Is it illegal not to enrol employees in social insurance in Japan? Coverage rules for part-time workers after the October 2026 change

Question

阿部国際法律事務所 · Accepted Answer

Not enrolling eligible employees is illegal. From October 2026 the JPY 88,000 monthly wage requirement no longer applies; 20 hours a week is the key test.

Failing to enrol employees who meet the requirements in social insurance (health insurance and employees' pension insurance) breaks Japanese law. A corporation's workplace is covered as long as it regularly employs staff, whatever its size or industry (Health Insurance Act, Art. 3(3)(ii); Employees' Pension Insurance Act, Art. 6(1)(ii)). Part-time workers are covered if their contractual hours are at least three quarters of a full-time employee's. Those below that line are also covered at companies above a certain size if they work 20 hours a week or more and are not students, and from 1 October 2026 the former requirement of monthly wages of JPY 88,000 or more no longer applies.

When this becomes an issue

・A part-time employee asks why they are not enrolled in social insurance.
・Shifts are set at just under 20 hours a week to keep labour costs down.
・The pension office contacts you about an inspection of your enrolment status or asks for documents.
・A former employee says they should have been enrolled while they worked for you.

1. Which companies and workplaces must enrol

A corporation such as a kabushiki kaisha or godo kaisha is a covered workplace if it regularly employs staff (Health Insurance Act, Art. 3(3)(ii); Employees' Pension Insurance Act, Art. 6(1)(ii)). This applies in any industry. The Japan Pension Service states that the workplace of a corporation such as a kabushiki kaisha is covered "including where there is only the business owner", so a company run by one person is also covered.

Sole proprietorships are treated differently. A workplace in one of the industries listed in the law, such as manufacturing, construction, transport, sales, finance and medical care, is covered if it regularly employs five or more people (Health Insurance Act, Art. 3(3)(i); Employees' Pension Insurance Act, Art. 6(1)(i)). Other sole proprietorships can opt in with the consent of at least half of their employees and official approval (Employees' Pension Insurance Act, Art. 6(3) and (4)).

2. Which employees are covered

As a rule, anyone employed at a covered workplace is insured under health insurance (Health Insurance Act, Art. 3(1)). Employees' pension insurance covers those under 70 (Employees' Pension Insurance Act, Art. 9). Job titles such as "regular" or "part-time" do not decide the question.

Only the categories set out in the law are excluded. One example is a person hired for a fixed term of two months or less who is not expected to be kept on beyond that term (Health Insurance Act, Art. 3(1)(ii)(b); Employees' Pension Insurance Act, Art. 12(i)(b)). If they are in fact kept on beyond the initial term, they become covered.

3. Coverage rules for part-time workers

There are two steps.

First, a worker whose weekly contractual hours and monthly contractual working days are both at least three quarters of those of a regular full-time worker at the same workplace is covered, regardless of company size.

Second, a worker below the three-quarters line is still covered if all of the following apply (Health Insurance Act, Art. 3(1)(ix); Employees' Pension Insurance Act, Art. 12(v); MHLW special website on extending social insurance coverage):

・Contractual working hours of 20 hours or more a week
・Not a student (part-time and correspondence students and some others are covered)
・Expected to be employed for more than two months
・The employer is a company with at least a certain number of employees (see 4. below)

There used to be an additional requirement of contractual monthly wages of JPY 88,000 or more. That requirement was abolished on 1 October 2026 by the 2025 pension reform act (Act No. 74 of 2025) (Japan Pension Service). Coverage now turns on whether the person works 20 hours or more a week, not on how much they earn.

Workers whose employer holds a special permit to pay less than the minimum wage, and whose contractual monthly wages are below JPY 88,000, are generally outside coverage but can join if they apply (Japan Pension Service).

4. The company-size requirement and the planned extension

Part-time workers on 20 hours or more a week are covered only at companies above a certain number of employees. The Ministry of Health, Labour and Welfare (MHLW) has set out the following timetable:

・Until September 2027: companies with 51 or more employees
・From October 2027: 36 or more
・From October 2029: 21 or more
・From October 2032: 11 or more
・From October 2035: companies with 10 or fewer employees are also covered

The headcount here is the number of people covered by employees' pension insurance. A company is covered if that number is expected to exceed the threshold for six months or more in a year (MHLW special website). It is not the number of part-time workers.

A company below the threshold can choose to cover its part-time workers by applying to do so.

