The complete guide to offering employee benefits in Japan
Calling all employers venturing into the Japanese job market: It's not just about hiring employees, it's about treating them right. We're here to guide you on crafting a benefits package that keeps you in the good graces of your employees, as well as Japan's labor laws.
What employee benefits are mandatory in Japan?
Mandatory benefits programs are required by Japan’s Labor Standards Act, which sets the minimum working conditions for the country’s employees. If you employ a Japanese worker and fail to offer them these mandatory employee benefits, you could wind up with a hefty fine.
Also keep in mind that the benefits required by the government of Japan are statutory minimums, and employers can always offer more than these mandatory benefits.
Pension
Most Japanese residents aged 20 to 59 are required to be covered by the National Pension System, with half the premiums paid by employers and half by employees. The plan disburses payments to employees who’ve been making contributions once they turn 65. The amount is dependent on the size and scale of contributions employees have made to the system throughout their careers.
The Japanese pension system offers a disability pension if they experience a signature or injury, and a survivor’s pension that provides for family members of deceased employees.
Health insurance
Japan has a statutory health insurance system funded by taxes and contributions. Employment-based plans are split 50-50 by employees and employers, based on an employee’s salary. Plans provide healthcare benefits like:
- Hospital visits
- Primary care
- Specialty care
- Mental health care
- Prescription drugs
- Hospice care
- Physical therapy
Basic health insurance plans cover 70% of ordinary medical expenses, with the insurance holders paying the other 30%.
Labor insurance
While Japan’s “social insurance” includes healthcare and pension schemes, which employers and employees split contributory costs for, the following two benefits are better known as “labor insurance,” which are designed to protect workers who’ve encountered unexpected hardship.
- Workers compensation insurance: Nearly all employers are required to cover their employees with workers compensation insurance, which provides medical care, income indemnity, and accidental death coverage for work-related injuries. Employers pay 100% of these premiums.
- Unemployment insurance: Japanese employees are entitled to a subsidized allowance in case they lose their job. Payments depend on your age, salary, and reason for leaving. Premiums are calculated based on an employee’s wage and are split between employer and employee.
Long-term care insurance
This mandatory benefit provides Japanese residents aged 65 and older with nursing home and at-home services from long-term care attendants. All Japanese employees 40 and older make contributions depending on their income.
Paid leave entitlements
According to the Labor Standards Act, employers are required to give paid annual leave to any employee who’s worked continuously for at least six months. Statutory minimum vacation days are based on length of service.
Other paid leave entitlements to include:
- Maternity leave. Pregnant employees can take up to six weeks off before childbirth, and up to eight weeks after. Allowances are not always statutorily required, but employees with workplace-funded health insurance generally get two-thirds of their salary reimbursed.
- Child care leave. Employees who, regardless of gender, have had at least a year of continuous employment, can take child care leave up until the child turns one year old. Employers are not required to pay employees during this leave.
- Caregiver leave. Employees can take leave to provide nursing care for an ailing family member. It can be taken up to three times per family member, up to 93 days total (but not consecutive). Employers are not required to pay employees during this leave.
Statutory holidays
Employees in Japan are entitled to paid time off during the 15 statutory holidays.
If the holiday falls on a weekend, the next workday will generally become the public holiday.
Supplementary benefits in Japan
In addition to the required benefits, many Japanese employers also provide additional benefit plans and perks to help them attract and retain employees. Some of the most common supplementary benefits are below.
Sick pay (and other paid leave options)
Most paid leave isn’t statutorily required in Japan, but often still granted by employers. This includes:
- Sick leave
- Bereavement leave
- Disability leave
- Marriage leave
Private Health insurance
While all Japanese employees are covered by government health insurance plans, some employers compete for top talent by offering supplemental insurance benefits with more robust coverage. Many employees use private plans as a supplement to life insurance, providing payments in case of a debilitating sickness or injury.
Group life insurance
In Japan, life insurance plans disburse lump-sum payments to family members impacted by deaths due to accidents, medical complications, natural causes, terminal illnesses, and acts of violence. Benefits can be a flat rate for all employees, or vary according to seniority.
Family allowance
More than three-quarters of Japanese companies provide allowances to employees who have dependents. Spouses get ¥10,000 to ¥15,000 per month, while children get ¥3,000 to ¥5,000 per month.
Long-term disability
Japanese employers may offer additional long-term disability insurance, which can provide financial assistance for employees while they are unable to work.
Paid time off
Many employers offer paid time off beyond Japan's statutory minimums to make their workplaces more attractive to top workers. Paid time off can include additional vacation time, extra parental leave, paid personal days, or flexible leave policies.
Additional perks
Japan’s labor market is competitive. Employers who offer some of the following fringe benefits will have an easier time attracting top talent:
- Transportation stipends
- Flexible work arrangements
- Subsidized food services
- Housing Allowances
- Stress checks (required for employers with more than 50 workers)
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Disclaimer: Rippling and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.
