Like all countries, Japan is trying to address the many workplace challenges that have arisen in recent years. Some are global, others more uniquely domestic in Japan. Some are longstanding, others are quite recent. The challenges are many including aging demographics, demands on working parents, the remote and independent working boom, and a host of worker conditions in need of improvement. 2024 changes to Japan’s labor law and employer responsibilities are important for employers to monitor. Stay abreast of Japan’s Labor Law Resources to ensure your company knows what’s coming.
*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.)*
*The bulk of the MHLW (Japanese Ministry of Health, Labor and Welfare) announcements are in Japanese. There are some general materials on the Ministries English site, however it tends to reflect only basic information. Please always seek out a local Japanese Sharoushi for an accurate interpretation of these complex rules and laws.
In ourExternal Resources you will find links to a select number of trusted Japanese and global resources addressing Japanese labor law, workplace Employer responsibilities and trends, etc.
Summary of Key December 2023 Announcements for 2024
1. Draft of National Pension Premium Exemption measures for the self-employed and freelancers: for childcare period for the first insured person.
On December 26, the MHLW introduced the idea of the eligible exemption period
→ In principle, from the day you raise the child until the child becomes 1 year old, it is the target period of childcare exemption (up to 12 months)
→ In the case of a biological mother to which maternity exemption is applied, 9 months following the postpartum exemption period (4 months) is the target period of childcare period exemption.
Resources- Japanese Only
2. Reduction in Employee Workmans Compensation (Accident) Insurance
On December 26, via the 11th Labor Policy Working Committee, the MHLW announced that it will revise the workers’ compensation insurance rate from April 1, 2020, such as reducing the average of 0.1 of all industries by 0.1.
Reduce the workers’ compensation insurance rate by 0.1/1000 on average → 4.5/1000 → 4.4/1000
Revision of the type 2 special subscription insurance rate related to special enrollment
→ Lowered in 5 out of 25 categories
Revision of the labor cost rate (the ratio of total wages to the contract amount)
→ Lowered in 2 out of 8 types of businesses
In addition, based on the impact of workers’ compensation benefits related to the new coronavirus infection, even if the calculation result of the workers’ compensation insurance rate (before the drastic change mitigation measures) is higher than the current workers’ compensation insurance rate, it will be deferred. Drastic change mitigation measures have been implemented for 18 industries.
Resources – Japanese Only
3. Added MHLW Resources Regarding Freelancers and Sub-contractors
In this rapidly changing area of Labor Law and Social Welfare Coverage, on December 22, a page about freelancers was added to the “Employment Environment and Equality” page on the Ministry of Health, Labor and Welfare website.
The “Act on the Optimization of Transactions Related to Specific Contracted Business Operators” (Act on the Optimization of Transactions between Freelances and Businesses) (Act No. 25 of Reiwa 5), was enacted by the Diet in 2023.
Essentially, these are guidelines for creating an environment where you can work with confidence as a freelancer or sub-contractor. Specifically for:
- Those who work at home using information and communication equipment (self-employed telework (work from home))
- Those who introduce freelance jobs, etc. Points of the Employment Security Act
Additional Summary Details Include the following, from this MHLW website page…
- “Specified Contractor” means a business entity that is the counterparty to an outsourcing transaction and does not employ employees. [Article 2, Paragraph 1]
- “Specified entrusted service provider” means an individual who is a specified entrusted service provider and a representative of a juridical person who is a specified entrusted service provider. [Article 2, Paragraph 2]
- “Outsourcing” means the entrustment by a business operator to another business operator to manufacture goods, produce information deliverables, or provide services for the business. [Article 2, Paragraph 3]
- “Specified business operator” means a business operator that subcontracts work to a Specified Entrusted Business Operator and uses its employees. [Article 2, Paragraph 6]
- Employees” do not include those who are temporarily employed for a short period of time or for a short period of time.
Appropriateness of Transactions with Specified Trust Business Operators
- When a business is entrusted to a specified trustee, the details of benefits and the amount of remuneration, etc. of the specified trustee must be clearly indicated in writing or by electromagnetic means. Further details are available…
Actions to be taken in case of violation, etc.
- The agency may give advice, guidance, report collection/on-site inspection, recommendation, public announcement, or order to a specified outsourcing business operator, etc., regarding a violation.
- A fine of up to 500,000 yen shall be imposed for violation of the order and refusal of inspection.
The government shall ensure that transactions pertaining to specified fiduciary service providers are conducted appropriately.
Resources – Japanese Only
Outline of the Act on the Optimization of Transactions Related to Specified Contracted Businesses (Act on the Optimization of Transactions between Freelances and Business Operators)
Act on the Optimization of Transactions Related to Specified Contracted Businesses (Act on the Optimization of Transactions between Freelancers and Business Operators
2024 changes to Japan’s labor law and employer responsibilities are important for employers to monitor. Stay abreast of Japan’s Labor Law Resources to ensure your company knows what’s coming.