Employer Contribution in Japan (2026 updated)

Starting April 1, 2025, Japan will implement revised social insurance contribution rates for both employers and employees, reflecting the government’s ongoing effort to fine-tune Japan’s social security system and strengthen payroll compliance.

Key Update: Reduction in Unemployment Insurance Rates

According to Japan’s Ministry of Health, Labour and Welfare (MHLW), the Unemployment Insurance (UI) contribution will be slightly reduced:

• Employer rate: 0.95% → 0.9%
• Employee rate: 0.6% → 0.55% 

These adjustments reflect the government’s efforts to balance sustainable benefits for workers while reducing corporate burdens amid economic uncertainty.

“Japan’s unemployment insurance reforms demonstrate a long-term approach to maintaining employment stability and workforce inclusivity,” says Hiroshi Takeda, HR policy analyst at the Japan Labor Bureau.

Employer Payroll Contribution in Japan

Employee Payroll Contribution

*Health insurance rates vary between prefectures.

Employees’ Health Insurance

The Employees’ Health Insurance (EHI) or Kenkōhoken is a mandatory program enforced since 1927, and it is funded through contributions from both employers and employees. All employees in companies with 5 or more workers, including foreign nationals and part-time employees meeting the required conditions, must enroll in EHI. Moreover, unemployed or low-income dependent family members can also be included in the EHI coverage if they are registered residents of Japan.

In addition to the EHI and Long-Term Care Insurance covering salaried workers and their eligible dependents, the National Health Insurance (NHI)–Japan’s public health insurance system–provides coverage for non-salaried residents under 75 years old. Upon reaching the age of 75, both non-salaried and salaried individuals become insured under the Latter-Stage Elderly Healthcare System.

These insurances generally cover a significant portion of medical expenses, the limit of which increases for specific demographics based on their income. Excess medical costs beyond the household’s maximum monthly limit may also be eligible for reimbursement as determined by the insured person’s income and age.

It is worth noting that employers are required to submit employees’ EHI application dossiers within 5 days of the start of their employment to the relevant Japan Pension Service (JPS) branch, including that of their dependents where relevant, and pay the applicable contribution.

Employees’ Pension Insurance (EPI)

Under the Employees’ Pension Insurance Act (1941), salaried workers are covered by Employees’ Pension Insurance (EPI), which operates alongside Employees’ Health Insurance (EHI). Categories of insured persons include:

Salaried employees in the private sector fall under Category II, specifically under the Employees’ Pension Insurance (EPI) system, which was established following The Employees’ Pension Insurance Act of 1941. The rules and specific conditions for EPI are similar to those of EHI, as the two funds coexist in tandem and are designed to safeguard the well-being of private-sector employees. To receive the Old-Age Basic Pension at the pensionable age of 65, beneficiaries must have made contributions for at least 10 years.

In addition to the Old-Age Pension, the system also carries provisions for early or delayed pension payments, disability pension for first- and second-grade disabilities, and multiple pension benefits for eligible surviving dependents in the event of an insured person’s death. Each of these benefits caters to different qualifying individuals and their qualifying conditions may vary.

In addition to the Old-Age Pension, the system also carries provisions for early or delayed pension payments, disability pension for first- and second-grade disabilities, and multiple pension benefits for eligible surviving dependents in the event of an insured person’s death. Each of these benefits caters to different qualifying individuals and their qualifying conditions may vary.

Key takeaway: The EPI offers long-term financial protection for Japan’s aging workforce, ensuring income continuity and stability.

Unemployment Insurance

The Unemployment Insurance, also known as shitsugyou hoken, is managed by Hello Work, the Japanese government’s Employment Service Center. It offers basic allowance for individuals who have left their job and are actively seeking re-employment, physically fit and living ordinarily. However, many people do not fall under this category, including full-time homemakers, full-time students, and those who have their own businesses.

To qualify for employment insurance benefits, the applicant needs to have insurance coverage for at least 12 months during the last two years before their termination. In certain cases, such as employer bankruptcy, dismissal, or non-renewal of a limited-term work contract, the requirement is reduced to at least six months in the last year before termination. This same reduced requirement applies to special insurance options like Continuously Insured Elderly Person or special lump sum payments. Notably, the basic allowance received under this benefit is based on the salary received in the last 6 months before the termination date.

