Unemployment Insurance in Japan, Explained

If you have just hired your first employee in Japan, enrolling them in unemployment insurance is one of your first legal obligations as a business owner.

Known as 雇用保険 (koyou hoken) or shitsugyou hoken, Japan's unemployment insurance is a mandatory government program administered by the Ministry of Health, Labour and Welfare. It provides unemployment benefits to workers who lose their jobs, and is jointly funded by the employer and the employee. There are also an additional two social insurance programs: employees' health insurance and employees' pension, referred collectively as 社会保険 = “social insurance,” which we covered previously.

As a business owner, you are responsible for registering your company, calculating premiums, and withholding your employee's share from their monthly salary.

Here is what you need to know before you do anything else:

• Who must enroll: Any company in Japan with at least one employee is required to enroll in Japan's unemployment insurance system, with limited exceptions for certain agricultural and seasonal workers

• When you need to enroll: Enrollment at Hello Work (the Public Employment Security Office) must be completed within 10 days of hiring your first employee

• What it will cost: For most general enterprises, the total premium rate is 1.45% of monthly payroll, split between a 0.9% employer contribution and a 0.55% employee contribution

Failure to enroll can result in retroactive premium collection and financial penalties, so it is important to understand your obligations early.

In this article, we cover everything a business owner needs to know about unemployment insurance in Japan: eligibility rules, how premiums are calculated, the documents you need to file at Hello Work, and what your employees are entitled to receive in unemployment benefits if they lose their job.

What is unemployment insurance in Japan?

While England was the first to have a full-fledged government-managed unemployment insurance program, enabled by their National Insurance Act established in 1911, many countries adopted similar programs around this time.  

In Japan, however, it was not until after WWII in 1947 that their first Unemployment Insurance Act was established, providing the legal framework for a proto-unemployment insurance system. 

The government later replaced that law with the current Employment Insurance Act in 1974 to keep in step with rapidly changing social and economic environments. 

Today, unemployment insurance covers unemployment benefits, parental leave, caregiving, employment at old age, and employer subsidies such as benefits received for hiring single mothers, senior citizens, and the disabled. 

The current government-managed unemployment insurance is paid for by the employer and the employee, with the scales tipped toward employers paying a higher percentage of the monthly premium. 

For the majority of businesses in Japan, enrollment in this insurance program is compulsory, and there are penalties associated with non-compliance. 

How to determine if your business must cover unemployment insurance 

If you have even one employee, you are considered a business establishment that is obliged to pay for unemployment insurance, 雇用保険適用事業所 = koyouhoken tekiyou jigyousho

Are there exceptions? Yes. Private businesses in agriculture, forestry, or fishery with less than five employees are exempt from enrolling in unemployment insurance.

Additionally, unemployment insurance is not applicable to individuals that fall under the following categories:

• Regular working hours are under 20 hours per week

• Not expected to work longer than 30 days under 1 employer

• Seasonal work, contracted to work less than 4 months or where regular working hours are under 30 hours per week

• Students*

*Exceptions: Students who are studying remotely or studying during the evening, undergraduates, students who are planning to work at the same establishment after graduation, and students on leave are eligible to enroll in unemployment insurance.

Refer to this Q&A (Japanese) on the Ministry of Health, Labour and Welfare site. 

What happens if you do not enroll in unemployment insurance in Japan

If you are a business owner in Japan and you fail to enroll in Japan's unemployment insurance system, there are serious financial and legal consequences.

Under the Employment Insurance Act (雇用保険法), the government can apply retroactive enrollment and collect unpaid premiums going back up to two years. In cases where the employer deliberately avoided enrollment, the Ministry of Health, Labour and Welfare can also impose an additional 10% surcharge on top of the unpaid amount.

If one of your workers loses their job during the period you failed to enroll them, that employee may still be able to receive unemployment benefits by filing a complaint directly with Hello Work. In that scenario, the government may pursue the full cost of those unemployment benefits from you as the employer.

Beyond financial penalties, non-compliance can also affect your company's eligibility for certain employer subsidies, including benefits available for hiring single mothers, senior citizens, and workers with disabilities.

The safest approach is to complete enrollment at Hello Work within 10 days of hiring your first employee in Japan. If you are unsure whether your business qualifies as an exemption, consult a licensed shakaihokenroumushi (social insurance and labor consultant) before assuming you do not need to enroll.

How much will it cost to enroll in unemployment insurance? 

Premiums for unemployment insurance follow this calculation: (standard monthly salary or bonus) x insurance premium rate = unemployment insurance premium.

