Income
Employment Insurance＊

Different classifications from those for Workers'
Accident Compensation Insurance

Addition of the payment for Two Major
Employment Insurance Services for employers

Borne by the
insured person
and the employer

Detailed explanation will be provided from 8-1 to 8-3 below.

8-1 Workers' Accident Compensation Insurance Premiums
Workers' Accident Compensation Insurance premiums are calculated by multiplying total income
by premium rate. Premium rates differ depending on the type of job. The higher the risk is, the higher
the premium rate becomes. As of September 2018, the rates are between 0.25% and 8.88% (Table 9).
The highest rate, 8.8%, is applied to employees involved in metallic and non-metallic mineral miningor coal mining work. In addition, 0.002% is collected as a general contribution for the victims ofasbestos exposure.

Table 9 E xamples of Workers' Accident Compensation Insurance Rates
As of September 1, 2018 (%)(excluding the general contribution) Work Type

Responsibility

Telecommunications, broadcasting, newspaper, and publishing businesses
Finance, insurance, and real estate businesses

0.25

Wholesale, retailing, restaurant, and lodging businesses

0.30

Other types of businesses

0.30

Premium rates for other businesses
https://www.mhlw.go.jp/new-info/kobetu/roudou/gyousei/kantoku/dl/040330-pamphlet.pdf(Introduction to procedures to enroll in Labor Insurance p. 17 (19) Reference 2: Table of insurance rate etc. (Fiscal Year 2016 version))21

I. Public Insurance  

8-2 Employment Insurance Premiums
Employment Insurance premiums are calculated by multiplying total income by premium rates.
Insurance premiums for unemployment benefits are borne by labor and management; however,
employers are required to pay for Two Major Employment Insurance Services. Premium rates differ
depending on type of job. Job classifications for Employment Insurance are different from those forWorkers' Accident Compensation Insurance, and are divided into three categories,“General,”“Agriculture, Fisheries, and Sake Brewing,”and“Construction.”

Table 10 E
 mployment Insurance Premium RateAs of September 1, 2018(%)

Responsibility for Employer
Unemployment
Benefits

Two Major
Employment
Insurance Services

Total

Responsibility for
Employee

General

0.3

0.3

0.6

0.3

Agriculture, Fisheries, and Sake
Brewing

0.4

0.3

0.7

0.4

Construction

0.4

0.4

0.8

0.4

Type of Job

8-3 Labor Insurance Payment (fiscal year renewal of labor insurance)
Labor insurance premium is paid per year, rather than per month, in advance. Employers are
required to pay the estimated labor insurance and Employment Insurance premiums to the end of
the fiscal year (March 31), including the amount to be borne by the individual employee, at the timeof enrollment in labor insurance. The portion of the Employment Insurance premium to be borne byindividual employees is divided into the payment period and deducted from their monthly salaries.
Between June 1 and July 10 of each year, the difference between the final labor insurance premiums
for the previous year (from April to March), general contributions for the previous year, and estimatedlabor insurance premiums for this fiscal year are paid. This is called, the“Fiscal year renewal of labor
insurance (Nendo ko-shin ).”<Fiscal year renewal of labor insurance>
Payment period: Between June 1 and July 10 of each year
Items to be paid:(1) F inal labor insurance premiums for the previous year - Estimated labor insurance premiums= Amount of difference(2) General contributions for the previous year(3) Estimated labor insurance premiums for the current fiscal year
In the case that estimated labor insurance premium exceeds 400,000 yen, payment can be made in
up to 3 installments. Payment can be made through financial institutions (Final Report of Labor
Insurance and Application for Labor Insurance Premium Estimate are required), or via bank transfer.

22  I. Public Insurance

ColumnBurden of Social Insurance andLabor Insurance

How much will social insurance and labor insurance premiums be?
As described in I. 7 and I. 8, the base income for calculation is different between social
insurance and labor insurance. The social insurance premium has an upper limit. Labor
insurance premium rates differ depending on the type of job. Below is an example of the costs.
Example) S ocial insurance and labor insurance premiums to be borneby employers (annual)
Employee Mr. A : 25 years of age
Monthly salary ￥230,000/Bonus ￥460,000 × 2 (Annual income ￥3,680,000)
Employees' Health Insurance:
Employees' Pension Insurance:
Child and Child Care Contribution:
Workers' Accident Compensation Insurance:
General Contributions:
Employment Insurance:
Total Insurance Premiums to be borne:

188,100
347,700
11,02011,04074
22,080￥580,014

Annual costs for the employer hiring Mr. A
Monthly salary + bonus:
Insurance premiums to be borne by the employer:

3,680,000 (535,800 to be borne by Mr. A included.)
580,014

Total:￥4,260,014

Table 11 List of Social Insurance and Labor Insurance
Premium Rates for Mr. A

As of September 1, 2018(%)

Premium Rate
Insurance Name
Employees' Health
Insurance
Long-Term Care
Insurance (40 yearsof age or over)
Employees' Pension
Insurance
Child and Child CareContribution

Target Salary・Standard Monthly
Remuneration
・Standard Bonus・Standard Monthly
Remuneration
・Standard Bonus

Workers' Accident
Compensation
Insurance
GeneralContribution

Employee's
Responsibility

Employer's
Responsibility

4.95

4.95

0.785

0.785

9.15

9.15

None

0.29
0.3

None
Total Salary

Employment
Insurance
Total Insurance Premium Rate

Remarks

Japan Health
Insurance Association
Tokyo OfficePremium rate is for“other business”

0.002
0.3

0.6

15.18516.077

Premium rate is for“general business”

・Social insurance enrollment is not compulsory for sole proprietorships with fewer than five employees. Only the labor
insurance needs to be considered.

23

I. Public Insurance  

9

Notification of Public Insurance Enrollment〜 What procedures do employers follow to enroll the workplaceand employees in public insurance? 〜
When establishing a business, employers are required to submit a Notification of Application as aworkplace (or Notification of Establishment) for both social and labor insurance, as well as a Notificationof Enrollment for the employer and employees (Notification of Acquisition of Qualification).

Table 12 Submission of Application for Social and Labor Insurance for the Workplace

SocialInsurance

Labor
Insurance

Employment
Insurance

Application to be submitted

Due Date

Where to submit

Notification of New
Application for Employees'
Health Insurance and
Employees' Pension
Insurance

Within 5 days after
becoming a corporation orsole proprietor covered by
the insurance/pension

Pension Service Office in thearea where the workplace islocatedLabor Insurance Registration
Form

Within 10 days after hiring
one employee

Labor Standards Inspection
Office in the area where theworkplace is locatedLabor Insurance Premium
Estimate Declaration Form

Within 50 days after hiring
one employee

Pay premiums via electronictransfer to or in person at thePrefectural Labor Bureau in thearea where the workplace islocatedEmployment Insurance
Covered Office
Establishment Report

Within 10 days after hiring
one employee

Hello Work in the area where
the workplace is located・Corporations are required to attach a copy of the Company Register, and sole proprietors are required to attach a copy of the
Family Register which includes all members of the household as well as a wage ledger, roaster of employees, and other documents
as needed. The required documents differ depending on the local government office where the business is located. Please check
what is required before submission.

Table 13 Notification of Application of Social Insurance and Employment Insurance
Application to be submitted

Social Insurance

Employment
Insurance

Due Date

Where to submit

Employees' Health Insurance/
Employees' Pension Insurance
Insured Worker Qualification
Acquisition Report

Within 5 days from therelevant day

Pension Service Officeor the Center in the area
where the workplace islocated (via postal services)

Application for Dependent's
Coverage

Within 5 days from thetransfer

Pension Service Officeor the Center in the area
where the workplace islocated (via postal services)

Employment Insurance Insured
Worker Qualification Acquisition
ReportUntil the 10th of the monthfollowing the month inwhich the relevant date falls

Hello Work in the area
where the workplace islocated・The applications and notifications listed above should be submitted with the notification of the eligibility of the workplace at thetime of the establishment of the workplace. The notification for employees employed after starting the business should also be
submitted in the same way.

24  I. Public Insurance

10

Resignation of Employees〜 What must an employer do about social insurance when an employee resigns? 〜

The table below shows what an employer must do about social insurance when an employee

resigns.

Table 14 Procedures for Social Insurance when an Employee Resigns
Application to be Submitted

Due Date

Where to Submit

Social Insurance

・Notification of Withdrawal from
Employees' Health Insurance and
Employees' Pension Insurance
・Health Insurance Certificate

Within 5 days fromthe day following theresignation

Pension Service Officeor the Center in the area
where the workplace
is located (via postal
services)

Employment
Insurance

・Notification of Withdrawal from
Employment Insurance
・Certificate of Resignation for
Employment Insurance

Within 10 days fromthe day following theresignation

Hello Work in the area
where the workplace islocated・Upon the submission of the Certificate of Resignation for Employment Insurance at Hello Work, a Letter of Resignation for
Employment Insurance is issued, which is important for receiving unemployment benefits. The employer must deliver this to theresigning employee immediately after receiving it.

ColumnPublic Insurance for Branch Offices andRepresentative Offices of Foreign Companies（1）Branch Offices

Branch offices are deemed corporations and required to enroll in social insurance. The
representative of a branch office in Japan is required to enroll in social insurance, but as is the casewith the representative of a corporation, is not, in principle, eligible for labor insurance.

（2）Representative Offices

Representative offices are deemed sole proprietorship business offices. In the case of employing
less than five permanent employees, said representative office can voluntarily enroll in social
insurance. The representative of said representative office is not, in principle, eligible for either social
insurance or labor insurance.

25

I. Public Insurance  

ColumnInternational Agreement, Social Security
Agreement for Public Pensions

Along with the increase in employment across international borders, the issue of public pensions
between countries became problematic. To address this issue, bilateral agreements were establishedto prevent double enrollment in public pension systems and promote the aggregation of pension
enrollment periods. The targets of this agreement are expat employees temporarily dispatched (for aperiod of five years or less) to signature countries. Such individuals enroll in the public pension systemof their home countries, rather than the pension system of the country of destination.
Unfortunately, however, foreign residents who start a business or are hired in Japan are required toenroll in the Japanese Public Pension System. The period during which the individual is enrolled in theJapanese Public Pension System is added to the period the individual has been enrolled in the pension
system of his/her country of origin. If the total period of enrollment between Japan and the country oforigin exceeds the period required to receive a pension (10 years as of September 1, 2018), theindividual will receive pension payments for the period of enrolled in Japan.
Partner countries in the bilateral agreement on public pension as of September 2018 are Germany,
the United Kingdom＊, Korea＊, the United States, Belgium, France, Canada, Australia, Netherlands,
Czech, Spain, Ireland, Brazil, Switzerland, Hungary, India, Luxemburg, the Philippines＊

Japan has not entered into an agreement on the aggregation of pension enrollment periods with the UK and Korea.