Key takeaway: Japan’s unemployment insurance promotes labor market resilience, encouraging reemployment and social stability.

Work Injury

Under Articles 75–82 of the Labor Standards Act, employers must ensure proper compensation, like medical treatment for job-related injuries or illnesses. Employers must also pay 60% of average wages during medical leave. Furthermore, employers must continue to pay their absent employees at 60% of their average wage unless gross negligence is proven as the cause of their condition. In cases where the employee’s recovery period extends beyond 3 years, employers may compensate their employees with an amount equivalent to 1,200 days of average wage to discontinue their obligations. It is also very important to note that employees who suffer from any disabilities or fatalities are entitled to additional compensation.

The mandatory Workers’ Accident Compensation Insurance covers on-the-job accidents, diseases, disorders, and death. Employers covered by this insurance will be able to share the burden of their liabilities from their compensatory obligations to their employees suffering from work-related injuries or diseases. The minimum guaranteed basic daily benefit amount under this insurance is subject to yearly revisions based on the employee’s age group, and in cases where work accidents lead to deaths, surviving family members can also receive a determined lump-sum payment as compensation.

Key takeaway: Work injury insurance safeguards both employers and employees from financial hardship arising from occupational hazards.

Payroll Reconciliation and Post-Payment Adjustments (PPA)

In Japan, Post-Payment Adjustment (PPA), also known as payroll reconciliation—is a vital part of compliance. Employers must review and adjust withheld social insurance and tax contributions at the end of each fiscal year, ensuring accurate reporting to authorities like the National Tax Agency (NTA) and JPS.

Errors in deductions, delayed updates to employee status, or changes in dependents can trigger reconciliation requirements. Businesses using a payroll provider in Japan or an Employer of Record Japan partner can mitigate these risks through automated compliance checks and regular audits.

Key takeaway: Timely PPA ensures payroll accuracy and prevents costly penalties during audits.

How an Employer of Record Helps You Hire in Japan

Navigating Japan’s employment landscape can be complex—strict labor laws, evolving regulations, and cultural nuances make compliant hiring a challenge for foreign companies. That’s where Slasify’s Employer of Record (EOR) service becomes an invaluable asset. 

Acting as your local HR partner, Slasify ensures that every step of the employment lifecycle—from drafting compliant contracts and processing payroll to managing mandatory social contributions and handling lawful offboarding—is aligned with Japanese labor standards.

Rather than investing heavily in building in-house HR and legal teams, businesses expanding into Japan can leverage Slasify’s localized expertise to reduce risk and accelerate market entry. 

Enabling Payroll Excellence in Japan with a HR tailored solutions

EOR service also keeps you updated with the latest regulatory changes, shielding you from compliance pitfalls. Slasify specializes in providing tailored and comprehensive payroll solutions for businesses operating in Japan. Our team of professionals boasts extensive knowledge and expertise in understanding Japan’s intricate labor regulations, allowing us to streamline your payroll processes seamlessly. 

“EOR solutions allow global companies to focus on growth while maintaining full compliance with Japan’s employment regulations,” explains Lina Chen, Global Payroll Consultant at Slasify.

Key takeaway: An EOR minimizes risk, ensures payroll compliance, and helps global teams hire in Japan quickly and lawfully.

 

FAQ for Employer Contribution and Payroll in Japan

1. What are the key payroll taxes and social insurance contributions in Japan?

Employers and employees share payments for health, pension, unemployment, and work injury insurance, based on income and industry type.

2. How can a foreign company manage payroll in Japan without an entity?

Through an Employer of Record Japan provider like Slasify, which manages local payroll, taxation, and benefits in compliance with Japanese labor law.

3. Are foreign employees required to contribute to Japan's social security?

Yes. Foreign nationals working in Japan are generally enrolled in the same social insurance programs as locals unless exempt under a totalization agreement between Japan and their home country.

4. What happens if payroll errors are found after payments are made?

A Post-Payment Adjustment (PPA) process is initiated to reconcile discrepancies, ensuring accurate year-end reporting.

5. What documents are required to onboard employees in Japan?

Employers must submit health and pension insurance forms to the Japan Pension Service within five days of hire and register tax information with the National Tax Agency.

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