Japan has a mixed economy with the two largest areas being Services making up 70% and Industry 28%. The GDP per capita is $39,256 (2020) although there is a significant shift away from full-time employment towards part-time employment. Other than holiday, pension, health insurance, nursing care, unemployment benefits and certain maternity and paternity benefits, all benefits are at the employer’s discretion in Japan. The cost of benefits is determined by a number of factors such as the level of benefits provided, but also the demographics of the workforce covered, such as age, gender, occupation
and salary.

Asinta Partner
Simon Wallington

Cornes & Company

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Mandatory employee benefits in Japan include retirement, several types of disability pension, workers compensation and unemployment insurance, healthcare, long-term care, paid leaves, and contribution to the longevity healthcare system. Common supplementary employee benefits include life, personal accident, long term disability, medical top-up, annual health checks, condolence benefits as well as housing, commuting, and family allowances. Common perks include food service, discounts on education and entertainment, and flextime.


Mandatory Employee Benefits in Japan


Regular employees are classified into the TYPE 2 Insureds regarding the Japanese public pension insurance system. Employees working shorter time at big companies have also been included in the category. The TYPE 2 Insureds shall be covered by the Employees’ Pension Insurance plan (KOSEI NENKIN, in Japanese). The premiums are calculated simply based on the salary amount. The enrollment procedures are settled by the employers. Half of the premiums are borne by the employer and the other half, by the employee. The pension benefit amount from the Employees’ Pension Insurance for the respective insureds varies, according to the premiums amount they have contributed. This variation is a major difference from the National Pension Insurance plan. In addition, the pension amount shall be larger than the basic pension amount paid from the National Pension insurance plan.

Old-Age Pension Benefit

Eligibility – Participants become eligible for the old-age pension benefit at age 65. A minimum participation period of 10 years to the National Pension is required.

Disability Pension

Eligibility – If a participant becomes disabled due to sickness or injury, a disability benefit will be paid. Disability is categorized by three classes, depending on its seriousness. A participant cannot receive the benefit, if he/she did not pay contributions for one-third or more of one’s previous participation period.

Three classes of disability

  • Class 1: Total disability requiring constant attendance
  • Class 2: Degree of disability restricting one’s ability to live independently
  • Class 3: Degree of disability restricting one’s ability to work

Survivors’ Pension

Eligibility – If a participant with an eligible dependent dies, a survivors’ pension will be paid to the dependent. If a participant did not pay contributions for one-third or more of his or her previous participation period, the survivors’ pension will not be paid.

Labor Insurance (Workers’ Compensation and Employment Insurance)

Administration – Administered by the government.

Coverage – Almost all employers must have the Workers’ Compensation Insurance to cover their employees, whether full-time or part-time. Directors of the company are generally excluded from the coverage and a separate personal Accident policy is usually recommended in such cases

Under the Workers’ Compensation Insurance, benefits are provided for medical care, loss of income, disability or death of an employee due to occupational causes or accidents during the commute.

Unemployment Insurance

Administration – Administered by the government.

Coverage – Employment insurance covers basically all employees and provides an allowance in case of unemployment. Temporary workers who work more than 20 hours a week and plan to work more than 31 days are included. Directors of the company are generally excluded from the coverage.  An expatriate who is planning to return to his or her home country after termination of employment in Japan may be excluded from coverage.

Health Insurance

All residents of Japan are eligible for health insurance. There are two major health insurance provisions:

  • The National Health Insurance, mainly for the self-employed, retired individuals and their dependents, is managed by the local government.
  • The Health Insurance for Employees, which is for employees and their dependents, is managed by either the Japan Health Insurance Association or health insurance societies set up by larger companies or specific industries.

Eligibility – As a general rule, employers with one or more employees are required to have health insurance. All full-time employees will be covered and become participants. Part-time workers are also included if their working time is more than three-quarters of the time worked by full-time employees.

The Health Insurance covers non-occupational sickness or injuries of participants and their dependents. Occupational sickness or injuries are covered by the Workers’ Compensation.

  • Basic Coverage for Participants and their Dependents: In the event of sickness or injury due to non-occupational causes, the participant is entitled to receive necessary medical care, such as medical consultation, supply of medicines, medical treatments, surgery and hospitalization. 70% of such medical care expenses will be covered by the Health Insurance. Participants are required to pay 30% of the medical care expenses. Medical care benefits are also provided for dependents. The benefits cover 70% of medical care expenses.
  • Benefit for High-Cost Medical Care: In case the out-of-pocket medical expense in a particular month exceeds a certain limit, the excess amount will be reimbursed by the Health Insurance.
  • When a participant is unable to work due to the necessity of medical treatment and loses his/her remuneration, an amount equivalent to two thirds of the standard daily remuneration will be paid per day up to 18 months, after a waiting period of three days.

National Health Insurance

The National Health Insurance offers benefits similar to those of the Health Insurance for employees. People not covered by another scheme must join the National Health Insurance. The coverage level is 70% of medical care expenses. The contribution amount is determined by each local government, usually based on total income and number of persons in each household.

Long-Term Care Insurance

With the impending problem of an aged society and an expected increase in demand for nursing and medical care for the aged, long-term care insurance started in Japan on April 1, 2000.

Insured: All individuals age 40 or older are required to have long-term care insurance.

Individuals aged 65 and over are Class 1 insureds, and those aged 40 to 64 are Class 2 insureds.

The insured is able to receive long-term care services such as home-visit services by care attendants or care services at nursing homes. However, those who would like to receive these services should be registered as truly needing these services for support.

