Introduction
For foreigners working in Japan, the system of social insurance and labor insurance is one of the most difficult systems to understand. Pay stubs list multiple deduction items, leading to many questions such as, "Why is my take-home pay reduced so much?", "How does this differ from social insurance in my home country?", and "Is enrollment necessary even for a short stay?".
The Japanese social insurance and labor insurance system targets "individuals working in Japan" regardless of nationality and is generally not optional. This article systematically explains the structure of Japan's social insurance and labor insurance, the requirements for enrollment, the burden of insurance premiums, and practical considerations from the perspective of foreign individuals.
1. Overview of Japan's Social Insurance and Labor Insurance
The public insurance system in Japan is broadly divided into "social insurance" and "labor insurance."
Social insurance includes health insurance and employee pension insurance, while labor insurance includes unemployment insurance and workers' compensation insurance. All of these are mandatory enrollment systems based on law and cannot be exempted on the grounds of foreign nationality.
As an important premise, in Japan, the determination of enrollment is centered on "the form of work being performed in Japan" rather than "whether one is a resident or non-resident," "nationality," or "type of visa." Therefore, even for short-term stays, enrollment obligations may arise depending on the employment type and actual working conditions.
2. What is Health Insurance? - Its Relationship with the Healthcare System
Health insurance is a system that forms the core of Japan's medical system, playing a role in keeping the out-of-pocket expenses at medical institutions to a principle of 30%. Foreigners working in Japan as company employees generally enroll in health insurance through their employer.
The insurance premium is calculated based on the "standard monthly remuneration," which is based on the salary amount, and is generally shared equally between the company and the individual. The health insurance premium listed on the pay slip reflects only the individual's share, while the company also bears a similar amount separately, which is a point that is often overlooked by foreigners.
In Japan, enrollment in public health insurance takes precedence regardless of whether one has private health insurance.
3. Concept of Employees' Pension Insurance and Future Benefits
The Employees' Pension Insurance is a comprehensive social security system that includes not only retirement pension benefits but also disability pensions and survivor pensions. Similar to health insurance, employees who meet certain requirements are required to enroll.
What is important for foreigners is the point that "even if they do not plan to permanently reside in Japan in the future, they are required to pay insurance premiums." However, if a social security agreement has been concluded between Japan and their home country, there may be exemptions from joining the Employees' Pension Insurance for a certain period. Additionally, even in the absence of an agreement, if they return to their home country after having joined for a certain period, they may be able to utilize the withdrawal lump-sum payment system.
4. Employment Insurance and Unemployment and Childcare Benefits
Unemployment insurance is a system aimed at providing financial security during unemployment and benefits for childcare leave. If certain working hour requirements are met, even foreigners can become insured individuals.
Employment insurance is divided into employee contributions and employer contributions, with the employee's share being relatively small. On the other hand, for foreigners who plan to change jobs or retire in Japan in the future, the possibility of receiving unemployment benefits makes understanding the system very important.
However, due to the relationship with residency status and planned departure, there may be cases where benefits cannot be received, so it is advisable to confirm in advance.
5. Workers' Compensation Insurance - All Foreigners Included
Workers' compensation insurance is a system that compensates for accidents and illnesses that occur in the course of work or during commuting. In principle, it applies to all workers regardless of nationality or residency status.
The insurance premium is fully covered by the company and is not deducted from the individual's salary. Therefore, foreign individuals have few opportunities to be aware of the direct burden, but it is an extremely important system in the event of an accident.
6. Actual Conditions of Insurance Premium Deductions as Seen from Pay Slips
Japanese pay stubs clearly list items such as health insurance premiums, employee pension insurance premiums, and unemployment insurance premiums. These deductions are based on law and cannot be changed at the discretion of the company or the individual.
Especially for foreigners, judging the level of compensation based on the "net amount" can lead to misunderstandings in planning their life in Japan. It is important to correctly understand the difference between the total amount paid and the amount after social insurance deductions.
7. Points to Note for Short-Term Stay and Expatriates
Even for short-term visitors or expatriates from overseas, if the employment situation in Japan is clear, there may be an obligation to enroll in social insurance. This is particularly true in cases where the secondment contract or the entity responsible for salary payments is based overseas, making the enrollment decision more complex.
If you start working without comprehensively organizing the applicability of social security agreements, duration of stay, and command relationships, there is a risk of retroactive collection of insurance premiums occurring later.
8. Practical Points That Foreign Individuals Should Understand
The Japanese social insurance and labor insurance system is not a "system you choose for yourself," but rather a "system that automatically enrolls you if you meet certain conditions." Living without knowing whether you are enrolled or not poses a significant risk.
It is important to comprehensively review the employment contract, pay slip, residency status, and duration of stay to accurately understand which system you are enrolled in.
Summary
The social insurance and labor insurance system in Japan may seem complex to foreigners, but its purpose is to ensure stability in life and risk diversification. Although the burden of insurance premiums is by no means light, it is characterized by its comprehensive coverage of risks such as medical care, pensions, unemployment, and work-related accidents.
For foreign individuals working in Japan, perceiving the system not as "a system they are enrolled in without knowing" but as "a system they can utilize with understanding" is the first step to building a career in Japan with peace of mind. Involving a tax accountant who is an expert in international taxation at an early stage will provide a solid foundation for developing a career or business in Japan with confidence.