Labor management and social security

IN JAPAN, YOU MUST SAFEGUARD YOURSELF AND MANAGE YOUR BUSINESS CAREFULLY, TO MANAGE STRICT LAWS PROTECTING EMPLOYEES.

EMPLOYEES ARE HARD TO LAY OFF!
Firing employees in Japan is difficult at best. Japanese law has many strict provisions to protect employees.

Labor management laws, especially the Labor Standards Acts, enforced by the Ministry of Health, Labor and Welfare, presume that people work at the same company for their entire work lives ("Shushin koyo.")
This is one reason is that mobility within the workforce is low. Laws are written in favor of employee protection.
Even though the economic environment and hiring standards have changed, this philosophy persists.
Because of this legal orientation, employees cannot be laid off or dismissed until a rigorous determination of “adequate cause” is proved. The Labor Inspection Office makes the ultimate decision, on a case-by-case basis.

You may be surprised by Japan’s requirements for establishing “adequate cause” for employee firing.
For example, the following scenarios do NOT constitute "adequate cause" for employee firing:

An employee is absent without notice and/or is out of contact for two weeks
An employee has inadequate skill sets or work habits
An employee takes maternity leave
(Women are granted two years of maternity leave, assuring payment at 2/3 or 1/2 of their regular salary during leave.)
An employee gets injured at work
The list continues!

The Labor Inspection Office will use the work rules YOU have documented and distributed, to judge whether a given employee’s firing aligns with Japanese laws and is appropriate for employee dismissal. These rules are required to set grounds for employee dismissal.
Therefore, to maintain a satisfactory working environment for you and your employees, you must document and distribute specific work rules in a timely manner.

WHAT’S UNIQUE ABOUT EMPLOYEE MANAGEMENT (HR) FOR SMALL BUSINESSES IN JAPAN?

Japanese workspaces have some unique differences from those in most other countries. Here are a few:

Managers typically work alongside employees, in the front line.
Many Japanese workplaces still utilize common workspaces, rarely assigning private or cubicle desk areas. This makes it difficult to direct employees and encourage individual decisions-making, since workers perceive few differences between themselves and managers during work hours.
Job descriptions are not clearly defined
One person may wear many hats, especially in small businesses. Workers often have job responsibilities that are vaguely defined.
Working together and cooperation are seen as a virtue.
Most Japanese workers are diligent and tend to work overtime. Many work overtime only due to a sense of obligation to work alongside other colleagues/managers/subordinates who are working overtime. Whichever is the case, companies must pay the overtime wage.
Though overtime work is very common in Japan, you cannot make your employees work overtime unless you have an agreement accepted by the Labor Inspection Office. This agreement must be renewed and submitted annually.

To control the situation and assure your business’ success in Japan, you must carefully prepare documents such as work rules and agreements, and distribute them to your employees in a timely manner.

IKUSEIKYOKAI IS ALWAYS READY TO PROVIDE YOU THE FULL KNOWLEDGE OF RELATED LAWS AND MOST SUITABLE ADVICE, WITH GREAT RELIABILITY, GAINED BY SERVING OVER 3,000 BUSINESSES IN 40 YEARS.

Social Security System and Social / Labor Insurance in a nutshell

- Social insurance and Pension insurance -

Social insurance consists of the EHI (Employees’ Health Insurance, KENKO HOKEN) and the EPI (Employees’ Pension Insurance, KOSEI NENKIN HOKEN). An employee working more than 3/4 of full-time deemed hours per week is eligible. Employers pay for half of the employee’s Social Insurance premiums (about 15% of gross salary).

* EHI
Provides your employees and their dependent family members with insurance benefits for sickness, injury, childbirth, or death. This insurance covers at least 70% of medical expenses.
When an employee is unable to earn a salary due to sick leave for more than 3 days, this insurance will pay 2/3 of his/her regular salary.

* EPI
EPI provides your employees with pension benefits for old age, disability, or death as long as you satisfy eligibility conditions. Dependent spouse is automatically enrolled in the National Pension Insurance System when the spouse’s annual salary is under JPY1.3million.

(Source: Introduction to procedures for enrolling in Labor Insurance (Ministry of Health, Labour and Welfare)

- Labor Insurance -

Labor Insurance consists of Industrial Accident Compensation Insurance (generally called “Industrial Accident Insurance”) and Employment Insurance.

*Industrial Accident Compensation Insurance
When a worker is injured or becomes ill, or dies due to work-related causes or while commuting to work, Industrial Accident Compensation Insurance benefits are provided to protect the afflicted worker and the surviving family. This insurance also funds programs to increase workers’ health and wellness, such as providing funds for their rehabilitation. Employers pay the full premiums and the amount calculation is based on employees’ gross salary and the type of industry.

*Employment Insurance
When a worker becomes unemployed, or when it becomes difficult for him/her to work for any reason, the Employment Insurance Benefit is provided to secure the worker’s livelihood expenses and to promote his/her reemployment opportunities. This insurance also runs programs to prevent unemployment, promote the capacity and skills of workers. An employee working more than 20 deemed hours per week is eligible. Employers pay 0.6-0.8% and employees pay 0.3-0.4% of the employee’s gross salary.

(Source: Introduction to procedures for enrolling in Labor Insurance (Ministry of Health, Labour and Welfare)

- Work rules and Agreements -

Work rules and agreements, carefully crafted with specific legal expertise, are paramount for protecting your business. Without them, Japanese laws protecting employees can impact you significantly. Setting up work rules, distributing them to your employees, and submitting them to the Labor Inspection Office, is mandatory for any business with over 10 employees.

Labor management and social security