Spotlight on Japan – A guide to implementing employee benefits technology

Japan’s employment landscape is shaped by comprehensive labor laws and a blend of mandatory and voluntary employee benefits. The system includes several layers of social security contributions and employer-provided perks, designed to support an aging workforce and maintain competitiveness in attracting talent. Employers are required to contribute to social security schemes and commonly offer supplementary benefits including pensions, health, and life insurance.

Mandatory benefits

Under Japanese labor law, employers must provide or contribute to a wide range of statutory benefits. These include a workplace pension (Employees’ Pension Insurance – EPI), health insurance (Employees’ Health Insurance – EHI), long-term care insurance, employment insurance, and paid leave. Contributions are shared between the employer and employee.

Pension (Nenkin)

This is mandatory through National Pension Insurance (Kokumin Nenkin) or Employees’ Pension Insurance (Kōsei Nenkin) for companies with over five employees. The Kokumin Nenkin is for those who are self-employed, students, or unemployed, while the Kōsei Nenkin is for employees in larger companies. Exemptions are possible for certain situations, such as those covered by their home country’s pension system while working abroad.

However, supplementary retirement benefits are commonly offered through corporate pension plans or the Smaller Enterprise Retirement Allowance Mutual Aid (SERAMA) plan, a public pension available to employers in Japan. Employers typically fund 100% of these supplementary plans with contributions ranging from 7% – 8% of the employees’ pensionable salary or JPY 5,000 per month for SERAMA.

Healthcare (Kenko Hoken)

All full-time employees in companies with five or more employees must receive health insurance from their employer, and employers usually cover 100% of the premium. Around 20% of employers provide supplementary group hospitalization cash insurance plans. These include a daily hospital benefit of JPY 5,000 to JPY 15,000, and a surgical benefit at five times to 40 times the daily cash benefit.

Life insurance

Basic death benefits are covered by EPI and EHI or health insurance societies (including a funeral grant of up to JPY 50,000), while supplementary death in service benefits are typically provided through group life (GL) or group personal accident (PA) insurance. Corporate or SERAMA pension plans often incorporate death in service benefits.

Common benefit structures include:

• 60% of employers offer coverage for two times the employees’ salary.
• 10% of employers offer coverage for three times the employees’ salary; this is most common in investment sectors.
• Employers can also cover the following fixed amounts: JPY 10 million to JPY 30 million. The use of fixed amounts is especially common in the IT industry.

Optional life insurance cover for dependents is sometimes offered by employers, with employees funding all or most of the premium, though employers may contribute around 10%.

In Japan, life insurance riders are additions to a policy that provide extra coverage or benefits. Rider benefits may include accidental death and dismemberment (AD&D), group long-term disability (LTD), and group hospitalization insurance. They can be customized to suit individual needs and add coverage beyond the basic policy, at the employees’ cost.

Statutory benefits

Childcare and family care leave

Employees are entitled to up to five days a year, or 10 days for two or more dependents, for childcare or nursing care.

Childcare allowance (Jidō Teate)

This is paid by the government to parents of children under 15, with the amount depending on the employees’ household income.

Popular voluntary benefits

Bonus payments

Summer and winter bonuses remain common, typically totaling 1.5 to 2.5 months of the employees’ salary annually.

Housing subsidies

Some companies offer rent subsidies or company housing, particularly for employees that have relocated.

Commuter allowances

Many employers offer reimbursement for transportation to work, which is generally tax-exempt up to 150,000 JPY per month. Some employers will pay for a three or six-month pass for the most direct commuting route from home to work.

Wellness and preventive care

Annual health check-ups such as Ningen Dock, a private medical check-up, are very popular with companies, while subsidized fitness programs and mental health support are becoming more and more sought after. Companies with over 50 employees are also legally required to provide annual stress checks for employees.

Employee wellbeing is a significant focus in Japan and heavily promoted by employers. Companies often provide reimbursement for wellbeing activities, which can include spa breaks, weekends away and even theme park tickets. Local providers offer a range of activities that employees can choose from.

Training and development

Employers often offer financial support for language classes and certifications to assist employees with their personal development goals.

Company cars

A company car is typically provided to senior executives or expatriates for business use – though it isn’t commonly available for personal use.

Key considerations for rolling out employee benefits in Japan

1. Ensure full compliance with local labor and tax regulations. Japan has a highly structured regulatory environment. All benefits – whether core or voluntary – must align with Japanese labor laws and tax policies. Working with local experts and using technology that supports region-specific compliance is essential to avoid risk.

2. Respect cultural expectations around stability and loyalty. Japanese employment culture traditionally values long-term commitment and stability. As a result, benefits are expected to reflect this – favoring enduring, reliable offerings over short-term perks. Employers should prioritize programs that reinforce security and long-term wellbeing, such as pensions and comprehensive health coverage.

3. Adapt to an aging workforce and dependent care needs. With one of the world’s most rapidly aging populations, employers in Japan are increasingly expected to offer benefits that support elderly dependents and provide long-term care.

4. Localize content with Japanese language and culturally relevant support. Employee communications and platform interfaces must be available in Japanese to ensure full understanding and engagement. This includes benefits documentation, enrollment instructions, and platform navigation.

5. Support employee wellbeing with in-office care and facilities. It’s common for companies in Japan to offer on-site medical support, such as designated local clinics and visiting doctors or nurses. Many employers also provide wellness rooms, including mother’s rooms for nursing employees – demonstrating a commitment to both physical and emotional wellbeing.

To learn more about the benefits landscape in Japan, or to see how a global benefits platform can help you deliver a seamless employee experience elsewhere in Asia, speak to one of our benefits experts.