Details: http://www.nenkin.go.jp/international/english/international/socialsecurity.html

ColumnInternational Agreement, Partial Refund after
Withdrawal from the National Pension System
and Employees' Pension Insurance

Foreign residents in Japan who have been enrolled in the National Pension System or Employees'
Pension Insurance for six months or more before are eligible to submit a claim for partial refund of
their contribution to the pension plan within two years from the day they stop being resident in Japan.
However, the dependent spouse of said foreign residents who enrolled in the Employees' Pension
Insurance cannot submit a claim for partial refund.
The claim for partial refund after withdrawal from the pension plan can be claimed by the insured
person, not by a corporation or employer.
Partial refund after withdrawal from the pension plan is calculated according to the period ofenrollment in Japan, up to 36 months. Upon receipt of the partial refund after withdrawal from thepension plan, the enrollment period is also deleted from the record. Individuals should, therefore, beaware that receipt of a refund means they will not be able to combine the period of enrollment in theJapanese pension system with enrollment in the pension system of their home country.
Details: https://www.nenkin.go.jp/service/jukyu/sonota-kyufu/dattai-ichiji/20150406.html(in 11 languages)

26  II. Employment Management

II. Employment Management
1Japanese Laws and Regulations regarding Employment

Sole proprietorships and corporations are subject to procedures for employment management.
This chapter explains employment management from recruitment to retirement for small-size
workplaces employing fewer than 10 employees.

〜 What are the laws and regulations regarding employment in Japan? 〜Japan stipulates minimum standards for working conditions through many labor-related laws andregulations such as the Labor Standards Act.
These labor-related laws and regulations apply to all employers and employees in Japan, regardlessof nationality.

Japanese Labor-Related Laws and Regulations:
Labor Standards Act, Labor Contracts Act, Industrial Safety and Health Act, Minimum
Wage Act, Part-Time Employment Act, Child Care and Family Care Leave Act, Equal
Employment Opportunity Act for Men and Women, Act for Stabilization of Employment ofOlder Persons, Worker Dispatching Act, etc.
Even with the consent from employees, employers cannot stipulate working conditions that do notmeet conditions stipulated by these laws and regulations. It is, however, possible for employers andemployees to enter into Labor-Management Agreements, which reflect employee opinion, to allow
exceptions to the Labor Standards Act. Agreement under Article 36 of Labor Standards Act, known as
the“36 Agreement”stipulating overtime work and work on holidays is an example.

Labor-Management Agreement:
Some of the stipulations of laws and regulations may be canceled or eased throughLabor-Management Agreements. For example, while law stipulates that working hours notexceed 40 hours per week, eight hours per day, a Labor-Management Agreement allows
overtime work exceeding this. On the other hand, however, overtime work is not
permitted without such a Labor-Management Agreement.
Labor-Management Agreements are entered into between the employer and the labor
union composed of a majority of employees or between the employer and a representativeof a majority of employees if there is no labor union. The employee representative must be:
1. An individual who is not in a position of supervision or management, or
2. An individual who is elected by democratic process such as secret ballot or a show ofhands after a clear statement announcing the selection of an individual to represent
employees in a Labor-Management Agreement.

27

II. Employment Management  

2

Preparation and Procedures for Hiring〜 What is required for the hiring of employees? 〜General schedule from job offering to employment is shown below.

Table 15 Example of Schedule from Job Offering to Employment
Content
Deciding recruitment conditions
Recruitment

Checking legal standards for recruitment
Selecting methods of recruitment
Screening of applications

Selection

Written examination (not essential)
Interview
Hiring decisions

HiringNotifying the selected individuals of their informal appointment (also notifying theindividuals who are not selected)
Indicating working conditions, Confirm with employee, Issuing legal documents (Notice of
Employment or Labor Contract)
Accepting the required documents from newly hired individuals

Preparation

Preparing roaster of employees, wage ledger, and attendance record
Enrollment in social insurance and labor insurance
Submission of the Status of Non-Japanese Employment

Health and Safety

28

Providing medical examination for employment

  II. Employment Management

3

Recruiting〜 What items do working conditions include? 〜

QAWhat must employers consider when recruiting employees?
Employers must provide potential employees with a job description, and clearly
indicate the contract period and working hours. Employers must keep in mind thatthey are prohibited from setting upper age limits or denying employment based on
gender and that they are required to treat personal information received frompotential employees as confidential.

3-1 I nforming Potential Employees about the Working Conditions for the Advertised
Position
The Employment Security Act stipulates matters to be indicated to job seekers, Hello Work, andemployment agencies. Table 16 provides an example of the conditions to be indicated.

Table 16 Example of Employment Conditions
Item

Example/Details

Remarks/Reference

Job Description

Office work, sales, web design, etc.
Location of work

Experience,
Qualifications, etc.
(if necessary)More than 3 years' office/sales experience,
Web design skill test level 2 or higher,
TOEIC score of 900 points or higher, etc.

Not stipulated by law

Employment Status

Full-time, part-time, (fixed-term) contracted employee, etc.

See glossary p. 2

Working Day

3 days per week, 5 days per week, Mondays and Thursdays, etc.

Probation Period

Length, labor conditions different from permanent
employment

Working Hours

Start and finish times, overtime work, breaks, de facto working
hours in the case of applying discretionary working hour system

Holidays

Days off, paid leaves, special holidays, etc.

Wages

Monthly, daily, or hourly wage, indication of the number ofovertime working hours, wage, and basic wage excluding fixed
overtime work wage in the case of applying fixed overtime
work wage, etc.

Benefits

Social insurance, labor insurance, etc.

I. Public Insurance

・Do not falsify or exaggerate employment conditions.
・Employers are required to provide newly hired individuals with a copy of working conditions upon hiring (See p. 31, II. 4-1).

29

II. Employment Management  

3-2 Recruiting Reminders（1）Handling Personal Information Obtained from Potential Employees
Personal information obtained from potential employees is to be collected, stored, and used solely
for the purposes of employee selection. Employers are prohibited from soliciting information on race,
ethnic background, social status, family origin, registered domicile, place of birth, or other informationthat may cause social discrimination, ideas and creeds, and enrollment status in labor unions.
（2）Age Discrimination
Employers are prohibited from discriminating against potential employees based on age.
（3）Gender Discrimination
The Equal Employment Opportunity Act prohibits discrimination based on gender. It is prohibited,for example, to limit temporary or part-time job offers only to men, or women, or to post
advertisements stating“Men welcome”or“Work for women.”

3-3 Recruiting
There are many ways to advertise job offerings.
1. Word of mouth through friends or acquaintances
2. Listing with public institutions such as Hello Work (free of charge) ＊3. Posting in newspapers and employment magazines, on websites, etc. (common).
4. Posting with employment agencies (for full-time employees)
5. Posting on the company website
6. Posting at universities＊

Hello Work confirms the work conditions, enrollment in social and labor insurance, etc. before
posting.
For more detailed information on the procedures for listing job offerings.
https://www.hellowork.go.jp/enterprise/job_offer.html

30(Japanese)  II. Employment Management

4

Hiring〜 What is required after making a hiring selection? 〜

QAWhat is required to employ a foreigner whose resident status permits working as apart-time employee for three days per week if the job ends in about a year and thefirst three months are a probation period?
Employers are required to confirm that the job description and period of
employment are consistent with the potential employee's visa status. After hiring
said individual, the employer submits a Notification of Foreign National Employment
Status to Hello Work. With this exception, there is no difference between hiring
Japanese and foreign nationals. Employers are required to indicate working
conditions when the individual is actually hired. Working conditions may bechanged from those indicated at the job offering; however, any changes must be
clearly indicated immediately. In addition to working conditions, other relevant
conditions must be announced to part-time and fixed-term contracted employees.
As is often the case, a probation period may be set. However, this does not meanthat employers can easily cancel employment during the probation period. Parttime employees whose prescribed working hours exceed 20 hours per week arerequired to enroll in Employment Insurance from the beginning of the probation
period.

4-1 Indication of Working Conditions
The Employment Security Act requires the employer clearly indicate working conditions whenrecruiting employees.
The employer is also required to indicate working conditions when entering into a labor contract
with employees (Article 15 of the Labor Standards Act, Article 6 of the Part-Time Employment Act).

Table 17 Indication of Working Conditions (Article 15 of the Labor Standards Act)
Matters to be indicated in writing(1) Matters regarding the period of labor contract(2) Location of work, Work to be engaged in(3) Matters regarding working hoursa) Start and finish times, Breaksb) Labor exceeding prescribed working hoursc) Matters regarding division of employees into two or more shiftsd) Holidayse) Leave (Paid leaves, Special holidays, etc.)(4) Matters regarding wagesa) Wages (including the classification of monthly, daily, hourly wages)b) Allotment amount or calculation method of allowances (including premium wages)c) Closing for wages, Payment day and methodd) Matters regarding pay raises(5) Matters regarding resignation (including the reasons)・Matters regarding pay raises may be announced orally. (However, matters regarding pay raises should be indicated in writing forpart-time employees.)・Retirement allowance and bonus are discretionary provisions. In the case that they are determined, they must be indicated. (Oralindication is also acceptable.)31

II. Employment Management  

The format of the document to be issued is not prescribed. Any format, such as the Notice of
Employment shown below, or the Labor Contract signed by both employer and employee is
acceptable as long as the matters to be indicated are included. However, since period of labor
contract, work location, work to be engaged in, wages, etc. are not included in the Work Rules (Seep. 37, II. 7), they are to be indicated separately in writing.
In the case that labor conditions shown at recruitment is changed at the application, employers are
required to either (1) issue a document explaining the changes or (2) clearly indicate the changes
with underlines or highlights in the Notification of Labor Conditions.
○ Special case of information that employers are required to provide to part-time employees
Employers are also required to inform part-time employees in writing whether or not they are
eligible for pay raises, bonuses or a retirement allowance (Article 6 of Part-Time Employment Act).
○ Matters to be indicated in fixed-term employment contracts
In regard to fixed-term contracted employees, employers are also required to indicate the possibilityof contract renewal and the criteria for renewal or non-renewal.

