international employment law firm alliance L&E Global
Japan | Atsumi & Sakai
11. Employee Benefits
Employment Law Overview Japan
Cross-Border Remote Work FAQs Japan
Starting a business in Japan

11. Employee Benefits

Social Security

There are two separate systems concerning social security in Japan. Both of these systems are run by the Japanese government. The systems are: (i) the social insurance schemes (i.e. the employee pension insurance and the employee health insurance), and (ii) the labour insurance schemes (i.e. the workers’ accident compensation insurance and the unemployment insurance).

Healthcare and Insurances

Social insurance schemes are designed to secure the life of workers by paying income-based contributions in the case of old age, disability or death. An employer that is a corporation, or one that is a sole proprietor hiring five or more employees, has a legal obligation to provide its employees with the employee pension insurance and the employee health insurance.

Labour insurance schemes have been established in an effort to secure the employment of workers with jobs, and to pay unemployed workers unemployment and other benefits. These benefits paid to unemployed workers are for the purpose of stabilising their life and promoting reemployment. Furthermore, all employers are obliged to provide employees with the workers’ accident compensation insurance and the unemployment insurance. The benefits of the social insurance and labour insurance schemes are covered by the mandatory contributions paid by workers and employers. A worker employed in Japan will be insured, regardless of whether or not the worker is a Japanese national.

Required Leave

Holidays and Annual Leave

While the statutory holidays must be granted once every week or four times every four weeks, it is common practice to provide holidays in addition thereto (e.g. Saturdays, Sundays, national public holidays).

Under the Labour Standards Act, employers must grant paid annual leave to employees who have been employed continuously for 6 months or more. The employee must have attended work for at least 80% of the scheduled working days in the previous fiscal year to receive the paid annual leave. The statutory minimum number of days of paid annual leave depends on the employee’s length of continuous service:

  • 6 months of service = 10 days of paid annual leave
  • 1 year and 6 months = 11 days
  • 2 years and 6 months = 12 days
  • 3 years and 6 months = 14 days
  • 4 years and 6 months = 16 days
  • 5 years and 6 months = 18 days
  • 6 years and 6 months or more = 20 days

The unused paid annual leave can be carried forward to the next year. Generally, paid annual leave may be taken in full day units. However, employers may allow the employees to take leave in half day units. It is also allowed to grant paid annual leave on an hourly basis by executing the labour-management agreement with such a provision. However, the total amount of days of such paid annual leave is limited to no more than 5 days. Furthermore, employers are obliged to ensure the use by their employees of at least 5 days of paid annual leave per year.

Maternity and Paternity Leave

A pregnant employee can take up to six weeks (or 14 weeks in the case of multiple fetuses) of maternity leave before childbirth, and eight weeks after childbirth, under the Child Care and Nursing Care Act. Furthermore, employers shall not have a woman work within 8 weeks after childbirth. However, in the case where such a woman has so requested to work; provided, that 6 weeks have passed since childbirth, and the work activities to be performed are such that a doctor has approved as having no adverse effect on her, then this Act shall not prevent an employer from having the woman return to work.

In addition, an employee (regardless of gender) who has been employed for at least one year or more, is entitled to take child care leave for a child aged less than one year (or until the child becomes one year and two months old, one and a half years old, or two years old). This is subject to certain conditions respectively, and does not include certain employees, such as those with fixed-term employment that would not continue after the child turns one and a half years old. Moreover, the employer is not obliged to pay the employee during maternity leave and child care leave.

Sickness and Disability Leave

While there is no legislation concerning sick or disability leave arising from employment, many employers implement their own rules regarding sick leave and/or payment during periods of sickness. The employer may settle the term of sick leave where an employee is suspended. Furthermore, this may become a cause for automatic termination if the employee does not recover before the term of sick leave expires. As to employee’s injury, sickness and disability due to employment, the Industrial Accident Compensation Insurance Act covers a large part of the compensation.

  • Any Other Required or Typically Provided Leave

Nursing Care Leave

Under the Child Care and Nursing Care Act, an employee who has been employed for at least one year or more and is nursing a family member who requires nursing, is entitled to take nursing care leave for 93 days in total per family member. This does not include certain employees, such as those under fixed-term employment arrangements, whose employment would come to end within 6 months and 93 days after the scheduled commencement date of nursing care leave. Furthermore, the employer is not obliged to pay the employee during nursing care leave.

Pensions: Mandatory and Typically Provided

There are no mandatory pensions provided to employees in Japan. However, in practice, a number of companies have voluntarily structured a variety of pension schemes including, but not limited to (i) defined payment plans, (ii) defined contribution plans, and (iii) decrease/eliminate existing pension plans.

Furthermore, there are no statutory benefits available to employees in Japan. However, in practice, a number of companies have started adopting a variety of incentive plans including, but not limited to, performance bonuses, share options, profit sharing schemes and employee stock ownership plans.

Any questions

Ask our member firm Atsumi & Sakai in Japan