Longevity Healthcare System

The Longevity Healthcare System (Healthcare System for Later-Stage Elderly Persons) was established through reforms to the national healthcare system as an easy-to-understand system for providing healthcare tailored to the physical and mental needs of elderly persons aged 75 years or older and for enabling the entire population to support the cost of providing such healthcare with a view to maintaining a system of insurance that can benefit everyone for many years to come.

All people insured under the National Health Insurance plan or an employee’s health insurance plan, as well as the dependents thereof, shall become insured under the Longevity Healthcare System (Healthcare System for Later-Stage Elderly Persons) once they turn 75 years of age.

Also, people between 65 to 75 years of age who are recognized by wide area associations as suffering from specific disabilities are included. (A person is considered to be eligible from the date on which he or she is recognized as suffering from a specific disability.)

Paid Leave

Paid leave is given to workers who have worked for 6 months continuously from the date of hire and have worked 80% or more of all working days. The minimum number of paid leave days is 10 days. Employees can take 10 days of paid leave in succession or in splits, but it is mandatory to take paid leave for at least 5 days a year.

Maternity Leave

Before childbirth, the leave allowance is 6 weeks prior to the expected date of birth (14 weeks for twins or more), and after maternity, the period is 8 weeks from the day after delivery. Both before and after childbirth, salary payments during leave are not stipulated by law and are subject to collective agreements and employment rules of each company. The maternity allowance (approx. 67% of salary) is paid if you have health insurance at your workplace and you are not paid during maternity leave. During maternity leave, if the salary is fully paid, no allowance will be paid. However, if the salary during maternity leave falls below 67% of the standard monthly salary (daily salary), the difference will be paid.

Caregiver Leave

Leave that employees take in order to provide nursing care to a direct Family Member in a care-requiring condition; a condition requiring constant nursing care for a period specified by Ordinance of the Ministry of Health, Labor and Welfare due to injury, sickness, or physical or mental disability. Employees can get up to 93 days off for each family member who needs nursing care. This leave can be taken up to 3 times – it is not 93 days in a year, but in the aggregate for the period they work for their employer.

Childcare Leave

Employees may take Childcare Leave upon applying to their employer if the child he or she takes care of is less than one year of age. As a general rule, childcare leave can be taken until the child is 1 year old (up to the day before his/her birthday) but it can be extended to 2 years old.


Supplemental Employee Benefits in Japan

Group Life Insurance

A provision to pay a lump sum benefit in the event of an employee’s death is a standard employee benefit. Most companies have group life insurance to cover employees for that purpose. Benefits may be a flat amount for all or some may be determined by rank or by seniority. Almost all foreign companies operating in Japan opt for a multiple of the employee’s salary.

Group Personal Accident

Payable in the event of death or permanent disability and can be extended to include medical costs associated with hospitalization and outpatient costs.

Group Long Term Disability Insurance

Payable monthly for insured who are in the long-term hospitalization or during long-term unemployable term due to injury and/or disease.

Group Medical Top-Up Insurance

Daily allowance for In-patient due to injury and/or disease, and Surgery allowance in lump sum is applied.

Housing Allowance

The company bears part of the rent and repayment of the home loan. The average subsidy is JPY10,000 to JPY20,000 yen a month.

Commuting Allowance

It is a system in which the company bears part or all of the cost of commuting.

Family Allowance

The company will provide an allowance as a living aid if the employee has dependents. The benefit amount depends on the company and is not decided by law. Over 76% of companies provide family allowances. The average amounts are:

  • Allowance for spouse: 10,000 yen to 15,000 yen per month
  • Allowance for children: About 3,000 yen to 5,000 yen per month

Medical/Health Check

The company will normally pay the basic cost for an annual medical examination. It is also the duty of the company to arrange for an annual stress check survey on all employees if the company employees over 50 staff.


Cash will be provided by the company such as wedding gifts, birth gifts, injury and illness, condolence money, etc. More than 85% of companies have introduced Condolence benefits.



Dietary assistance

The employee cafeteria is costly and the hurdles to introduce it are high. Recently, services other than the employee cafeteria have been introduced and many can be started at low cost. The stand-alone company food service is a service where a dedicated refrigerator is installed in the office so that side dishes and rice are always available. Employees can purchase from JPY100 per item, and there is a rich lineup of main dishes ranging from hamburger steaks and grilled fish to side dishes such as pickles and simmered dishes.

Outsourcing benefit

There are two types of outsourcing benefit, “Package Service” and “Cafeteria Plan”. With “Package Plan”, employees can use services that they have affiliated with in flat-rate system. On the other hand, with “Cafeteria Plan” employees are provided with subsidies (points), and they can select and use services within those subsidies (points). The benefits depend on the outsourcing company. For example, discounts on tickets for theme parks, sports, music and movies, shopping benefits, facilities such as massages and sports clubs, use of facilities such as counseling and health checkups, free English and bookkeeping courses, housekeeping services, babysitting, Discounts for childcare facilities, Child care/nursing

Group benefit pools

More and more companies are signing up to a supplier of discounted goods and services where the scale of many employers can produce significant discounts on shopping, petrol, movie tickets, travel, and leisure activities.

Flextime system

Employees can work by deciding the start and end times of work each day so long as they work for a set minimum number of hours per month, and more and more companies are introducing this system.


Related Government Websites

Ministry of Health, Labour and Welfare


This information about employee benefits in Japan is provided by Cornes & Company, Asinta’s employee benefits consulting Partner in Japan.

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