In Japan’s social insurance system are two so-called “annual income barriers,” leadting short-time workers who are covered by their spouses’ social insurance to keep down their working hours. First, the "1.06-million-yen barrier" is relating to workers at companies with more than 100 employees who become disqualified as a dependent spouse if they earn more than 1.06 million yen annually, since they are required to pay social insurance premiums on their own. The other is the "1.3-million-yen barrier," concerning employees of smaller firms which are not applicable to social insurance enrollment. Employees in such companies who earn an annual income of 1.3 million yen or more are required to pay National Pension and National Health Insurance premiums. In September, the Labor Ministry has disclosed a package to create an environment to support people to work without worrying about the annual income barriers.
[1] Measures against 1.06-million-yen barrier
<Changes in career development subsidy>
The government will establish a new course in the existing career development subsidy program. Companies that have introduced measures to increase short-time employees’ earnings may receive up to 500,000 yen per employee. This is aimed to encourage employees to work without worrying about a situation where their net incomes decline by working more and paying social insurance premiums. The application procedure for the subsidy will also be simplified.
Measures to increase workers’ incomes include pay raise or extension of standard work hours. The government will also provide subsidies to companies who pay “allowance for the promotion of social insurance application” to reduce workers’ burden of social insurance premiums.
[Allowance for the promotion of social insurance application]
Companies may provide an allowance to employees newly registered in the social insurance program up to the amounts of their premiums. The allowance will be excluded from the income for determining standard monthly remuneration and standard bonus. Companies may continue this treatment for a period up to two years.
[2] Measures against 1.3-million-yen barrier
One of the criteria to be qualified as an insured worker’s dependent spouse is “an annual income of less than 1.3 million yen.” In the case a person’s income increases temporarily by working longer during a personnel shortage, etc., the criterion will be examined flexibly by attaching the company’s supporting document.
The government is also preparing to publish materials to support small- and medium-sized companies to reexamine their spousal allowances, paid to workers whose spouses meet certain criteria. This includes a flow chart for changing the criteria. Please check the Labor Ministry’s website regularly for updates.
[Reference]
Labor Ministry, “Strengthened support package to reduce annual income barriers”
https://www.mhlw.go.jp/stf/taiou_001_00002.html
The content is based on laws and regulations as of the date of the article.