Table 18 Example of Indication of Contract Renewal, etc.
Example of indication of contract renewal(1) Automatically renewed(2) Renewal possible(3) Non-renewable

Example of indication of criteria for renewal or non-renewal(1) Amount of work being performed at the end of thecontract period(2) Work-related achievements and attitude(3) Work-related ability(4) Financial state of the corporation(5) Progress of the work engaged to perform○ Shifting to Indefinite-term Employment from Fixed-term Employment
In the case of fixed-term employees, regardless of part-time or full-time employment status, whose
fixed-term employment contract has been renewed repeatedly for a total of five years and who wish
to shift to indefinite-term employment, employers must shift their employment to indefinite-term
employment.
A sample of the Notice of Employment form is posted on the official website of the Ministry of
Health, Labor and Welfare in several languages.
http://www.mhlw.go.jp/new-info/kobetu/roudou/gyousei/kantoku/040325-4.html (English)-1.html (Spanish)-2.html (Tagalog)-3.html (Portuguese)-5.html (Chinese)-6.html (Korean)-7.html (Indonesian)-8.html (Vietnamese)

4-2 Probation Period
Many employers set a probation period to assess the ability and aptitude of new hires for regular
employment. However, in the case that the employer decides to dismiss or not retain the newly hired
employee as a regular worker after said individual has been working 14 or more days, even within theprobation period, the employer is required to provide at least 30 days' notice prior to the end of
employment, or pay an amount greater than the equivalent of 30 days' average wage in lieu of said
30-day notice (See p. 52, II. 14-3).
There is no stipulation regarding the length of the probation period; however, it is usually between
32  II. Employment Management

three and six months. In some cases the period may even extend up to one year. When setting aprobation period, it is necessary to clearly indicate the period, reasons for dismissal or non-retention
as a regular worker during the probation period, and include in the Notice of Employment (or Labor
Contract), and Work Rules.
If each requirement is satisfied, employees are required to be enrolled in the social insurance and
Employment Insurance during the probation period. Enrollment takes place before regular
employment.

4-3 Notifications regarding Employment of Foreign Residents
When hiring foreign residents, employers are required to confirm that the resident status permits
the individual to be hired for the job and submit a Notification of Foreign National Employment
Status (stipulated by the Employment Measures Act) to the Minister of Health, Labor and Welfare(Hello Work). Regardless of the employment contract, all foreign residents engaged in work under the
direction of an employer are deemed employees. In addition, corporate directors who are not the
subjects of the Notification of Foreign National Employment Status are also asked to submit a
Notification of Acceptance of Mid- to Long-Term Residents in accordance with the stipulations of the
Immigration Control Act.
（1）Confirmation of Resident Status and Period
When hiring foreign residents, employers are required to confirm that the job description andperiod of employment are permitted by the individual's visa status. Employers are also required toconfirm that students from abroad have obtained permission to be involved in activities outside theirresident status. Employers should verify the above by checking the potential employee's resident cardor passport. Hiring foreign residents that do not meet the above requirements may be punished by aprison term of not more than three years and a fine of not more than 3 million yen.
（2）Notification of Foreign National Employment Status
Employers are required to submit the Notification of Foreign National Employment Status, including
the name, resident status and period of the relevant foreign resident employee at their employment
and resignation, to the Ministry of Health, Labor and Welfare (or Hello Work). Employers who fail tosubmit notification or submit false information are subject to a fine of not more than 300,000 yen.
All foreign resident employees, excluding special permanent residents and those whose resident
status is“Diplomat”or“Official”are subject to this notification. Part-time employees, student parttime employees, and family employees are also included. Individuals with the status of“Business
Manager”but are also in employee positions are also included.
Q&A for the Notification of Foreign National Employment Status
http://www.mhlw.go.jp/bunya/koyou/gaikokujin-koyou/dl/qanda.pdf (Japanese)（3）Notification of Acceptance of Mid- to Long-term Residents
Notification of the Mid- to Long-term Residents for foreign executives and sole proprietors, such asa representative director of the corporation, must be submitted to the Minister of Justice (regional
immigration bureau/Tokyo Regional Immigration Bureau) within 14 days of the start or end of
acceptance. No notification is required for foreign resident employers, executives, and sole proprietors
whose resident status is“Spouse or Child of a Japanese National,”“Spouse or Child of a Permanent
Resident,”“Permanent Resident,”“Long-term Resident,”or“Special Permanent Resident”.
Notification of the Employment of Mid- to Long-Term Foreign Residents
http://www.moj.go.jp/nyuukokukanri/kouhou/nyuukokukanri10_00017.html(Japanese)33

II. Employment Management  

5

Preparation for Employment〜 What is required when hiring a new worker? 〜

QA

What is required before a foreign national part-time employee begins work?
Regardless of a potential employee's nationality, the employer needs to follow thesame procedures. If the employee's prescribed working hours exceed 20 hours, it isnecessary to enroll the employee in Employment Insurance. In addition, roaster of
employees, wage ledger, and attendance book are necessary. These three records
are required when the Labor Standards Inspection Office, Japan Pension Service, orother authority carry out inspections.

5-1 Documents to be Submitted by Employees
Employees are required to submit the following documents:
1. A pledge (compliance to regulations, confidentiality obligation)
2. Certificate of Items Stated in Resident Register
3. Report of Exemption for Dependents
4. Commute Route (for those who receive allowance for transport)
5. Bank Account information for Salary Payment (also used as the agreement on bank transfer forsalary)6. Pension Handbook (for the spouse too if the spouse is a dependent)
7. Employment Insurance Card (if the person had been enrolled in Employment Insurance in theprevious job)
8. Certificate of Tax Deduction (if the person has employment income in the year said person joined
the current corporation)
9. A copy of licenses (if the license is necessary for the job)
10. Individual Number (Social Security or Tax Number)

5-2 Three Documents Designated by Law
Employers are required to create and store three documents designated by law, roaster of
employees, wage ledger, and attendance book. When administrative institutions carry out
inspections, these three documents are required.

34

  II. Employment Management● Roaster of Employees
Regardless of status as regular, full-time contracted, or part-time employee, employers are required
to create a roaster of employees for all employees. Items to be included in the roaster of employees
are stipulated by law as follows.
1. Name2. Date of birth
3. Gender
4. Address
5. Type of job (not necessary for workplaces with less than 30 employees)
6. Date of employment
7. Date of and reason for resignation (include reason if the employee was dismissed)
8. Date of and cause of death● Wage ledger
1. Name2. Gender
3. Period of wage calculation
4. Number of working days
5. Number of working hours
6. Number of overtime hours
7. Number of holiday working hours
8. Number of late-night working hours
9. Base salary, allowance, and other wages, and the amount of each
10. Amount deducted● Attendance Book
The format is not prescribed. The attendance book is used to confirm the number of hours listed in
items 4 to 8 in the Wage ledger. Time card, IC card, and self-certification are accepted.

5-3 Enrolment in Social Insurance and Employment Insurance
When hiring employees that meet the requirements for enrollment in social insurance and
Employment Insurance, employers are required to enroll them in these insurances immediately.
Details of the procedures are shown in p. 24, Table 12, Table 13.

35

II. Employment Management  

6Japanese Labor Law and Practice〜 What is Japanese labor management? 〜QAWhen hiring employees, what should the employers consider?
Table19 shows basic labor management from recruitment to resignation inaccordance with the Japanese labor law and practice.

Table 19 Basic Labor Management
Item

36

Point

Rules of Employment

Rules for the workplace, required for businesses with 10 or more
employees.

Wages

Five principles of salary payment (cash, direct, whole amount, every
month, certain date)

Working hours, Breaks, Holidays

Statutory working hours: 40 hours/week, 8 hours/day
Work break: 45 minutes/6 hours
Holidays: 1 day/week

Overtime work, Holiday work,
Late-night work

36 Agreement
Premium wages: 25% for work outside the working hours, 35% forholiday work, 25% for late-night work

Annual Paid Leaves

10 days after the 6th month of employment, prorated for part-time
employees

Other Leaves

Leaves for the exercise of civil rights, Leaves for maternal healthcareChild Care, Family Care Leave

Child care leave (for children up to 1 year of age), Family care leave (93days)

Safety and Health

Obligation to ensure safety in the workplace, Health examination

Resignation, Retirement, Dismissal

Retirement at 60 years of age, 30-day advanced notice for dismissal,
Procedures for resignation

Individual Labor-Management
Disputes

Labor Consultation Desk, Industrial tribunal system  II. Employment Management

7

Work Rules〜 What is the difference between Work Rules
and Working Conditions that are created for recruitment? 〜

QWhile employers are required by law to clearly state working conditions whenhiring, is it also necessary to have an established set of Work Rules for a new businesswith only a small number of employees?

A In principle, employers are required to have an established set of Work Rules if they

employ 10 or more workers, regardless of whether those employees are regular or
part-time. Work Rules stipulate working conditions and other rules for employees
precisely. If there are no Work Rules, the Labor Contract (Notice of Employment) isused as an alternative.

7-1 Matters to be Stipulated by Work Rules
Work Rules stipulate working conditions such as working hours and wages, and other rules to befollowed by employees for administrative reasons. In the case that the Work Rules are known andunderstood by employees, the regulations are deemed the equivalent of Labor Contract which
control both labor and management. Article 89 of the Labor Standard Act stipulates the matters to be
included in the Work Rules as follows:

Table 20 Matters to be Included in the Work Rules
Matters to be Included

Content

Items

Working hours① Start and finish times② Breaks③ Holidays④ Leaves⑤ Work shifts, if applicable

Wages① Determination and calculation of wages② Method of payment③ Closing for wage calculation and payment date
④ Pay raises

Resignation

Dismissal and resignation (including the reasons for dismissal)

Matters that must be
included

Matters to be included
if applicable① Retirement allowance (range of eligible employees, determination, calculation,
payment of retirement allowance, payment time)② Temporary wages (bonus, etc.)③ Matters regarding commendations and sanctions④ Matters regarding other stipulations that apply to all employees

Matters to be
voluntarily included① Service discipline② Management principles, etc.

37II. Employment Management  

7-2 Obligation to Establish Work Rules
Employers with 10 or more employees stationed at one specific workplace are required to submit
the Work Rules to the competent Labor Standards Inspection Office. Employees include temporary
and part-time employees. While not required, Work Rules are also recommended for workplaces withfewer than 10 employees.

