Employment insurance does more than its name suggests. Besides unemployment benefit, it pays the childcare leave benefit, caregiver leave benefits, training subsidies for individuals and a range of employer subsidies. It is administered through Hello Work, the public employment service.
Employees are covered if they are expected to work at least 31 days and 20 hours a week. From October 2028 the weekly threshold falls to 10 hours. Board directors are generally not covered. Contributions are charged on all pay including bonuses, with no ceiling. For fiscal 2026, from April 2026, the rate for ordinary businesses is 13.5 per 1,000: 5 from the employee and 8.5 from the employer. Construction and agriculture pay more.
Unemployment benefit is paid as a percentage of previous daily wages, higher for lower earners and subject to a daily maximum, for a period that depends on age, years insured and the reason for leaving. People who resign voluntarily now wait one month before benefit starts, down from two, since April 2025. Childcare leave benefit is 67% of pay for the first six months, and from April 2025 a top-up takes it to 80% for up to 28 days when both parents take leave soon after the birth.
What it means for a foreign employer
- It costs little and pays for much of parental leave. The childcare leave benefit is paid by the insurance, not by you, which makes generous leave policies cheaper than they look.
- Senior hires get modest unemployment benefit. The daily maximum means it replaces only a small part of an executive's pay. It is not a reason to skimp on a separation package.
- The reason for leaving matters. Whether a departure is recorded as voluntary or for company reasons changes the employee's benefits, and is often part of exit negotiations.
- Notify Hello Work on hiring and leaving. Enrolment and loss of coverage must be reported, including for foreign employees.
Sources
- Employment Insurance Act; Act on the Collection of Labour Insurance Premiums.
- Ministry of Health, Labour and Welfare, fiscal 2026 employment insurance rates; guidance on the 2024 amendments (April 2025 and October 2028 changes).