international employment law firm alliance L&E Global

2. State Aid

Government subsidies and special relief resources allocated to support employers, and workers, in their efforts to maintain employment and pull through the crisis.

Japan currently has an "Employment Adjustment Subsidy" system, which has been revised to help businesses suffering as a result of COVID-19. The system is designed to help employers avoid termination by covering part of their employees’ salaries (in general up to a maximum of JPY8,330 per employee per day, and for a maximum of 100 days in any 12 months, but disregarding days in the period 1 April to 30 June 2020, if the subsidy was requested in that period) during the period the employees are furloughed. In order to be eligible, the employer must have a labour agreement with an employee representative, or union if there is one, and its monthly business activities (evaluated by reference to factors such as sales volume and/or sales amounts) must have decreased by 10% due to COVID-19, when compared to the same period in the previous year, if the request for the subsidies was submitted in the period 24 January 2020 to 31 March 2020, 5% if the request was submitted in the period 1 April to 30 June 2020 and 10% thereafter. The subsidy is paid to the employer; the rate of the subsidy being between 50% and 100% of the payment the employer is required to make during the furlough (i.e. at least 60% of the employee’s average wage), the actual amount being calculated based on whether the company is a small or medium sized company or a large company, the total number of the employer’s employees, the dates covered by the payments and whether the company has terminated any employees. Application for the subsidy is made to the competent Prefectural Labour Bureau or Employment Service Center.

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