Japanese Labor Law Attorneys, known as “Sharoushi”, ensure your company is compliant with Japanese Law.  Recent revisions in retirement procedures and payouts can be complex but are core to the Japanese social security system. Sharoushi will ensure that your payroll procedures, all deductions, and reporting, retirement payment obligations, etc. are all included in your companyWork Rules (*see below and link to special article),and done in accordance with law. Understand the changes In the Japanese Retirement System and Required Work Rules.

Verse Corporation publishes articles on timely issues in Japanese Social Welfare and Labour Law. Japanese payroll, source deductions, and all labor law work & pay rules regarding compensation, social insurance, absenteeism & sick leave, etc. require strict adherence. Labor/employment law can be complex, even for Japanese companies, and must be handled mostly in Japanese. As with all social welfare and labor law matters in Japan, please seek out professional Sharoushi (Certified Labour Law and Social Insurance Attorney.)

Summary

On July 11, 2023, the Ministry of Health, Labor and Welfare announced the revised model employment rules for “Payment of Retirement Allowance (Article 54). 

The MHLW isolated the following specific revision to exemplify the changes that companies and / or their Sharoushi must be aware of. The following shows the sections that are revised as bolded, and we show the original afterward.

Article 54 Payment of retirement allowance

REVISIONS

1. When a worker is retired or dismissed, a retirement allowance shall be paid as stipulated in this chapter. However, those who have been disciplined and dismissed in accordance with Article 68, Paragraph 2 may not be paid in whole or part of their retirement benefits.

2 For those who are subject to the continuous employment system, retirement allowance will be paid at retirement age, and retirement allowance will not be paid for subsequent re-employment.

● Explanation

The retirement allowance system must not be established, but when it is established, the scope of the applicable workers, the requirements for payment of retirement benefits, the calculation of the amount and the method of payment, the time of payment, etc. must be described in the employment rules. In addition, if there is a reason for non-payment or reduction, this falls under the matters related to the determination and calculation method of retirement allowance stipulated in Article 89, Item 3-2 of the Labor Standards Act, so it is necessary to specify it in the employment rules.

ORIGINAL

Article 54. Payment of retirement allowance

1. If a worker with more than one year of service retires or is dismissed, a retirement allowance will be paid as stipulated in this chapter. However, retirement benefits will not be paid to those who retire due to personal reasons and are less than the year of service. In addition, those who have been disciplinarily dismissed according to Article 67, Paragraph 2 may not be paid in whole or part of their retirement benefits.

2. For those who are subject to the continuous employment system, retirement allowance will be paid at retirement age, and retirement allowance will not be paid for subsequent re-employment.

● Explanation

Article 54 Payment of retirement benefits

The retirement allowance system must not be established, but when it is established, the scope of the applicable workers, the requirements for payment of retirement benefits, the calculation of the amount and the method of payment, the time of payment, etc. must be described in the employment rules.

*A Note On Work Rules

Japan Labor Standards Act, Article 89.

• “An employer that continuously employs 10 or more workers must draw up rules of employment covering the following particulars and must file those rules of employment with the relevant government agency. The same applies if the employer has altered any of the following particulars:
• If the rules of employment provide for a retirement allowance or severance pay, the particulars of the scope of workers to whom those provisions apply; the means of determining, calculating, and paying that retirement allowance or severance pay; and the timing for paying that retirement allowance or severance pay

See the Verse article on Model Work Rules in Japan.

Resources for this article and related to Labor Standards and Pensions

Japan Labor Standards Act. English.

Model Japanese Work Rules. English. Updated March 2023.

Various  Japanese Pension System Documents. English

Understand the changes In the Japanese Retirement System and Required Work Rules.