Insurance premium rates differ by the following 3 business types:

*General enterprises 一般の事業 = ippan no jigyou

Employee premium rate 0.55% + Employer premium rate: 0.9% = Total premium rate: 1.45%

*Agriculture, Forestry, and Fishery/Sake brewing industry 農林水産・清酒製造の事業 nourinsuisan/seishu seizou no jigyou

Employee premium rate 0.65% + Employer premium rate: 1.0% = Total premium rate: 1.65%

*Construction industry 建設の事業 = kensetsu no jigyou

Employee premium rate: 0.65% + Employer premium rate: 1.1% = Total premium rate: 1.75%

For example, say the monthly salary for employee John Doe is ¥300,000 and the bonus is ¥500,000. The company is a general enterprise, meaning the premium rate for John Doe is 0.55%. So the calculation will look something like this:

• ¥300,000 (JD's salary) x 0.55% (average enterprise employee premium rate) = ¥1,650 (JD's premium fee)

• ¥500,000 (JD's bonus) x 0.55% (average enterprise employee premium rate) = ¥2,750(JD's premium fee)

Numbers 0.5 and under are rounded down. Numbers above 0.6 are rounded up. Here's an example of a John Doe with a different salary:

• ¥243,088 (JD's salary) x 0.55% (general enterprise employee premium rate) = ¥1,336.984 → ¥1,337 (JD's premium fee)

• ¥243,900 (JD's salary) x 0.55% (general enterprise employee premium rate) = ¥1,341.45 → ¥1,341 (JD's premium fee)

The examples above are sourced from current rates as published by the Ministry of Health, Labor and Welfare.

Note: This article and the previous articles in this series, “Employees Pension Insurance in Japan,” “Employees Health Insurance in Japan,” "Workers' Accident Insurance in Japan" are intended to provide you with general information only.

Remuneration subject to calculation of fees

Employees' monthly salaries and bonuses are subject to calculation and withdrawal of insurance fees. 

When calculating the insurance fee, the salary or bonus amount applied to the formula must be the amount before withdrawing taxes and social insurance fees.

But what about allowances, gifts, compensation, and other forms of remuneration, such as commuting allowances, dependent family allowance, and business trip expenses? 

Payments subject to calculation and withdrawal of unemployment insurance fees include the following:

• Commuting allowance

• Overtime compensation, night-duty, and day-duty allowance

• Dependent family allowance

• Job training allowance, allowance for special work

• Housing allowance, regional allowance (weighting allowance)

• Financial incentives such as perfect attendance allowance

• Leave allowance, given when there is no work because of the business owner

Payments not subject to calculation and withdrawal of unemployment insurance fees are the following:

• Board members' compensation

• Monetary gift for weddings, special payment for death, disaster relief money, senior service bonus, continuous service bonus, retirement bonus

• Business trip expenses, accommodation expenses

• Compensation for loss of wages, given when the worker is on leave due to employment injuries

• Accident and sickness benefits, given when the worker had an accident or sickness outside of work

• Dismissal notice payment; compensation given when a notice was not given within 30 days of the dismissal

Unlike employees' health insurance and pension, unemployment insurance fees may change every month depending on the amount of the payments added to the monthly salary from the first list above.

For example, if an employee has more overtime work in any given month, the insurance fees for that month will spike proportionally to the overtime compensation.

While calculating these premiums is done via self-evaluation, the MHLW site provides excel file templates to help with your calculations. 

There are also many software solutions that assist companies with these calculations and accounting firms or business lawyers specializing in labor law can also help with this type of payroll task. 

How to enroll in unemployment insurance 

Businesses that are compulsorily mandated to enroll in Japan's unemployment insurance system can conduct necessary enrollment procedures at Hello Work (Public Employment Security Office)

To enroll, you must file the Notice of Establishment of Labor Insurance Affiliation, 労働保険関係成立届 = roudouhokenkankei seiritsu todoke, to the Labor Standards Inspection Office.

After sending in the roudouhokenkankei seiritsu todoke to the Inspection Office, make the following applications at your city's Hello Work (Public Employment Security Office) within 10 days of hiring your first employee.

• Notice of Establishment of a Workplace Covered by Unemployment Insurance 雇用保険摘要事務所設置届 = koyouhoken tekiyou jimusho secchitodoke

• Notice of Acquisition of Eligibility for Unemployment Insurance 雇用保険被保険者資格取得届 = koyouhoken hihokensha shikakushutokutodoke

• Unemployment Insurance Certificate of the Insured (or a CV) 雇用保険被保険者証 = koyouhoken hihokenshashou

• A Copy of the Notice of Establishment of Labor Insurance Affiliation 労働保険関係成立届の控え　roudouhokenkankei seiritsu todoke no hikae

• Copy of Corporate Registration = 法人登記謄本houjin touki touhon or 

• Certificate of Registered Matters = 登記事項証明書 touki jikou shoumeisho

What Your Employees Are Entitled to Receive

As a business owner in Japan, it is useful to understand what your employees can claim through Japan's unemployment insurance system after they leave your company. Being informed helps you handle offboarding correctly and avoid disputes at Hello Work.

