Japan

Japan's social insurance system (shakai hoken) is jointly funded by employers and employees, calculated against a capped 'standard monthly remuneration,' and split roughly 50/50 for most programs. Rates vary by prefecture (health insurance) and are reviewed periodically.

• Health Insurance (Kenko Hoken): approximately 10% combined, split 50/50 (~5% employer / ~5% employee); rate varies by prefecture under Kyokai Kenpo or company health insurance union.
• Long-Term Care Insurance (Kaigo Hoken): approximately 1.6% combined, split 50/50, applicable only to employees aged 40-64.
• Employees' Pension Insurance (Kosei Nenkin): 18.3% combined, split 50/50 (9.15% employer / 9.15% employee).
• Employment Insurance (Koyo Hoken): approximately 1.35% combined for FY2026, split employer ~0.85% / employee ~0.5%.
• Workers' Accident Compensation Insurance (Rousai Hoken): 0.25%-8.8% of payroll depending on industry risk classification, paid entirely by the employer.

Workers' Accident Compensation Insurance (Rousai Hoken) is a mandatory, employer-funded scheme covering all employees, including part-time staff, for injuries, illnesses, or death arising from work or commuting. There is no employee contribution.

Premium rates range from approximately 0.25% to 8.8% of total payroll depending on the industry's risk classification (office work sits at the low end; construction and mining at the high end). Benefits include medical treatment, income compensation (roughly 60-80% of average wages during incapacity), disability benefits, and survivor benefits.

Japan has no general statutory severance pay requirement, unlike many neighboring jurisdictions (e.g., China, South Korea). Employers are not legally obligated to pay severance simply because employment ends.

In practice, however, dismissal in Japan is very difficult to execute lawfully. Under Article 16 of the Labor Contract Act, a dismissal must be 'objectively reasonable' and 'socially acceptable'; dismissals that fail this test are void and can entitle the employee to reinstatement with back pay. Because of this high bar, employers frequently negotiate a mutually agreed resignation with an ex-gratia severance payment (often equivalent to roughly 1 to 12+ months' salary depending on tenure, seniority, and redundancy circumstances) to secure a clean, lower-risk exit rather than pursue unilateral dismissal. Company work rules or employment contracts may also independently promise a retirement/severance allowance (taishokukin), which becomes a binding contractual obligation once promised, even though it is not required by statute.

There is no statutory 13th (or 14th) month salary requirement in Japan.

Nonetheless, discretionary seasonal bonuses (shoyo) are standard, near-universal market practice, typically paid twice per year — a summer bonus (around June-July) and a winter bonus (around December) — together often totaling roughly 2 to 4 months' base salary depending on company and individual performance. Bonus amounts and eligibility are set by company policy or collective agreement rather than by law, and are commonly prorated or withheld for employees who have not completed a minimum service period at the time of payment.