7-3 Procedures for Establishing Work Rules
Below are the required procedures for establishing (or changing) Work Rules.
（1）Hearing of Opinions
While employers have the authority to establish and change Work Rules, they are required to seek
and consider employee opinions through representatives of the majority of employees at therelevant workplace (a labor union representative if said labor union membership includes a majorityof the employees). The purpose is to reflect employee opinions to regulations; however, this does notmean that the employer requires consent from said representatives for the establishment or changeof Work Rules. Employers are only obligated to include a document that describes the opinions of therepresentatives with the Work Rules submitted to the competent Labor Standards Inspection Office.
（2）Submission
Employers are required to submit Work Rules and changes thereto to the competent Labor
Standards Inspection Office with a report of the opinions of the employee representative. Said reportmust include the signatures or be stamped by the official seals of said representatives.
（3）Informing Employees about the Work Rules
Employers need to inform employees about the Work Rules as shown below.
The Work Rules that are not made available to employees are not deemed legally effective.
1. Posting or otherwise making the Work Rules available in the workplace
2. Handing out to individual employees
3. Recording on magnetic tape, magnetic data, or its equivalent to allow employee access to thecontent at any time.

ColumnWork Rules for Part-Time and other
Employees

Work Rules may be allied to part-time and fixed-term contracted employees; however, it is also
possible to stipulate separate Work Rules for part-time and fixed-term employees. In order to apply
separate Work Rules for such employees, it is recommended that the opinions of a representative of amajority of the part-time or fixed-term contracted employees be sought.

38  II. Employment Management

8

Wages
〜 What are the rules for the determination of wages? 〜

QA

What is required for the determination of wages and method of payment for parttime employees?
Each prefecture has the authority to set minimum wage and employers must be
familiar with it. Employers must consider if they provide transport allowances andother benefits or not. It is also be stipulated that full payment be made directly to theemployee in cash.

8-1 Five Principles of Payment
Article 24 of the Labor Standards Act stipulates following five principles:

Table 21 Five Principles of Wage Payment
Five Principles

Content and Cautions

1. Cash Payment

Wages are paid in cash, not by actuals, check, or foreign currency. Direct deposit
to the employee's bank account is possible with the express permission of theemployee.

2. Direct Payment

Wages are handed directly to the employee.
Payment through a substitute or mediator is not allowed.

3. Full Payment

Wages are paid in full. Items to be deducted are as follows:・Income tax, resident tax, social insurance premiums and other items stipulated bylaw.
・Items to be deducted from wages in accordance with Labor-Management
Agreements
Reduction in wages due to absence, tardiness, or early departure is allowed inaccordance with the no work, no pay principle.

4. Payment at least
once per month

Wages are paid at least once per month
Paid at least once per month even if the employee is on an annual salary.

5. Payment
on a fixed dateWages are paid on a predetermined date. Said predetermined date must be a
specific date each month such as the “25th”. It is not possible to determine a given
day such as “the third Friday of the month” as a predetermined date. In the eventthat the payment date is a holiday, the company can make the payment of wages
either one day earlier or later as predetermined. (Many companies make a paymentof wages one day earlier.)

8-2 Bonuses
Many corporations in Japan provide bonuses in summer (June or July) and in winter (December).
Bonuses often boost employee morale and promote their settlement. However, bonuses are notrequired by law. If the employer is planning to provide bonuses, it is necessary to add the stipulation
to the Notice of Employment and Work Rules.

39II. Employment Management  

8-3 Resignation and Retirement Allowances
Resignation and retirement allowances are also not required by law. If the employer
decides to provide them, it is necessary to add the stipulation to the Notification of Working
Conditions and Work Rules. Once stipulated, however, it is difficult to change the system;and they must be provided once stipulated regardless of the financial status of the businessat the time. This may create a significant future risk for a small enterprise. Therefore, it isnecessary to consider resignation and retirement allowances carefully.

8-4 Transport Allowances
Many corporations provide transport allowances to employees in Japan. This is also not
required by law; however, it is common practice. Transport allowances are usually provided
to permanent employees in the form of commuter passes for buses and trains. Provision of
the actual cost of transport for each day of work is common for part-time employees whocome to work on a limited number of days.

8-5 Minimum Wage
Minimum wages are set by each prefecture as“regional minimum hourly wages”for alljobs and“specific minimum hourly wages”for specific industries. If both are applied, thehigher minimum wage applies.
In Tokyo, for example, the regional minimum wage is 985 yen, and the specific minimum
wage is 871 yen for the steel industry. The regional minimum wages in the Kanto District are
983 yen in Kanagawa, 895 yen in Chiba, and 898 yen in Saitama (as of October 2018).
Minimum wages have been increasing each year. Employers must be familiar with thesematters when determining the wage.
（1）Minimum wages are applied to all employees, including temporary and part-time
employees.
（2）Even if the employees agree on working at a wage lowering the minimum wage, theagreement is ineffective and the employees can demand payment of the minimum
wage.

8-6 Allowance for Absence from WorkIn the case that an employee is prevented from working for reasons attributable to theemployer, the employer is required to pay 60% or more of the average wage to theemployee (Article 26 of the Labor Standards Act).
The reasons attributable to employers are deemed outside force majeure, which is defined
as natural disaster and other overwhelming circumstances beyond the employer's control.
For example, managerial failures that lead to a lack of materials, difficulties in procuring
materials or funding are also deemed reasons attributable to employers.

40  II. Employment Management

9

Working Hours, Breaks, and Holidays〜 Rules for working hours, including special cases and exceptions 〜QA

Is it permitted to ask employees to work on Saturdays and Sundays toaccommodate the needs of overseas corporations?
It is permissible if the number of working hours falls within the range stipulated bylaw. If the hours exceed the limit, it is necessary to enter a Labor-Management
Agreement stipulating overtime and holiday work. Law stipulates upper per-weekand per-day limits as well as breaks and holidays.

9-1 Statutory Working Hours
Labor Standards Act stipulates that employees may not be compelled to work in excess of 40 hours
per week or 8 hours per day, excluding breaks (Article 32 of the Labor Standards Act). Violation ofthese provisions shall be punished by a penalty of imprisonment for a maximum of six months or afine of up to 300,000 yen.
Please see p. 44, II. 10 for details in the event employees agree to work overtime.
◆ Exception to the 40 hour/week stipulation ‒ Workplaces eligible for special provisions:
As an exception to the 40-hour/week stipulation, the law sets the maximum number of hours/week
at 44 for workplaces with fewer than 10 employees, including part-time employees, engaged incommercial, movie and play, health and hygiene, and service and entertainment. However, even insuch cases, the maximum permissible hours per day is eight hours.

9-2 Work Breaks
Employers are required to provide employees at least 45 minutes' break time during working hours
when the number of hours worked is scheduled to or does in fact exceed six hours, and at least one
hour when the working hours exceed eight hours. The work break should be provided to all
employees at the same time (Article 34 of the Labor Standards Act).

9-3 Holidays
Employers are required to provide employees with at least one day off per week (Article 35,
Paragraph. 1 of Labor Standards Act). Holidays need not be provided to all employees at the sametime, which allows employers flexibility in scheduling days off.“Per week”generally means from
Sunday to Saturday. Instead of providing one day off per week, employers may provide four or moredays off during four weeks (Article 35, Paragraph 2 of Labor Standards Act).
Although the law stipulates one day off per week, many corporations have two days off per week.
National holidays are usually observed by many corporations; however, there are no provisions that
stipulate that employers must observe national holidays.

41II. Employment Management  

9-4 Flexible Working Hour Systems

QA

Are there exceptions to the maximum number of hours allowed to accommodate
businesses that have predictable seasonal variation?
Some business categories and conditions may not match statutory working hours. In suchcases, there are flexible systems such as variable working hour and flextime systems.

○ Variable Working Hour System
Because the working hours stipulated by law create a disadvantage for businesses that traditionallyexperience seasonal and other variations, the law provides a variable working hour system that allows
working hours to be adjusted depending on the situation. This system permits weekly hours to be
calculated as an average number over a certain period. Under this system employees are allowed to
exceed 40 hours per week (44 hours per week for workplaces eligible for special provisions) within therelevant period if the average number of hours over the entire period does not exceed 40 hours per
week.
The variable working hour system includes three variations. Before adopting one of these, however,
employers are required to enter Labor-Management Agreements with individual employees andsubmit them to the Labor Standards Inspection Office. Please note, however, that (1) below may be
included in a Notice of Employment or Work Rules.
(1) One-Month Variable Working Hours System(2) One-Year Variable Working Hours System(3) Atypical Adjustable Working Hours System for a Week ＊＊Limited to retail businesses, hotels, and restaurants with fewer than 30 employees○ Flextime System
The Flextime System gives employees some choice over their start and finish times with the total
number averaging 40 hours per week maximally (44 hours per week for workplaces eligible for special
provisions) for a certain period (settlement period) within three months. Under this system,
employees may exceed hours per week or per day stipulated by law without such being considered
overtime work. In the case that the settlement period exceeds one month, the employer is required
to pay premium wages for the working hours exceeding 50 hours per week.
To adopt this system, it is necessary to enter a Labor-Management Agreement with employees andstipulate in the Notice of Employment or Work Rules that employees have some choice over the startand finish times. In the case that the settlement period exceeds one month, the employer is required
to submit such to the Labor Standards Inspection Office.

9-5 Discretionary Working Hour System for Specialized WorkThe discretionary working hour system is suitable for specialized work for which working style andtime allocation within prescribed working hours (or a certain period of time) is best determined byindividual employees. Subject jobs are limited to 19 specialties, including system engineer, copy
writer, clothing and interior designer, interior coordinator, system consultant, game software creator.
To adopt this system it is necessary to conclude a Labor-Management Agreement and submit it to
the Labor Standards Inspection Office.

42  II. Employment Management

9-6 De Facto Working Hour System for Work outside the Workplace
It is sometimes difficult to calculate working hours for work such as sales, which requires employee
activity outside the workplace. The de facto working hour system is suitable for such cases. The defacto working hour system assumes that the employee has worked for the prescribed working hours.
If the number of hours required to perform the relevant work exceeds the prescribed number ofhours, the employee is assumed to work for the necessary number of hours. If it is possible tocalculate the actual working hours because the employee is working with a supervisor or is being
instructed by telephone or other means, this system is not applicable.

43

II. Employment Management  

10

Overtime Work, Holiday Work, Late-Night Work〜 Are there exceptions to the statutory working hours? 〜

QIs it possible for a corporation whose business hours are from 9 AM to 5 PM with
one-hour lunch break to schedule employees to work until eight at night during thebusy season?

