As a measure against the 1.06-million-yen income barrier, the Labor Ministry has introduced a social insurance application encouragement allowance and established a new course in the existing career advancement program, which are applicable retrospectively from October 1, 2023. This article looks into details of these measures.
[1] Social insurance application encouragement allowances
Social insurance application encouragement allowances is a scheme to support companies that encourage the application of social insurance by paying allowances to their employees to reduce their burden of premium payment. The allowances will not be included in the calculation of standardized monthly remuneration of social insurance, up to the amount of premium paid by each employee. This program is applicable to workers whose standardized monthly remuneration is 104,000 yen or less and can be used up to two years. This program may also be applied to a case where a company gave allowances to other employees who are working under the same conditions as an exceptional treatment to ensure fairness among workers.
[2] Career advancement subsidy
To encourage social insurance enrollment, the government has set up the “treatment improvement course at the time of social insurance registration,” in the career advancement subsidy program. The new course includes the following three plans.
1. Allowance Support Plan
Under the Allowance Support Plan, subsidies are given to companies that have enrolled part-time or other employees in social insurance program and paid them allowances to reduce their burden of premium payment. As in the table below, the program is implemented in three steps (over a three-year period). Companies may apply for subsidies every six months.
Table 1 Allowance Support Plan
|
|
Requirements |
Amount of subsidy per employee |
|
First year |
Payment of an allowance of at least 15% of the worker’s wage (standardized monthly remuneration and standard bonus). |
200,000 yen |
|
Second year |
Payment of an allowance of at least 15% of the worker’s wage (standardized monthly remuneration and standard bonus); implementation of the measure for the third year described below in the third year onward. |
200,000 yen |
|
Third year |
Increasing of the worker’s wage (base salary) by at least 18% |
100,000 yen |
*Subsidies for large companies are three-fourth of the figures above.
2. Working Hour Extension Plan
Subsidy is provided when a company made employees applicable to social insurance by increasing their working hours. (Refer to Table 2.) In the case the amount of the increase in weekly working hours is less than four hours, companies are also required to pay higher compensations by raising their hourly wages.
Table 2 Working Hour Extension Plan
|
Extension of standard weekly working hours |
Wage increase |
Amount of subsidy per employee |
|
Four hours or more |
|
300,000 yen |
|
Three hours or more and less than four hours |
5% or more |
|
|
Two hours or more and less than three hours |
10% or more |
|
|
One hour or more and less than two hours |
15% or more |
* Subsidies for large companies are three-fourth of the figures above.
3. Combination Plan
Aside from using the individual plans above, companies may also combine both plans, adopting the Allowance Support Plan in the first year, and the Working Hour Extension Plan in the second year.
Table 3 Combination Plan
|
|
Requirements |
Amount of subsidy per employee |
|
|
First year |
Payment of an allowance of at least 15% of the worker’s wage (standardized monthly remuneration and standard bonus) |
200,000 yen |
|
|
Second year |
In addition to above, implement any of the following measures; |
300,000 yen |
|
|
Extension of weekly working hours |
Wage increase |
||
|
Four hours or more |
|
||
|
Three hours or more and less than four hours |
5% or more |
||
|
Two hours or more and less than three hours |
10% or more |
||
|
One hour or more and less than two hours |
15% or more |
||
*Subsidies for large companies are three-fourth of the figures above.
The ministry has also simplified the application procedure of the career advancement subsidy. In general, companies have to submit a career advancement plan, prior to the application of the subsidy, but if they start the measures under the “treatment improvement course at the time of social insurance registration,” by January 31, 2024, they may submit the plan by that date. The form of the career advancement plan has also been simplified, using checkbox that allows companies to only select their career advancement measures, while companies are not required to submit payroll books, including applicable workers’ signatures. Applicable workers’ attendance records for six months or one year must be submitted, if requested.
The Labor Ministry’s Q&A site on the social insurance encouragement allowance or career advancement subsidy is also helpful. Please examine the contents carefully in considering application.
[Reference]
The Labor Ministry, “Annual income barrier strengthened support package”
https://www.mhlw.go.jp/stf/taiou_001_00002.html
“Download application form (Career advancement subsidy) after October 20, 2023”
https://www.mhlw.go.jp/stf/seisakunitsuite/bunya/0000118801_00011.html
*This article is based on laws and regulations as of the posting date.
