Learn about mandatory and optional employee benefits in Japan
In Japan, a comprehensive social security system offers a variety of mandatory employee benefits. These benefits, funded by both employer and employee contributions, aim to provide financial stability and support to workers throughout their lives.
The pension system in Japan includes the National Pension System, which covers most residents aged 20 to 59. Premiums are shared equally between employers and employees. There's also the Employee Pension Insurance (Kosei Nenkin), mandatory for employees earning over JPY 88,000 per month. This provides additional retirement benefits on top of the National Pension System.
The National Health Insurance (NHI) provides basic healthcare coverage for all employees in Japan. It's funded through a combination of taxes and contributions from employers and employees. It covers hospital visits, primary care, specialty care, mental health services, prescription drugs, and more.
Labor insurance includes Workers' Compensation, which provides financial support to employees who are injured or become ill due to work-related accidents or illnesses. It covers medical expenses, lost wages, and disability benefits. Unemployment Insurance provides income support to unemployed workers while they search for new jobs.
Japanese law mandates several types of paid leave for employees:
These mandatory benefits provide a strong foundation of social security for Japanese workers, contributing to a sense of security and loyalty between employers and employees.
While mandatory benefits provide a solid base, many Japanese employers offer additional perks and benefits to attract and retain top talent. Here's a look at some of the most common optional employee benefits in Japan:
In Japan, the National Health Insurance (NHI) system provides basic health coverage to all residents, including employees.
All employees in Japan, regardless of nationality or employment status (full-time, part-time, temporary) are required to be enrolled in the NHI system. Premiums are shared between employers and employees, typically deducted from monthly salaries. The exact contribution rate may vary slightly depending on income level, but generally falls around 8% for employees and 12% for employers.
Employers are responsible for registering new employees with the NHI system within 30 days of their start date. They withhold the employee's portion of the NHI premium from their salary and contribute the employer's portion on top. Additionally, employers are required to report employee health insurance details to the government periodically.
New employees may need to provide additional documents or complete registration procedures with their local NHI office. The employee portion of the NHI premium is automatically deducted from their salary by the employer. Employees should notify their employer and NHI office of any changes in their employment status or residence.
Japan has a two-tiered retirement system that combines public and private plans to provide income for retirees. This system includes the National Pension Scheme, Employee Pension Insurance, Corporate Pension Plans, and Individual Defined Contribution Pension (iDeCo).
The public pension system in Japan consists of two main programs:
It's important to note that the retirement age for full benefits is gradually increasing. Currently, it's 65 for most people, but it's planned to reach 67 in the future. There are options for early and delayed retirement with adjustments to the benefit amount.
Private pension plans in Japan include:
The best retirement plan combination depends on your individual circumstances, salary, and career path. Consider factors like expected retirement age, desired retirement lifestyle, and employer-provided benefits when making your choices.
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