A Because it exceeds statutory working hours; namely, 8 hours per day, it is necessary

to enter into a Labor-Management Agreement, stipulate overtime in the Work Rules
and Labor Contract, and submit such to the Labor Standards Inspection Office before
employees can be asked to work overtime.

10-1 36 Agreement
The Labor Standards Act defines overtime as work exceeding statutory working hours; namely, 8hours per day and 40 hours per week (44 hours per week for workplaces eligible for special
provisions).
Before requiring employees to work in excess of statutory working hours or on holidays, it isnecessary to conclude and submit a Labor-Management Agreement to the Labor Standards
Inspection Office. This Labor-Management Agreement is stipulated by Article 36 of the Labor
Standards Act; therefore, it is called the 36 Agreement. Without submission of this Agreement,
employers are prohibited from requiring employees work overtime or on holidays. Overtime work
and work on holidays is called statutory overtime work.
This Agreement stipulates“specific circumstances requiring overtime and holiday work,”“type ofjob,”
“number of employees,”“working hours that can be extended for one day, or a certain periodof time beyond one day,”“holidays employees can be required to work,”and“effective period of theAgreement.”The term of the Agreement is a maximum of one year. Renewal of the 36 Agreement
requires submission of a notification of renewal.
The upper limit of the working hours that can be extended is as shown below. The employer isrequired to enter an agreement with special provisions before asking employees to temporarily work
beyond the upper limit and submit such to the Labor Standards Inspection Office. (See p. 61,
Appendix)
In addition, special provisions also stipulate the upper limit of overtime work. This will apply to small
and medium-sized enterprises from April 1 in 2020.

Table 22 Upper Limit of Overtime WorkPrincipal Upper Limit(1) 45 hours per month(2) 360 hours per year
(For the one-year variable
working hours system)(1) 42 hours per month(2) 320 hours per year
Work on legal holidays notincluded.

44

Exceptional Upper Limit(In the event of temporary special reasons)(1) Less than 100 hours per month (including legal holiday work)(2) The average of 2 to 6 months should be up to 80 hours per month(including legal holiday work)(3) Limit of overtime work is 720 hours per year.
(4) Up to 6 months that exceeds 45 hours per month (42 hours for the oneyear variable working hours system)
This will be enforced from April 1, 2020 for small- and medium-size
enterprises.

  II. Employment Management

10-2 Premium Wages

Q

What are the premium rates for overtime and holiday work? Do the rates differ for
managerial staff?

A Minimum premium rates for overtime exceeding statutory working hours and legal
holidays are stipulated by law. The minimum premium rate for overtime is 25%. The
minimum premium rate for legal holidays is 35%. While many employers provide twoholidays per week, the law only stipulates that employees receive one legal holiday per
week. For this reason, if, for example, the scheduled legal holiday is Sunday but the employer
also gives Saturday off, then the premium rate for working on the legal holiday, Sunday, is35%; however, the premium rate for working on Saturday is 25% for the overtime work
exceeding statutory working hours (40 hours) per week.
The minimum premium for late-night work, defined as between 10:00 PM and 5:00 AM, is25%. In the case of overtime work that extends into late-night working hours, the overtime
premium for regularly scheduled workdays is added to the overtime premium for late-nightworking hours, bringing the overtime premium to 50%.
Employers are not required to pay managers overtime; however, the late-night work
premium does apply.

Premium wages are calculated by multiplying the standard hourly wage by the number of working
hours and the relevant premium rate. Premium rates are as shown below (Article 37 of the Labor
Standards Act, etc. ).

Table 23 Premium Wage Rates
Premium Rate

Remarks

Overtime Work (Work on prescribedholidays included. Work on legal
holidays not included.)

25% or more

Late-Night Work

25% or more

Between 10:00 PM and 5:00 AM

Holiday Work

35% or more

Legal Holiday Work

Overtime Work + Late-Night Work

50% or moreIn the case that overtime work continues to latenight.
The minimum premium rate for prescribed latenight work is only 25%.

Holiday Work + Late-Night Work

60% or more

Late-Night Work on Legal Holidays

Work exceeding 8 hours per day
Work exceeding 40 (44 ＊ ) hours per week＊4
 4 hours is for subject workplaces of the special measures

・It is recommended that employers pay a premium of 25% for the overtime work exceeding the upper limit (45 hours per month,
360 hours per year).
・Some major corporations pay a premium of 50% for overtime work exceeding 60 hours per month; however, small and mediumsized enterprises are scheduled to adopt this rate from April 1, 2023.

Employers should voluntarily determine the rate of premium wages for the work exceeding theprescribed working hours but within statutory working hours, or work on prescribed holidays (notexceeding the prescribed working hours per week) excluding legal holidays.

45

II. Employment Management  

Table 24 W orking Hours and Premium Rates(in the case that the employee is prescribed to work 7 hours)
9:00

12:00
Scheduled
Working
Hours
3 hours

13:00

Work
Break

17:00

18:00

Scheduled
Working Hours

22:00

5:00

Overtime Work

4 hours

1 hours
Overtime
Work Within
Statutory
Working
Hours
100%+αOvertime Work Exceeding
Statutory Working Hours(Exceeding 8 hours)
Premium wage rate
at not less than (100% + 25%)

α is what the employer decides to do.

Late-Night Work
Premium rate
no less than 25%

10-3 Exclusion of Managers from Stipulations regarding Working Hours, Work Breaks,
and Holiday Work
Individuals handling supervision are excluded from stipulations regarding working hours, breaks
and holidays. This means that employers are not required to pay managers for overtime work.
This also applies to individuals engaged in supervision or continual work with approval fromadministrative agencies or individuals engaged in agricultural, livestock, sericultural, and fisheries
industries.
However, if the above-mentioned individuals are engaged in late-night work, employers are
required to pay the late-night work premium.

46

  II. Employment Management

11

Annual Paid Leave System〜 How many paid leaves are employers required to provide to employees? 〜

QA

Do regulations regarding the paid leaves employers are required to give
employees also include part-time employees?
Paid leaves are stipulated by the Labor Standards Act and based on the number ofyears of continuous employment. Employers are also required to provide paid leaves
to part-time employees based on the number of working days.

11-1 Number of Annual Paid Leaves to be Provided
Annual paid leaves are provided to employees who have been continuously employed for six
months from the day of hire and have worked at least 80% of the prescribed work days. Thereafter,
employees who have worked at least 80% of the prescribed work days are granted annual paid leaves
according to the number of years of continuous service. Days taken off under the leaves of absence
listed below are not considered days absent from work in the calculation of attendance at work to
determine annual paid leaves.
(1) Medical leave for the treatment of employment-related injuries and illness(2) Maternity leave(3) Child or family care leave in accordance with law.
Note: It is legally prohibited to purchase/sell annual paid leaves. Unused annual paid leaves can be
added to the following year (must be used within 2 years).

Table 25 Example of Full-Time Employees (5 days per week)
Number of yearsof continuous
serviceAnnual paid leave
to be granted

6 months

1 year and6 months

2 years and6 months

3 years and6 months

4 years and6 months

5 years and6 months

6 years and6 months
or longer

10 days

11 days

12 days

14 days

16 days18 days

20 days

Employers are required to grant annual paid leaves to employees whose prescribed working hours
are shorter than full-time hours, such as part-time employees (individuals who are prescribed to work
fewer than 30 hours per week, and no more than 4 days per week or 216 days per year), at theappropriate rate according to the prescribed working days of full-time employees.

47II. Employment Management  

Table 26 E xample of Part-Time and Other Employees Whose Prescribed Working Hours are
Short
Prescribed working days
per week or
per year

Number of years of continuous service
6
months1 yearand 6months2 yearand 6months3 yearand 6months4 yearand 6months5 yearand 6months

6 year and 6
months or
longer

4 days169-216 days

7 days8 days9 days10 days

12 days

13 days

15 days

3 days
121-168 days

5 days6 days6 days8 days9 days10 days

11 days

2 days73-120 days

3 days4 days4 days

5 days6 days6 days7 days1 day
48-72 days

1 day

2 days2 days2 days3 days3 days3 days・Part-time employees scheduled to work 30 or more hours per week are considered full-time employees and receive the same
number of annual paid leaves as full-time employees do.

11-2 Employer's Right to Change the Period of Annual Paid Leaves
Employers should make every effort to accommodate employee requests for annual paid leaves.
However, if granting annual paid leaves during the period requested by an employee would create asignificant burden of normal operations, the employer may require the employee to choose anotherperiod. The employer cannot, however, require a change in the period requested simply because it isbusy or inconvenient.

11-3 Designation of the Period of Paid Leaves
Employers must determine the period and give 5 paid leaves within a year to employees, including
part timers who have received 10 or more paid leaves. However, in the case that employees
determine the period and take paid leaves, employees can deduct from the above-mentioned 5 paid
leaves. In the case that employees could not take 5 or more paid leaves within a year, employers are
fined a maximum of 300,000 yen per employee.

11-4 Wages for Paid Leaves
Paid leaves are classified as regular work days for all employees. Regular employees paid on amonthly basis do not receive premium wages for paid leaves. Part-time employees paid on a daily or
hourly basis, however, do receive standard wages for annual paid leaves. It is necessary to stipulate
one of the items shown below in the Notice of Employment or Rules of Employment.
(1) Regular wages to be paid for prescribed working hours (common)(2) Average wages(3) S tandard daily remuneration provided for the Employees' Health Insurance (Labor-Management
Agreement is necessary. Submission to the Labor Standard Supervision Office is not required.)
In regard to (1) above, wages for annual paid leaves for part-time employees paid on an hourly basis
are calculated by multiplying the hourly wage by the number of hours the part-time employee would
normally have worked (number of hours stipulated in the labor contract).

48  II. Employment Management

12

Other Statutory Holidays and Leaves〜 What holiday or leave systems are there other than annual paid leaves? 〜

There are leaves and holidays for public duty, child birth, childcare, and family-care. However, theseleaves do not always need to be paid leaves.

12-1 Leave to Exercise Civil Rights
Employers may not refuse employee requests for time off during working hours to exercise franchiseand other civil rights, or to perform public duties such as serving as a citizen judge.

12-2 Leave for Maternal Healthcare
Female employees are granted maternal healthcare leave for pregnancy and child birth as shown
below.

