Labor Insurance

1) Workers' Compensation Insurance

①What is workers' compensation insurance?

If you're a job seeker looking to work in Japan, it's crucial to understand labor insurance, which includes two main types: workers' accident compensation insurance and unemployment insurance.

Workers' accident compensation insurance is designed to provide essential insurance benefits to workers or their families in case of work-related injuries, illnesses, or fatalities, including on-the-job accidents and commuting-related incidents. Officially known as "Workers' Accident Compensation Insurance," this system emphasizes the importance of protecting workers.

Notably, workers' accident compensation insurance is unique because it's not something individual workers purchase; instead, it's secured by their employers.

②Requirements for Application of Workers' Accident Compensation Insurance

Regardless of the size of their business, employers are required to enroll their employees in workers' compensation insurance if they hire even one worker. This requirement applies to all workers, irrespective of nationality or employment status, including part-time or casual workers. This means that foreign workers, even those with uncertain immigration statuses, enjoy the same coverage as Japanese workers.

③Insurance Premium Rates

The cost of workers' compensation insurance premiums is entirely taken care of by employers. At the start of the fiscal year, employers calculate and pay the estimated premiums and reconcile this amount at the end of the fiscal year. The premium calculation involves multiplying the total expected wages for the fiscal year (from April 1 to March 31) by the applicable premium rate. This calculation encompasses various wage components, such as basic wages, bonuses, commuting allowances, late-night allowances, and housing allowances.

(Source: Ministry of Health, Labour and Welfare, "Workers' Accident Insurance Premium Rates (from fiscal year 2008)")

Link to premium rates

Workers' accident insurance premiums = total wages of workers covered by workers' accident insurance × workers' accident insurance premium rate

Types of workers' compensation insurance benefits (v) Procedures at the time of enrollment and retirement

When employers hire workers, they must submit a "Notification of Establishment of Insurance Relationship" and a "Certificate of All Historical Matters" to the Labor Standards Inspection Office within 10 days of the worker's first day. Additionally, a "Labor Insurance Estimated Insurance Premium Declaration" should be sent to the Labor Standards Supervision Office within 50 days.

The good news for job seekers is that once these initial documents are submitted, there's no need to repeat enrollment procedures each time a new employee joins the company. Importantly, no special procedures are required for workers' accident compensation insurance even if a worker leaves the company.

2) Employment Insurance

①What is employment insurance?

For job seekers in Japan, understanding employment insurance is equally vital. This system is designed to stabilize the financial security of workers and facilitate their re-employment in case of unemployment or the inability to maintain employment due to company-related reasons.

While both workers' accident compensation insurance and unemployment insurance aim to protect workers, they serve different purposes and are applicable in distinct situations.

Key benefits of employment insurance include unemployment allowances, reemployment allowances, and childcare leave allowances.

②Conditions for Employment Insurance Coverage

If you're planning to work in Japan, you should know that when a company hires at least one worker, it becomes subject to employment insurance coverage. There are exceptions, such as privately owned companies with five or fewer employees engaged in agriculture, forestry, or fisheries.

Meeting these requirements means enrolling in employment insurance, regardless of your job type or desire to enroll. This principle applies to foreign workers and technical intern trainees as well.

To qualify for employment insurance, you must meet the following criteria:

• The company must be an applicable place of business for employment insurance.

• The prescribed weekly working hours must be 20 hours or more.

• The worker must be expected to be employed for 31 days or more.

• There are exceptions when these criteria don't apply, such as for workers with weekly working hours less than 20 hours, those not expected to be continuously employed for 31 days or more, and workers employed on or after the day before their 65th birthday, among others.

③Insurance Premiums

Unlike workers' accident compensation insurance, employment insurance premiums are covered by the worker, with the worker's share deducted from their monthly wage.

Employment insurance premiums = total wages of workers covered by employment insurance × employment insurance premium rate

The employment insurance premium rate varies by industry, mainly due to differences in the frequency of unemployment benefits and compensations for work absence. These variations are influenced by job instability resulting from weather and economic conditions.

（出典：厚生労働省「令和4年度雇用保険率のご案内」）

https://www.mhlw.go.jp/content/000921550.pdf

④Types of employment insurance benefits 

⑤Procedures for enrollment and retirement

For job seekers planning to work in Japan, it's crucial to understand the procedures for enrollment and retirement.

Enrollment procedures: When a worker covered by employment insurance is hired for the first time, the employer must submit a "Notification of Establishment of Business Office" and a "Notification of Acquisition of Employment Insurance Insured Status" to the Hello Work office responsible for the business location. Subsequently, a "Notification of Acquisition of Employment Insurance Coverage" must be submitted each time a new employee is hired. Employers should provide the "Certificate of Employment Insurance Coverage" issued by Hello Work to the new employee upon submission of the notification. The deadline for submitting the notification of acquisition is the 10th day of the month following the month of acquisition.

For foreign employees, specific information, including name, status of residence, period of stay, date of birth, gender, nationality/region, permission to engage in activities other than those permitted under the status of residence, residence card number, and name and location of the place of business where the employee will work, must be entered in the "Notification of Acquisition of Employment Insurance Coverage." This information should be recorded in columns "17" to "23" of the "Notification of Acquisition of Employment Insurance Coverage" and submitted to Hello Work. This step notifies Hello Work of the employment status of the foreign national.

Employers hiring foreign nationals are also obligated to submit the "Notification of Employment Status of Foreign Nationals" to Hello Work upon hiring or resignation. If enrolled in employment insurance, the "Notification of Acquisition of Employment Insurance Coverage" or "Notification of Loss of Employment Insurance Coverage" can be submitted instead of the "Notification of Employment Status of Foreign Nationals." However, if not enrolled in employment insurance, the employer must prepare the "Notification of Employment Status of Foreign Nationals" and submit it to Hello Work. Additionally, as of March 2020, a "Notification of Residence Card Number" is required. This separate form allows entry of the resident card number.

Procedures at the time of retirement: When an individual insured under employment insurance leaves employment, they must submit a "Notification of Loss of Employment Insurance Coverage" and a "Certificate of Release from Employment Insurance Coverage" to Hello Work. After completing this process, a "rishokuhyo" (release form) will be issued. The notice of loss of eligibility must be submitted within 10 days from the date of separation from employment.

For foreign employees, specific information must be entered in the "Notification of Loss of Employment Insurance Insured Status," including name, status of residence, period of stay, date of birth, gender, nationality/region, resident card number, name and address of the place of business related to the separation of employment, and more. By submitting the form to Hello Work with the specified information entered in the "Address (of the insured person)" column on the front and columns "14" to "19" on the back, the employer notifies Hello Work of the separation of employment status for the foreign national. Also, as of March 2020, a "Notification of Residence Card Number" is required, and it should be included on the "Notification of Employment Status of Foreign Nationals."

When a foreign employee resigns, a "Certificate of Resignation" should also be issued. This document, in accordance with Article 22 of the Labor Standards Law, is not an official document like a separation certificate or a release form but may be requested by the Immigration Bureau to ensure the validity of the work visa after the foreign employee changes jobs. It is issued independently by the company and is obligatory only when the resigning employee requests it. The certificate should include information such as probationary period, type of work, position in the business, wages, and the reason for resignation.