[GUIDE] Employee Benefits in Japan

Now that Japan has opened its doors to foreign workers through a new visa system, many foreign nationals who are interested to know about work culture and working conditions for employees in Japan would do well to find out about the standard benefits and salary packages offered by companies here.

However, it’s also important to note that companies here do not generally offer high wages, but they make up for various allowances or bonuses to lower the rate of overtime pay paid for work outside normal working hours.

Get to Know the Employee Benefits in Japan

In this post, we will highlight the standard benefits and allowances of those who work here in Japan:

• Annual Paid Leave: As per Japan’s labour law, permanent and contract employees are entitled to a minimum of 10 days paid leave each year after six months (probation) rising to 20 days for those with more than six-and-a-half years’ of service. This allowance can be pro-rated for partial years worked.
• Annual Sick Leave: Generally speaking, there is no paid sick leave in Japan. So when employees do get sick, they use their paid vacation to take a leave of absence. However, there are some foreign companies here in Japan that grant sick leave to their employees as a special benefit.
• Social Security
  • “Kokumin kenko hoken” or “Citizens’ health insurance”: This is mainly intended for self-employed individuals and those considered as long-term temporary or part-time workers (called “freeters” in Japan).

This type of insurance covers 70% of the cost of any medical treatment. Some people take out top-up insurance to cover the remaining 30% in case of a major illness, accident, or injury.

This is typically preferred by expats who don’t intend to stay too long here in Japan as it only covers health insurance and nothing else.

• “Shakai Hoken” or “Social Security”: This is the more comprehensive national insurance scheme in the country. Fifty percent (50%) of the cost of monthly premiums is covered by the individual through deductions from salary at source (i.e. NHS contributions in the UK) and 50% by their employer. Companies with more than just a handful of employees are obliged to provide this cover to their employees.

Unlike the kokumin kenko hohen, the shakai hoken covers 4 areas: health insurance, industrial injuries insurance, unemployment insurance, and pension benefit. This type of insurance will greatly benefit those who intend to work for the long term here in Japan, as they will fully be covered by this insurance only after 20 years or so of living in the country.

• Commutation Expenses: While not mandatory under the law, companies typically refund commutation expenses based on the monthly train fare. This type of allowance is subject to Social Insurance and Labour Insurance but not to employee income tax.
• Business Expenses: Business-related expenses (travel, meals, accommodation) are fully reimbursed to employees by companies here in Japan.

Expenses outside of work have to be included in the salary and are subject to taxation.  Of note, expenses refunds are typically not included in the payroll slip.

• Overtime Pay: An employee who works more than 40 hours per week must be paid for overtime unless they fall under the management category. Meanwhile, companies that intend to use overtime on a regular basis should provide a written agreement between employees and management commonly referred to as “article 36″ and submit it to Labour Standards Inspection Office on a yearly basis.
• Short-/Long-Term Leave
  • Maternity – Guaranteed maternity leave in the country covers a period six weeks before the expected delivery date to eight weeks after giving birth. The employee may return to work earlier after getting approval from her physician.
  • Compensation during Maternity Leave: The employee salary shall be covered by the social insurance up to a maximum of two-thirds of the employee’s salary.

Should the company decide to provide a certain amount of payment during this period, the amount covered by the social insurance office will be lowered in combination with the company’s share only to meet the two-thirds of the base pay limit.

• Child Care – This applies to both male and female parents. Child care leave begins from the day after the maternity leave ends (i.e. 8 weeks after the birth date), to the day before the child reaches the age of 1. If the employee’s spouse is also on child care leave, the child care leave may be extended up to when the child reaches the age of 1 year and 2 months. The duration each parent may take child care leave should not, however, exceed one year.
• Compensation during Child Care Leave: Payment for this type of leave will be shouldered by the labour insurance.

The company may contribute a certain amount of payment during this period; the total amount, however, should not exceed 2/3 of the employee’s base salary.

• Additional Paid Leaves Granted by Companies: Special leave grants decided upon and approved by companies.
  • Bereavement Leave:
    • Death of a parent, spouse or child: up to five days
    • Death of a grandparent, grandchild, sibling, child’s spouse, or spouse’s parent/s: up to three days.
    • In both cases where the employee is the chief mourner, or the person in charge of arranging the funeral service, an additional two (2) days leave are given.
  • Leave to Attend Buddhist Memorial Services: For the first year memorial service of a deceased parent, spouse, or child. One day only.
  • Leave for Marriage (five days)
  • Leave for Jury Service: An employee who has been elected as juror and is required to show up on court is granted a set number of days from the company.
  • Public Work Leave: The approved number of days granted by the company for an employee to carry out public office duties.

Since the base pay in the country is considered relatively low compared to other countries’ standards, the benefits in terms of allowances greatly make up for this. To know more about labour standards in Japan, you may check out the Ministry of Health, Labour, and Welfare’s (MHLW) website.

Disclaimer: The details posted on this article are intended for information-sharing only. Should you have any concerns or inquiries regarding your pay and employee benefits, you must raise this with your company’s HR or employer.