Table 27 Maternal Healthcare Leave
Type of Leave
Prenatal
Leave
Maternity Leave

Description

Remarks

6 weeks upon request(14 weeks for multiple pregnancy)

If the employee receives
no salary during leave,
the Employees' Health
Insurance pays a maternity
allowance equivalent to
2/3 of the standard daily
remuneration.

8 weeks after childbirth whether requested or
Postpartum
not (the employee may return to work after 6
Leave
weeks with physician approval)

Time for Child
Care

Employers are required to accommodate female employee requests for 30 minutes twice aday, or 1 hour per day to care for children less than one year of age.

Maternal
Healthcare Leave

Employers are required to accommodate requests from female employees who are pregnant
or who have undergone childbirth within a year for leave to receive healthcare guidance orhealth examinations stipulated by the Maternal and Child Health Act.

Menstrual Leave

Employers are required to accommodate requests for time off from female employees who
have a significant difficulty working during menstruation.

・All leaves above can be given as unpaid leaves.
・During maternity leave, both employers and employees are exempt from the payment of social insurance premiums.

12-3 Child Care and Family Care Leave
Employers are required to provide child care and family care leave to all the employees, regular,
part-time, fixed-term contracted employees, etc., regardless of gender or employment status if therequirements are satisfied. However, this does not apply to fixed-term contracted employees,
including fixed-term part-time employees, who have worked less than 1 year. In addition, it is also
possible to exclude certain employees by Labor-Management Agreement.
As compensation for wages during child care and family care leave, Employment Insurance provides
child care and family care leave benefits to employees.
During maternity, child care and family care leave, both employers and employees are exemptedfrom the payment of social insurance (Employees' Health Insurance, Employees' Pension Insurance)
premiums. During the time employees are exempted from payment of premiums, however, they are
eligible to receive benefits.

49

II. Employment Management  

Table 28 Child Care and Family Care Leave and Related Measures
Type

Description

Number of Days off, etc.

Child Care Leave

Employees rearing children
less than 1 year of age (Canbe extended up to 2 yearsof age.)Until the child becomes 1
year old (Can be extended
up to 2 years of age.)

Family Care Leave

Employees taking care ofa family requiring nursing
care

Not more than 93 daysfor one subject requiring
nursing care

Sick/Injured Child
Care Leave eave for providingLcare for injury orillness of children orfor immunizations or
medical examinations
 mployees rearingE
preschool-age children

Family Care Leave

Employees providing
nursing and other care forfamily requiring nursing
care

Short-Term Work
for Child Rearing

Employees rearing
children under 3 years ofage

Short-Term Work
for Family Care

Employees providing
nursing care for family
members requiring
nursing and other carewithout taking nursing
care leave

Limitation on NonPrescribed Work
for Child Rearing
Limitation on
Overtime Work forChild and Family
Care

Employees rearing
children under 3 years ofage
Employees rearing
preschool-age children
Employees taking care offamily members requiring
nursing care

Employees who can be excluded as
subjects due to LaborManagement Agreement, etc.
・Less than one year after
starting work at thecorporation
・Employees scheduled to work
not more than 2 days per week

For 1 child, 5 days per year
For more than 2 children,
10 days per year
(Half-day leave is alsoavailable.)
For 1 family member, 5days per year
For 2 or more family
members, 10 days per year
(Half-day leave is alsoavailable.)
Shorten working hours
per day to 6 hours at
maximum until thechildren become 3 yearsof age mployees can take thisEbenefit two or moretimes during 3 years after
starting to use the services
 horten working hours per
S
day to 6 hours
No overtime
Exclude from late-nightwork
Limit statutory overtime
work to 24 hours permonth and 150 hours per
year・Less than 6 months after
starting work at thecorporation
・Employees scheduled to work
not more than 2 days per
week・Less than 1 year after starting
work at the corporation
・Employees scheduled to work
not more than 2 days per
week・Employees who have difficulty
reducing work time due tothe characteristics of theirwork (alternative measures arenecessary)・Less than 1 year after starting
work at the corporation
・Employees scheduled to work
not more than 2 days per
week・Employees whose prescribed
hours are late night (Excluded
as subjects of limitation tolate-night work)

・All leaves above can be given as unpaid leaves.
・During child care and nursing care leaves, both employers and employees are exempt from the payment of social insurance
premiums.

50  II. Employment Management

13

Safety and Health〜 Safety considerations employers are responsible for 〜

According to law, employers are not only required to comply with the minimum standards for theprevention of industrial accidents, but they are also required to endeavor to ensure the safety andhealth of employees in workplaces through the creation of a comfortable working environment andthe improvement of working conditions. Employers are required to provide safety education andmedical examinations for employees.

13-1 Obligation to Ensure Safety in the Workplace
Employers are required to ensure the safety and health of employees in the workplace.
Obligation to ensure safety in the workplace includes prevention of mental problems such as
depression caused by harassment at the workplace.

13-2 Medical Examinations
To protect the safety and health of employees, employers are required to provide medical
examinations to employees at the time of hire and at least once per year afterward. The cost of the
medical examination shall, in principle, be borne by the corporation (employer). The Health Insurance
system may sometimes provide grants.
Employers are required to provide medical examinations for part-time employees whose prescribedworking hours are 3/4 of regular employees' per week (30 or more hours per week) or who have beenworking for more than 1 year.

51

II. Employment Management  

14

Resignation, Retirement, and Dismissal〜 What should employers consider before dismissal of employees?
What is the retirement system? 〜

Employers are allowed to dismiss employees only under reasonable and socially valid reasons andconditions. Grounds for dismissal should be determined when creating the labor conditions, andemployers are required to provide at least 30 days advance notice, or pay compensation in lieu of
notice equivalent to 30 days' wages.
Retirement shall be at no less than 60 years of age and continuous employment until 65 years of age
is allowed by law.

14-1 Types of Termination
Termination is defined as the completion of a labor contract. Dismissal is defined as cancellation of alabor contract by the employer. Termination other than dismissal includes resignation, retirement,completion of assignment, etc. Resignation is defined as the voluntary cancellation of a labor contractby the employee and requires submission of a letter of resignation.

14-2 Retirement and Continual Employment
The lower limit of the retirement age in Japan is legally stipulated as 60 years of age. Therefore,
many corporations have determined 60 years of age as the retirement age. Employers are required tocontinue employment up to 65 years of age for those who so desire by increasing the retirement age,
implementing a continual employment system including reemployment, or abolishing the
stipulations for retirement according to the Act on Stabilization of Employment of Elderly Persons.
Many corporations now allow employment beyond 60 years of age for those who are eligible byallowing employees to retire and then reapply for employment under different working conditions,
including duties and wages.
However, it is necessary for employers to clearly indicate retirement and continual employment
policies in the Notice of Employment or Rules of Employment. Otherwise, it is considered that there is
no retirement system.

14-3 Dismissal
1. Reasons for Dismissal
Any dismissal for other than objectively reasonable grounds or which is not considered appropriate
in general societal terms will be treated as an abuse of employee rights and be invalid (Article 16 of
the Labor Contract Act). Employers are required to stipulate reasons for dismissal in the Notice of
Employment and Work Rules. Dismissal for other than the stipulated reasons may be deemed invalid.

Table 29 Types of Logical Reasons for Dismissal

Personal reasons

Managerial reasons

52

Lack of ability and aptitude(Ordinary dismissal)

Incapable of working due to physical or mental
disability, having a very poor service record, lacking
ability or efficiency, etc.

Acts in violation of law orcompany policy (Punitive
dismissal)

Absence without notice, breach of discipline(equivalent to serious grounds for discipline)

Dismissal for the purposes ofreorganization

Reduction in personnel because of financial difficultyor rationalization

  II. Employment Management

2. Advance Notice of Dismissal
In the event that an employer wishes to dismiss an employee, the employer is required to provide atleast 30 days advance notice. An employer who does not give 30 days' advance notice is required to
pay the dismissed employee the equivalent of average wages for a period of not less than 30 days.
However, this shall not apply to those who are employed on a daily basis, those who are employed
for not more than 2 months, and those who have worked less than 14 days in a probation period. ＊＊Advance notice of dismissal shall apply to those who are in a probationary period consecutively for more than 14 days.

ColumnTermination of the consecutive employmentof fixed-term contracted employees

Rejection of contract renewal of fixed-term contracted employees is called“the termination ofconsecutive employment.”In case of an employment contract with a fixed period, termination comeswith its expiry without any specific reason (termination of contract upon its expiration).
Excluding cases in which employers clearly state in advance that the relevant contract will not be
renewed, employees whose contract has been renewed at least three times or who have been
employed more than one year are deemed to be working under a contract of employment without
fixed term. Employers are required to state the reasons and procedures (advanced notice) for
termination of consecutive employment. Employers must clearly state the basis of the decision for theextension, renewal, or cancellation of contracts with fixed-term contracted employees (see p. 32, Table
18).
In the event employees whose contract has been renewed for a total of five years wish to change toa non-fixed-term contract, the employer shall comply.
With regard to a fixed-term labor contract, an employer may not dismiss a worker until the expirationof the term of such labor contract, unless there are unavoidable circumstances (Article 17 of the Labor
Contract Act).

3. Legal Restrictions on the Dismissal of Employees
Employers are forbidden from dismissing employees:
・During a period of absence from work for medical treatment with respect to injuries or illness
suffered in the course of employment or within 30 days thereafter・During a period of absence from work before and after childbirth within 30 days thereafter・Because of nationality, creed or social status
・Because of gender・Because of marriage, pregnancy, or requesting maternity leave・Because of requesting child care leave or family care leave・Because of whistle blowing
・Because of membership in a labor union, joining or organizing a labor union, or lawful union
activities
・Because of having reported a violation of the Labor Standards Law to the relevant supervisoryagency53

II. Employment Management  

14-4 Procedures for End of Employment
Employers are required to follow the procedures shown below when a labor contract is terminated.
（1）Payment of wages and return of money and goods
Upon request from a resigned employee, the employer is required to pay the wages and return thereserve funds, security deposits, savings, and any other money and goods to which the employee isrightfully entitled within 7 days (Article 23 of the Labor Standards Act).
（2）Recording into the roaster of employees
The employer is required to enter information related to retirement (date and reasons) in theroaster of employees and maintain it for a period of 3 years.
（3）Procedures concerning Withdrawal from Social Insurance
The employer is required to collect the health insurance certificate of the retiring employee andsaid employee's dependent family and submit Notification of Withdrawal from Health Insurance and
Employees' Pension Insurance to the competent Pension Service Office within 5 days from thefollowing day of the retirement.
（4）Submission of Notification of Withdrawal from Employment Insurance
The employer is required to submit the Notification of Withdrawal from Employment Insurance toHello Work within 10 days from the day following retirement. Upon employee request, the employer
is required to attach a Resignation Certificate for Employment Insurance (in triplicate). The employer isrequired to give the employee the Letter of Resignation for Employment Insurance issued by Hello
Work immediately. The letter of Resignation for Employment Insurance is necessary to receive
unemployment benefits.
（5）Issuance of the Certificate on the Occasion of Retirement
Regardless whether the end of employment is the result of retirement or dismissal, if an employee
requests a certificate stating the period of employment, the kind of occupation, the position in theenterprise, the wages or the cause of retirement (if the cause for retirement is dismissal, including thereason), the employer is required to provide such without delay. The employer is not permitted toprovide information that is not requested by the employee (Article 22 of the Labor Standards Act).

