8. How to Sign Up for Social and Labor Insurance When Setting Up a Corporation
If you are thinking of starting a business in Japan, you should be informed of the social and labor insurance systems in Japan. In this article, you would learn about the kinds of insurance you need to sign up for when you incorporate a company in Japan, and how to apply for these insurances.
Contents
• Insurance as Requirement after Incorporation
• How to Sign up for Health Insurance and Welfare Pension Insurance
• How to Sign up for Workers’ Accident Compensation Insurance
• How to Sign up for Employment Insurance
Insurance as a Requirement after Incorporation
It is legally required for company representatives to sign up for social and labor insurance after you set up a corporation, as stipulated by the Japanese Social Insurance System and the Labor Standards Law. Failure to comply will result in imprisonment of up to 6 months or a fine of up to 300,000 to 500,000 Japanese yen. Additionally, the name of the business would be announced by the Ministry of Health to the public, which will be disadvantageous for your future business development.
Social insurance
Social insurance is one of the social security systems, for protection against the risk of any emergencies such as illness, aging, unemployment, occupational accidents, and nursing care that may lead to financial problems. In Japan, the social insurance comprises of “Health insurance” and “Welfare pension insurance.”
Health insurance is a public medical insurance system that provides financial help to an employee in situations such as illness, injury, childbirth or death. It aims to stabilize one’s life by providing medical benefits and allowances.
Welfare pension insurance is a public pension system which protects all employees under the age of 70. All employees with an address in Japan under the age of 70 are obliged to join the welfare pension insurance.
Companies have to sign up their employees for these insurances.
When do you need to apply for social insurance?
When you apply for the change or renewal of your status of residence, the Immigration Bureau will confirm that you have social insurance. If it is discovered that you are not signed up, you might be subject to penalties.
You must notify the pension office that has jurisdiction over the location of the company within 5 days of the establishment of the company.
Labor Insurance
Labor insurance comprises of “Workers’ Accident Compensation Insurance” and “Employment Insurance”.
Workers’ accident compensation insurance is a system that provides necessary insurance benefits to a person in a position of employment in case of injury, illness, disability, or death that occurred during work or commuting to work.
Employment insurance is a system with comprehensive employment functions for the purpose of providing necessary benefits for stabilizing life after employment and assisting in reemployment when workers lose their jobs. Based on the Employment Insurance Law, the employer must notify the Public Employment Security Office (Hello Work) that the worker who meets the applicable criteria has become an insured person regardless of the will of the employer or the worker.
It is legally required for a corporation to sign up for both workers’ accident compensation insurance and employment insurance if even one person is hired.
When you need to apply for it
If a corporation hires at least one employee, a corporation has to submit the “Insurance-related Establishment Notification” to the Labor Standards Inspection Office within 10 days from the date a corporation first hired the employee.
How to Sign up for Health Insurance and Welfare Pension Insurance
Required Documents
This document should be submitted for all officers or employees of the company.
This is submitted if the officer or employee has dependents (spouse, children, parents, etc.).
Procedure
Submit the above documents to the pension office.
Target persons
• Corporate representatives (representative director, chairman, representative employee, etc.) and officers except for part-time corporate auditors and those who do not receive compensation.
• Full-time employees (excluding officers) who have work for 30 hours or more per week and a contract period of at least 2 months.
If there are employees of 70 years old or older, and you meet the following requirement, you as the owner of the company must also submit the above documents to the pension office.
• Those who have been insured by welfare annuity insurance in the past.
• A person including business owners of corporate establishments, who is in business establishment applicable to that stipulated in Article 27 of the Employees’ Pension Insurance Law and, a person who does not fall under each item of Article 12 of the same law.
Deadline
Within 10 days after the establishment of the corporation
How to Sign Up for Workers’ Accident Compensation Insurance
Required documents
• Insurance-related establishment notification
• Labor insurance estimated premium declaration
Procedure
Submit the above documents to the Labor Standards Inspection Office
Target persons
• All employees except officers
Deadline
• Insurance-related establishment notification
Within 10 days from the day you hire the employee.
• Labor insurance estimated premium declaration
Within 50 days from the day after the insurance-relationship is established (the day when an employee is hired).
How to Sign Up for Employment Insurance
Required documents
• Notification of establishment of employment insurance coverage office
• Notification of qualification for employment insurance insured
Procedure
Submit the above documents to the Public Employment Security Office (Hello Work).
Target persons
All employees that meet both of the following
• Those who are expected to be employed for 31 days or more
• Those who have 20 hours or more of regular working hours per week
Deadline
• Notification of establishment of employment insurance coverage office
Within 10 days from the day following the day you hire the employee.
• Notification of qualification for employment insurance insured
By the 10th day of the month following the month you hired the new employees.
Information
Stay tuned for further articles on “How to Start a Business in Japan,” our series on foreign entrepreneurship!
Previous Articles:
• How to Start a Business in Japan: An Overview
• All You Need to Know about the Startup VISA
• Procedures for Coming to Japan with a Startup VISA: Renting a House and Resident Registration
• Procedures for Coming to Japan with a Startup VISA: Obtaining a Phone Number, a Name Seal, and a Personal Bank Account
• A Guide to obtaining a Business Manager VISA
• Procedures for Incorporating a Business and Renting an Office
• How to Open a Corporate Bank Account for a Startup Business in Japan
Our future articles would be discussing:
• Writing a Business Plan
• Setting up procedure in Kobe