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To receive unemployment benefits, your former employee must meet two conditions:

1. They must have been enrolled in employment insurance (雇用保険 / koyou hoken) for a cumulative total of at least 12 months within the 2 years prior to leaving their job

2. They must have registered with Hello Work and be actively looking to find a new job

If both conditions are met, your former employee can begin the application process for Japanese unemployment insurance benefits.

Image. Employment insurance eligibility certificate

How the process works after leaving your company:

After receiving their termination notice, which you are required to issue within 10 days to 2 weeks, the former employee presents themselves and the notice to their nearest Hello Work office. A caseworker will assess their eligibility to receive unemployment benefits and schedule them for an employment insurance benefits briefing.

When benefits begin depends on the reason for leaving. Workers who are let go for company reasons such as redundancy or business closure can begin receiving benefits sooner than those who resign voluntarily. This distinction matters for your employees to know, and it is worth communicating clearly during offboarding.

For a full breakdown of benefit amounts and duration, your employees can consult directly with Hello Work or visit the Ministry of Health, Labour and Welfare website.

Frequently asked questions

Is unemployment insurance in Japan mandatory for my business?

Yes. Any business in Japan with at least one employee is required to enroll in Japan's unemployment insurance system. The only exceptions are private businesses in agriculture, forestry, or fishery with fewer than five employees. If you are unsure whether your business is eligible for an exemption, consult a licensed social insurance and labor consultant before assuming you do not need to enroll.

Can part-time workers be enrolled in unemployment insurance in Japan?

Part-time employees are eligible for enrollment if their regular working hours are 20 hours or more per week and they are expected to work for at least 31 days under the same employer. Workers who do not meet both conditions are not eligible for unemployment insurance in Japan.

What documents do I need to enroll in unemployment insurance in Japan?

You will need to file the Notice of Establishment of Labor Insurance Affiliation at the Labor Standards Inspection Office first. After that, bring the following to Hello Work: the Notice of Establishment of a Workplace Covered by Unemployment Insurance, the Notice of Acquisition of Eligibility, the employee's Unemployment Insurance Certificate or CV, a copy of your Labor Insurance Affiliation notice, and your Certificate of Registered Matters.

What is the difference between 雇用保険 (koyou hoken) and 労働保険 (roudou hoken)?

Labor insurance (roudou hoken) is the umbrella term covering two separate programs: unemployment insurance (koyou hoken / shitsugyou hoken) and worker's accident insurance (rousai hoken). As an employer in Japan, you are required to enroll eligible employees in both programs. This article focuses on unemployment insurance specifically.

How does an employee apply for unemployment benefits after losing their job?

After losing their job, your former employee should bring their termination notice to their nearest Hello Work office to apply for unemployment benefits. They will need to bring their My Number Card, employment insurance certificate, and bank account details. A caseworker will confirm their eligibility and explain the waiting period before receiving unemployment benefits begins. The amount of benefit they receive is calculated as 50 to 80% of their average daily wage prior to losing their job.

What is the re-employment allowance and can my former employees receive it?

The re-employment allowance (再就職手当) is a lump-sum bonus paid to workers who find a new job before their unemployment benefit period runs out. It is designed to encourage people receiving unemployment benefits to find a new job quickly rather than drawing benefits until they find a job. The amount of the re-employment allowance depends on how many benefit days remain when the worker starts their new position. Your former employees can get full details on eligibility directly at Hello Work.

In closing

Unemployment insurance in Japan is not optional for most businesses. From the moment you hire your first employee, you have a legal obligation to enroll them in Japan's unemployment insurance system, file the correct documents at Hello Work, and calculate premiums accurately each month.

The process is straightforward once you know the steps. Enroll within 10 days of your first hire, keep your payroll calculations up to date, and make sure your employees understand what they are entitled to receive if they ever need to find a new job.

If you need help navigating Japanese paperwork, MailMate's bilingual team can help you manage everything from company registration to ongoing mail handling. Getting set up correctly from the start saves you time, money, and the risk of penalties down the line.

Read also:

👉How to Pay National Health Insurance in Japan

👉Forgot to Pay Japan NHI? Here’s What Happens