5. What happens if the company does not enrol employees

When an employee meets the requirements, the employer must notify their acquisition of insured status (Health Insurance Act, Art. 48; Employees' Pension Insurance Act, Art. 27). For health insurance, the notification must be filed within five days of the relevant event (Enforcement Regulations of the Health Insurance Act, Art. 24(1)).

An employer who, without good reason, fails to notify or files a false notification faces imprisonment of up to six months or a fine of up to JPY 500,000 (Health Insurance Act, Art. 208(i); Employees' Pension Insurance Act, Art. 102(1)(i)).

Employees can also ask the authorities at any time to confirm that they are insured (Health Insurance Act, Art. 51(1); Employees' Pension Insurance Act, Art. 31(1)). Enrolment may therefore be confirmed through an employee's request or a pension office inspection even if the company never files.

6. Premiums when enrolment is backdated

Premiums are split equally between the company and the employee (Health Insurance Act, Art. 161(1); Employees' Pension Insurance Act, Art. 82(1)). But it is the company that must pay them to the government, including the employee's share (Health Insurance Act, Art. 161(2); Employees' Pension Insurance Act, Art. 82(2)).

The right to collect premiums lapses after two years (Health Insurance Act, Art. 193(1); Employees' Pension Insurance Act, Art. 92(1)). When enrolment is backdated, the company may therefore be asked to pay up to two years of past premiums.

The employee's share needs care. As a rule, only the previous month's premium can be deducted from wages (Health Insurance Act, Art. 167(1); Employees' Pension Insurance Act, Art. 84(1)). Past premiums cannot simply be deducted in a lump sum, so the company has to agree with the employee how their share will be settled. In practice the company may end up bearing more than it expected.

7. When the employee does not want to be enrolled

Some employees say they would rather not be enrolled because their take-home pay will fall. But once the requirements are met, enrolment is mandatory. It is not something the employee can opt out of by request or agreement.

If an employee wants to avoid the effect on take-home pay, the discussion is about whether to change the contractual hours themselves. Even then, the contractual hours should not be far removed from the hours actually worked. The MHLW says overtime is generally not counted, but may be counted where overtime is constant.

Steps you can take now

・List the weekly contractual hours and monthly contractual working days of every part-time worker.
・Compare them with full-time hours and check that everyone at three quarters or above is enrolled.
・For those on 20 hours or more a week, check whether your company meets the size requirement, using the number of people covered by employees' pension insurance.
・Check that no one has been left out since October 2026 on the ground that they earn less than JPY 88,000 a month.
・Check when the staged extension from October 2027 will reach your company.
・Check that the hours in employment contracts are not far removed from the hours actually worked.

When to consult a lawyer

・You have found several unenrolled employees and need to decide how far back to enrol them and how to settle premiums.
・A pension office inspection has pointed out non-enrolment.
・A former employee has sent a letter claiming damages for non-enrolment.
・You want to change contractual hours but are concerned this may be an unfavourable change to working conditions.

Frequently asked questions

Q. Does a company with only the president need social insurance?
Yes. The Japan Pension Service states that the workplace of a corporation is covered, including where there is only the business owner (Health Insurance Act, Art. 3(3)(ii); Employees' Pension Insurance Act, Art. 6(1)(ii)). The treatment can depend on individual circumstances, such as whether the representative is paid, so check with your local pension office.

Q. Has the "JPY 1.06 million income wall" gone from October 2026?
The requirement of contractual monthly wages of JPY 88,000 or more for part-time workers was abolished on 1 October 2026 (Japan Pension Service). Coverage now depends on requirements such as working 20 hours or more a week and not being a student. The company-size requirement, however, remains 51 or more employees until September 2027 and will be extended in stages.

Q. Must we enrol an employee who refuses?
Yes. Once the requirements are met, the person is insured whatever they want. The company must notify their enrolment and faces penalties if it does not (Health Insurance Act, Art. 208(i); Employees' Pension Insurance Act, Art. 102(1)(i)).

Q. How many years of premiums are due if enrolment is backdated?
The right to collect premiums lapses after two years (Health Insurance Act, Art. 193(1); Employees' Pension Insurance Act, Art. 92(1)). You may therefore be asked to pay up to two years of past premiums. How to settle the employee's share needs to be considered separately.

Q.Is it illegal not to enrol employees in social insurance in Japan? Coverage rules for part-time workers after the October 2026 change

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