54

  II. Employment Management

15

Individual Labor-Related Dispute Resolution System〜 Which public organizations should we consult
when labor-management disputes occur? 〜

General Labor Consultation Desks are located at Prefectural Labor Bureaus and Labor Standards

Inspection Offices. An individual labor dispute resolution system is also in place.
Labor disputes are bad for both employers and employees. It is necessary for both sides tocommunicate well to avoid misunderstandings that cause disputes, and to promote prompt andeffective resolution if a dispute should occur. General Labor Consultation Desks at Prefectural Labor
Bureaus provide advice, guidance, and mediation.
It is also possible to bring disputes to Industrial Court for swift resolution when an agreement
between the parties cannot be reached through mediation. The Industrial Court establishes a Labor
Tribunal Panel comprised of one judge and two experts to hear the dispute. The Panel attempts toresolve disputes through discussion in a series of not more than 3 closed hearings. If the parties
involved are unable to reach agreement, the Panel hands down an official order. If both parties accept
it, the order has the same effect as a judicial settlement.
    General Labor Consultation Desks
https://www.mhlw.go.jp/general/seido/chihou/kaiketu/soudan.html(Japanese)55

II. Employment Management  ColumnWork style reforms

Act on the Arrangement of Related Acts to Promote Work Style Reform was established on June 29,
2018. This revised a wide range of acts to promote both work-life balance and a wide variety of work
styles. Major changes, description, and the date of enforcement are shown in below table.

Major Changes

56

Description

Date of Enforcement for
Small- and Medium-sizeEnterprises(1) Upper limits of overtime work

Upper limit of working hours thatcan be extended (p 44. Table 22)

April 1, 2020(2) Extension of settlement period
for flextime systems

Settlement period was extended
from 1 to 3 months (p 42. II. 9-4)

April 1, 2019(3) Ensuring the acquisition of acertain number of paid leaves

Employers must give at least 5 paid
leaves to employees (p 48. II. 11-3)

April 1, 2019(4) Foundation of highly skilled
professional system

Withdrawal from hourly wages for
specific highly skilled professionals

April 1, 2019(5) Revision of premium rates forovertime work exceeding 60
hours per month

Increasing premium rate forovertime work exceeding 60 hours
per month to 50%

April 1, 2023

(6) Equal pay for equal value of work

Balance between regular and nonregular employees

April 1, 2021

(7) Work-interval system (Obligation
to make effort)

Setting times from the finish of one
period of work to the start of thenext period of work

April 1, 2019  III. Reference

III. Reference
Contact List
Type

Pension,Healthcare andPublic Insurance

Name of Organization/URL

Pension/Social Insurance

Japan Pension Service (Regional Pension Service Office)https://www.nenkin.go.jp/service/seidozenpan/
yakuwari/20150518.html (Japanese)
http://www.nenkin.go.jp/international/index.html

Employees' Health
Insurance Benefits

Japan Health Insurance Association (Prefectural Office)http://www.kyoukaikenpo.or.jp/ (Japanese)

National Health Insurance

Municipal OfficeWorkers' Accident
Compensation Insurance

Regional Labor Standards Supervision Office
http://www.mhlw.go.jp/bunya/roudoukijun/location.html(Japanese)
http://www.mhlw.go.jp/english/policy/employ-labour/labour-standards/

Employment Insurance

Regional Hello Work Office
http://www.mhlw.go.jp/kyujin/hwmap.html (Japanese)
http://www.mhlw.go.jp/english/policy/employ-labour/labour-standards/

Labor Issues

General Labor Consultation Desks at Prefectural Labor
Bureaus
http://www.mhlw.go.jp/general/seido/chihou/kaiketu/
soudan.html (Japanese)
http://www.mhlw.go.jp/english/policy/employ-labour/labour-standards/“Are your working conditions fair?” p. 8
Telephone Consultation Service and Foreign Workers
Consultation Service
https://www.mhlw.go.jp/new-info/kobetu/roudou/
gyousei/kantoku/dl/040330-6.pdf

Labor Insurance

Labor
Consultation

Statutes
Official Name of Law

Simplified Name of Law

English Translation

健康保険法

健康保険法

Health Insurance Act

厚生年金保険法

厚生年金保険法

Employees' Pension Insurance Act

労働者災害補償保険法

労災保険法

Industrial Accident Compensation Insurance Act/
Workers Accident Compensation Insurance Act

雇用保険法

雇用保険法

Employment Insurance Act

労働保険の保険料の徴収等に関する法律

労働保険徴収法

Act on Collection, etc. of Insurance Premiums ofLabor Insurance

労働基準法

労基法

Labor Standards Act

最低賃金法

最賃法

Minimum Wage Act

職業安定法

職安法

Employment Security Act

57

III. Reference  

Official Name of Law

Simplified Name of Law

English Translation

労働契約法

労働契約法

Labor Contracts Act

労働安全衛生法

安衛法

Industrial Safety and Health Act

雇用対策法

雇対法

Employment Measures Act

労働関係調整法

労調法

Labor Relations Adjustment Act

労働者派遣事業の適正な運営の確保及び派遣労働者の就業条件の整備等に関する法律

労働者派遣法（派遣法）

Act for Securing the Proper Operation of Worker
Dispatching Undertakings and Improved Working
Conditions for Dispatched Workers(Worker Dispatching Act)

育児休業、介護休業等育児又は家族介護を行う労働者の福祉に関する法律

育児介護休業法（育介法）

Act on Childcare Leave, Caregiver Leave, andOther Measures for the Welfare of Workers Caring
for Children or Other Family Members(Child Care and Family Care Leave Act)

高年齢者等の雇用の安定等に関する法律

高年齢者雇用安定法

Act on Stabilization of Employment of Elderly
Persons

雇用の分野における男女の均等な機会及び待遇の確保等に関する法律

男女雇用機会均等法（均等法）

Act on Securing, etc. of Equal Opportunity
and Treatment between Men and Women in
Employment(Equal Employment Opportunity Act for Men and
Women)

短時間労働者の雇用管理の改善等に関する法律

パートタイム労働法

Act on Improvement, etc. of Employment
Management for Part-Time Workers(Part-Time Employment Act)

出入国管理及び難民認定
法

入管法

Immigration Control and Refugee Recognition
Act(Immigration Control Act)

公益通報者保護法

保護法

Whistleblower Protection Act

個別労働関係紛争の解決の促進に関する法律

個別労働紛争解決促進法

Act on Promoting the Resolution of Individual
Labor-Related Disputes

Japanese-English Glossary

58

健康保険

Employees' Health Insurance

国民健康保険National Health Insurance

厚生年金保険Employees' Pension Insurance

国民年金

National Pension (System)

介護保険Long-Term Care Insurance

労働者災害補償保険（労災保険）

Workers' Accident Compensation Insurance

雇用保険

Employment Insurance

社会保障協定Social Security Agreement

  III. Reference

国民年金・厚生年金保険脱退一時金Lump-Sum Withdrawal Payments (National Pension/Employees'
Pension)

労使協定

Labor-Management Agreement

正社員

regular employee

常用社員permanent employee

パートタイマー

part-time employee

有期契約社員

fixed-term employee

フルタイム社員

full-time employee

派遣社員

temporary worker from an agency/dispatched employee

労働契約

labor contract

試用期間

probation period

就業規則

work rules

子ども・子育て拠出金

Child and Child Care Contribution

賃金

wages

賞与

bonus

退職金

retirement allowance

最低賃金

minimum wage

休業手当

allowance for absence from work

平均賃金

average wages

法定労働時間statutory working hours

休憩

work breaks

休日

day off/holiday

変形労働時間制

Variable Working Hours System

フレックスタイム制

Flextime System

専門業務型裁量労働制

Discretionary Working Hour System for Specialized Work

みなし労働時間制

De Facto Working Hour System

時間外労働

overtime work

休日労働

holiday work

深夜労働

late-night work

割増賃金

premium rate

年俸制

annual salary system

年次有給休暇annual paid leave

育児休業

child care leave

介護休業

family care leave

健康診断

medical examination

59III. Reference  

60

定年

retirement解雇

dismissal

個別労働紛争individual labor-related disputeSheet 1

For details
regardingemployees
eligible forthe variable
working hoursystemexceeding
three months
within a
one-yearperiod, fill in
the fields ofcolumn ②.
Accounting

Settlement of accounts at
the end of each month

Determine the specificreasons.

Machine assembly

DesignType of services

Number ofapplicable workers[Age 18 or over]

20

10

3

3

2

2

3

3.5

3.5

2.5

2.5

3.5

(TEL :--)

Saturdays, Sundays and Public holidays

Saturdays, Sundays and Public holidays

1 year from April 1, xxxx

Termination of the Agreement

20

20

15

15

30

Number ofworking hours
exceedingstatutoryworking hours

30

30

25

25

40

Number ofworking hours
exceedingprescribedworking hours(Optional)

Per Month(Up to 45 hours for ①. Up to
42 hours for ②.)

One day per month

One day per month

Number of statutory holidays
on which employees can be
asked to work on

320

320

270

270

Determine
the initial dateof calculationof the upper
limit for one
year.
Regardless ofthe effective
term of thelabor-manage
ment
agreement,
the initial dateof calculation
shall be set
for the year.

Set the termof theagreement.
One year isdesirable.

Note thelabor
insurance
number andcorporate
number.

Start 8:30 Finish 17:30

Start 8:30 Finish 17:30

Start and finish times on
statutory holidays on which
employees can be asked to work

Determine the number of working hours
exceeding the statutory working hours per year.
Up to 360 hours for ① and up to 320 hours for ②.

