Social Insurance for Outbound Employees
With the progress of global business, the opportunities for Japanese companies whose employees are detached abroad are increasing. From this background, in the previous News, we introduced outbound employees’ taxation in Japan. In this News, we will mention the treatment of social insurance for outbound employees.
2. Treatment of social insurance
The treatment of social insurance for outbound employees differs based on the following factors:
(i) Whether an employment relationship exists between an outbound employee and his/her Japanese company (‘an assignor company’), and
(ii) Whether the outbound employee’s salary is paid either by ‘an assignor company’ or by his/her overseas dispatched company (‘an assignee company’).
3. Case of qualified as an insured
An outbound employee is still qualified as an insured of Japan’s social insurance on the condition that an employment relationship still exists with the assignor company (‘a temporary detachment’ , which is called ‘Zaiseki-syukko’ in Japanese), and that a part or all of the employee’s salary is paid by the assignor company.
4. Case of not qualified as an insured
An outbound employee is not qualified as an insured of Japan’s social insurance on the condition that an employment relationship is already shifted to the assignee company (‘a permanent detachment’, which is called ‘Tenseki-syukko’ in Japanese). Also, an employee under the temporary detachment is not qualified if his/her salary is no longer paid by the assignor company.
5. Social Insurance (Employees’ Pension Insurance, Health Insurance, Nursing Care Insurance)
The social insurance treatments for an outbound employee who is still qualified as an insured are as follows.
(1) Health Insurance
In principle, there is no limit of using Japan’s Health Insurance abroad. The medical expenses you paid abroad are still covered by Health Insurance as well as in Japan. However, since you cannot use your Health Insurance Card abroad, you have to cover the entire medical costs up front and claim for reimbursement after returning to Japan under the Overseas Medical Care Benefits System. In order to claim for reimbursement to insurers in Japan (Kyokai-Kenpo or Kumiai-Kenpo), you will need an attending physician’s statement with the attachment of a translation. It should be noted that not all the medical costs you paid is necessarily reimbursed; the coverage is limited to the portion of medical care costs corresponding to the amount under the Health Insurance system in Japan. So you might have to cover the high medical costs on your own in some countries.
(2) Nursing Care Insurance
Nursing Care Insurance applies to persons aged 40 or above who have resident records in Japan. In the case of the temporary detachment, when an employee aged 40 or above is dispatched abroad, he/she is exempt from the payment of premiums by submitting an ‘Application of Exclusion from Nursing Care Insurance’. The employee who becomes 40 while being dispatched abroad also has to submit the application. The employee who maintains his/her resident record in Japan or who does not submit the application is not exempt from the payment of premiums.
(3) Employees’ Pension Insurance
If you maintain the status as an insured, you will have to keep paying the employees’ pension insurance premiums even while being dispatched abroad. The amount of premiums you paid during your assignment abroad will be added to the pension you receive in the future.
However, in most cases, you have to be enrolled in the pension system of the dispatched country, which causes dual burden of contribution payments between Japan and the other country. Further, if the period of the assignment abroad is relatively short, the insurance premiums you paid in the dispatched country may be consequently non-refundable. In order to solve this problem, Japan has concluded social security agreements with several countries. Under the agreements, when you are sent to the agreement country, you will be exempt from paying premiums of the agreement country, depending on the length of your assignment abroad. It should be noted that each agreement country has different requirements for such exemption rules.
6. Labor Insurance
(1) Unemployment Insurance
In the case of the temporary detachment, since an employment relationship still exists with the assignor company in Japan, you are still qualified as an insured of unemployment insurance even after being detached abroad. When your salary is partly paid by the assignor company and you resign in the middle of working abroad, the special treatment of ‘Relaxation of Qualifying Conditions’ might be available for applying unemployment insurance benefits. In detail, if the portion of your salary paid by the Japanese assignor company during your assignment abroad is considered significantly low, a maximum of two years will be added to the insured period of two years before resignation; as a result, it permits to calculate the benefits of unemployment insurance based on the amount of your salary paid before working abroad.
(2) Workers’ Accident Compensation Insurance
Since Workers’ Accident Compensation Insurance is applicable to persons working for companies and offices located in Japan, outbound employees both under the temporary detachment and under the permanent detachment are not qualified. However, you can get the qualification by applying the ‘Special Treatment of Enrollment for Employees Assigned Overseas’. For this application, certain conditions such as company size and working status must be satisfied.
In this News, we have mentioned ‘Social Insurance for Outbound Employees’.
Please note that this News only introduces general outlines and does not include professional advice. So please make sure not to make any decisions without taking professional advice individually.
If you have any questions, please feel free to contact us.