200

200

150

150

370

Number ofworking hours
exceedingprescribedworking hours(Optional)
Number ofworking hours
exceedingstatutoryworking hours
250

April 1, xxxx

Initial date ofcalculation[MM/DD/YY]

Per Year(Up to 360 hours for ①. Up to
320 hours for ②.)

Number of working hours that can be extended

Determine the number of working hours
exceeding the statutory working hours per month.
Up to 45 hours for ① and up to 42 hours for ②.

Prescribed Holidays(Optional)

Determine the number ofworking hours exceeding thestatutory working hours per day.

7.5

7.5

7.5

7.5

7.5

Per Day
Designatedworking
hours perday
Number of(Optional) Number ofworking hours working hours
exceedingexceedingprescribedstatutoryworking hours working hours(Optional)(Postal Code:)1-2-3 xxx town, xxx City

Address and phone number of enterprise(Check required in check box.)□
The number of hours above notwithstanding, the total number of working hours including overtime and holiday work shall be less than 100 hours per month or 80 hours per month averaged over two to six months. ✓Temporary order receipt/ Change of delivery date

Concentration of receipt of orders

5

5

10

20

10

Subdivide the range ofbusiness and determine thespecifications.

Purchase

Inspection

Response to defective
products

Inventory

Machine assembly

Temporary order receipt/
Change of delivery dateSpecific reasons for requiring Work on Holidays② Workers falling under the
one-year variable working
hour system① Workers not corresponding
to ② below

DesignType of services

Concentration of receipt
of ordersSpecific reasons forrequiring Overtime Workxx Metal Engineering Co., Ltd. xxxx Plant

Metal Product Manufacturer

Number ofapplicable workers[Age 18 or over]

Name of the enterprise

Corporate Number

Labor Insurance Number○Transfer the information from the Labor-Management Agreement regarding Overtime Work and Work on
Holidays.
○Submission of the Labor-Management Agreement regarding Overtime Work and Work on Holidays can bemade electronically.
○The (Optional) column can be left blank.

Labor-Management Agreement regarding Overtime Work and Work on Holidays

Type of the enterprise

Form No.9 (Related to Article 16, Paragraph.1)

Overtime WorkWork onHolidays

Enter an agreement for each
workplace (plants, branch
offices, and sales offices).

○When asking employees to work temporarily beyond the upper limit, the employer is required to submit Form
No.9-2.
○Form No.9-2 includes
・Labor-Management Agreement regarding Overtime Work within the Upper Limit (1st sheet)・Labor-Management Agreement regarding Overtime Work beyond the Upper Limit (2nd sheet)  III. Reference

Appendix: Labor-Management Agreement regarding Overtime Work and Work on Holidays (Example)

61

62

Decideupon oneor more ofthemeasuresfrom ① to⑩ listed in
Note 1 onthefollowing
page toensure thehealth ofemployees
who work
beyond theupper limitofovertime.

Determinetheprocedures
for asking
employees
to work
beyond theupper limitofovertime.

Sheet 2①③⑩

(Applicable numbers)

Determine the number of yearlyworking hours of overtime work
(excluding overtime work on
holidays) beyond the upper limit(360 or 320 hours per year). Thiscan be up to 720 hours per year.

25%

620
500

(Specific content)
Providing face-to-face guidance to subject employees by physicians/ Setting an interval during 11-hour periods of work for subject employees/ Holding
short-time conferences at individual workplaces

Advanced application to the representative of the employees

Determine the premium rates
when asking employees to work
beyond the upper limit ofovertime. In such cases, please
try to set the premium rates
higher than the statutory
premium rate (25%).

25%

90

80

25%

March 12, xxxx

In the event that no labor unions consisting of a majority of the employees isestablished, a representative of the majority of the employees who have concluded
the Labor-Management Agreement must be selected by ballot or a show of hands,
and the method of selection shall be noted. Designation by the employer or
selection based on the intension of the employer shall not be accepted.

To the Chief of the XYZ Labor Standards Inspection Office

March 15, xxxx

Supervisor

Selection process of the parties to this agreement (in case of the person representing a majority of the employees) [Election by vote]

Name of labor union (consisting of a majority of the employees at this workplace), title and name of the person representing the majorityof the employees, who is a party to this agreement

Date of execution of this agreement

25%
720

820

Number ofworking hours
exceedingprescribedworking hours(Optional)

600

700

Number ofworking hours
exceedingstatutoryworking hours

Premiumrates
regardingtheovertimework
beyondthe upper
limit

April 1, xxxx

Number of working hours thatcan be extended

Initial date of calculation[MM/DD/YY]

Per Year(Number of overtime working hours/ Up to
720 hours)

Hanako Yamada

Name:Plant Manager
Taro Tanaka

Title:
Name:

Personal seal isalso required.

Seal

If this application is also used as theagreement, the employee
representative is required to sign oraffix his/her name and personal seal.

Inspection Department Manager

Title:A supervisor cannot be an
employee representative.

Determinethe premium
rates whenaskingemployees towork beyond
the upper
limit ofovertime. In
such cases,
please try to
set thepremium
rates higher
than thestatutory
premium rate(25%).

Determine
the initial dateof calculationof the upper
limit for one
year.
Regardless ofthe effective
term of thelabor-manage
ment
agreement,
the initial dateof calculation
shall be set
for the year.

Number of monthly working
hours combining overtime andstatutory holiday work shall beless than 100 hours and 80 hours
per month averaged over two to
six months. Confirm these
conditions between labor andmanagement, and check thecheck box. If the checkbox is notchecked, the application will not
be accepted.

(Check required in check box.)□
The number of hours above notwithstanding, the total number of working hours including overtime and holiday work shall be less than 100 hours per month and 80 hours per month averaged over two to six months. ✓Measures to ensure the health and welfare of
employees asked to work beyond the upper limit ofworking hours

Procedures for asking employees to work beyond
the upper limit of working hours

4

6.5

6

25%

25%

100

100

90

90

Number of working hours that
Premium
can be extended and the number rates
of working hours on holidays
regardingthe
Number of
Number ofovertime
working hours
working hours
work
combining thosecombining
beyondthose exceeding exceeding
the upperprescribed
the statutory
limit.
working hours andworking hours
those on holidays
and those on(Optional)
holidays

Determine the number of monthly
working hours combining overtimeand holiday work when asking
employees to work beyond the upper
limit (45 or 42 hours per month). This
shall be less than 100 hours permonth or 80 hours per monthaveraged over two to six months.

6

6

6.5

6.5

Number oftimes thattheemployercan ask
employees
to work
beyondthe upper
limit (Up tosix times)

6

6

Determine the number oftimes that the employer can
ask employees to work beyond
the upper limit of monthly
overtime work (45 or 42 hours
per month). This should be
limited to six times per year.

10

Machine assembly

Response to troubles in machines
Subdivide the rangeof business anddetermine thespecifications.

20

Inspection

Reasons must be as specific as possible andthe requirement must be limited totemporary or unexpected overtime work.
Reasons that include the possibility of
constant long-term work, reasons such as “forthe convenience of business” or “forunavoidable circumstances for business,” areunacceptable.

10

Response to troubles in products & majorcomplaints

Type of services

Number of
Number of working hours thatapplicable
can be extended
workers[Age 18 or
Number of
Number ofover]working hours working hours
exceedingexceedingstatutory
prescribedworking hours working hours(Optional)

Per Day(Optional)

Per Month(Number of working hours combining overtime workand holiday work/ Limiting to less than 100 hours)

Labor-Management Agreement regarding Overtime Work and Work on Holidays (Special Provisions)Sudden changes of specifications/ Implementation
Designof new systems

When asking employees to work temporarily
beyond the upper limit

Form No.9-2 (Related to Article 16, Paragraph1)

III. Reference    III. Reference

Note 1: Choose measures from ① to ⑩ and fill in the column (Applicable numbers). Then provide thedetails of the chosen numbers in the column (Specific content).
① Face-to-face guidance by a physician shall be provided to employees who have exceeded acertain number of work hours.
② The number of days during which overtime work is performed shall be subject to the time
specified by Article 37, Paragraph 4 of the Labor Standards Act and limited to a certain
amount per month.
③ Breaks shall be secured for certain continuous periods between the start and finish times.
④ Substitute holidays or special vacations shall be provided according to the work and healthstatus of individual employees.
⑤ Health examinations shall be provided according to the work and health status of individual
employees.
⑥ Employers shall promote the use of annual paid holidays, including the use of consecutivedays.
⑦ Employers shall provide consulting services to promote employees' physical and mental
health.
⑧ Employers shall provide due consideration for the state of employees' work and health.
Employers shall reassign employees to different sections if necessary.
⑨ Employers shall receive advice and instruction from industrial physicians and provide healthguidance by industrial physicians.
⑩ Other
Download application forms
Major forms regarding labor standards provided by the Ministry of Health, Labor and Welfare
https://www.mhlw.go.jp/bunya/roudoukijun/roudoujouken01/(Japanese)

Information Desk
Ministry of Health, Labor and Welfare, Labor Standards Bureau, Working Conditions Policy Division
TEL: 03-5253-1111 (Main)
https://www.mhlw.go.jp/bunya/roudoukijun/sosikibetu/roudoujoken.html (Japanese)

63

Inquiries for Trading and Starting Businesses
MIPRO Consulting Service
Tel: 03-3989-5151

Consultation hours: Weekdays 10:30 A.M. to 4:30 P.M.
URL: https://www.mipro.or.jp/

While MIPRO has made every effort to provide accurate information based on
the most recent data during creation of this guidebook, it is recommended thatyou confirm the necessary documents and other matters with a competentpublic agency or consult with a social security attorney or other specialist when
you actually carry out the relevant procedures.
Please note that MIPRO assumes no responsibility for any damage directly or
indirectly caused by the use of the information contained herein.
＊

Unauthorized reproduction of this publication is strictly prohibited.

The Mipro Guide toStarting a Business in Japan

Manufactured Imports and Investment Promotion Organization (MIPRO)
6th Floor, World Import Mart Bldg., 3-1-3, Higashi-Ikebukuro, Toshima-ku, Tokyo 170-8630, Japan
TEL.03（3971）6571 FAX.03（3590）7585
URL：https://www.mipro.or.jp/

The Mipro Guide to Starting a Business in Japan ～ Public Insurance and Employment Management ～外国人のための起業ガイドブック（公的保険・雇用管理編）～ Public Insurance and Employment Management ～外国人のための起業ガイドブック（公的保険・雇用管理編）

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