Workers Accident Compensation Insurance Japan, Explained

For over a century, government support for work-related accidents has existed in Japan, insuring workers primarily in factory, mine, and construction industries.

However, in its early incarnation, these benefits were considerably lower than what other countries provided at the time. In September 1947, after WWII, a ground-breaking Labor Standards Law (Japanese PDF,  MHLW) was enacted that improved standards for labor conditions, expanded coverage, and substantially raised compensation payouts. 

Since then, workers' accident insurance in Japan has undergone a series of amendments, further expanding coverage and improving benefit levels.

Some of the more recent issues this system has been tackling over the past two decades include asbestos-related lung diseases, mental illness or injury or death from overwork, power harassment, and sexual harassment.

In this article, we look at all the essentials of Japan's Workers' Accident Compensation Insurance 労災保険 = rousai hoken: what it is, who it's for, how to enroll, and more. 

Quick summary: What is Workers' Accident compensation insurance?

Workers’ Accident Compensation Insurance in Japan (労災保険 / rōsai hoken) is a mandatory public insurance system that provides medical care and financial compensation to workers who are injured, become ill, disabled, or die due to work or commuting. All employers in Japan must enroll, and employers pay 100% of the premiums. Coverage applies regardless of nationality or employment type (full-time, part-time, or dispatched workers).

A super-quick overview of what it is and how it works

Workers' accident insurance in Japan (労働 者 災害 補償 保険 = rōdōsha saigai hoshō hoken) is run by the government and covers expenses and compensations for work-related accidents, disability or death. 

Any business that hires even one employee must enroll in workers' accident compensation insurance, and employers pay 100% of this insurance premium at the start of the fiscal year. 

When a work-related accident occurs, employers are obligated to report to the Labor Standards Inspection Office. If expenses arise from a work-related accident, employees can file a request to the chief of Labor Standards Inspection Office for insurance benefits. (See this article for what to do in case of an accident involving an employee.)

What is covered under workers' accident compensation insurance?

Workers' accident insurance covers medical expenses, leave allowance, disability compensation, compensation for the bereaved family, and even support for the insured person's return to society. All other injuries and illnesses not related to work, such as childbirth, car accidents on vacation, etc., are covered by the national health insurance or employee's health insurance.

Employers are mandated by law (Labor Contract Act and Industrial Safety and Health Act) to make necessary safety precautions for a safe working environment. 

Occasionally, there are unannounced inspections from the Labor Standards Inspection Office, so familiarize yourself with the relevant standards and regulations and enroll in workers' accident insurance if you are mandated to do so. 

If you do not have safety measures in place for your employees, you may be held criminally liable whether there is an accident or not.

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Are commuting accidents covered under workers’ accident insurance?

Yes. Japan’s workers’ accident compensation insurance also covers injuries and illnesses that occur during a worker’s commute to and from work. This is known as commuting accident coverage (通勤災害).

In principle, an accident is considered a commuting accident when it occurs:

• while traveling between home and the workplace, or

• while traveling between multiple workplaces,

• using a reasonable and normally accepted route and method.

Typical examples include traffic accidents, falls, or other sudden injuries that occur while going to work or returning home.

However, coverage may not apply if the worker:

• makes a personal detour or interruption unrelated to work, or

• significantly deviates from a reasonable commuting route for private reasons.

When an accident is recognized as a commuting accident, a medical compensation benefit is provided in the same way as for work-related accidents.

Who must enroll, and who is eligible?

As mentioned in the previous section, if your business hires even one employee—regardless of their employment status, such as full-time, part-time, or day laborers—you must enroll in workers' accident compensation insurance.

However, some exceptions exist. The following types of businesses and employees are not covered by workers' accident compensation insurance, as other laws protect them.

• Government office workers

• Government-owned businesses

• Those insured by seamen's insurance (other than those insured by voluntary disease continuation)

Also, contractors or board members with representative or administrative rights are not covered by workers' accident compensation insurance (although board members who work under a representative and receive wages can be covered).

Additionally, most freelancers are excluded from insurance coverage. Instead, a special voluntary enrollment system exists for freelancers who are excluded from the government's primary workers' accident insurance coverage. Some examples of sole proprietors/freelancers who can enroll in this voluntary insurance are taxi drivers, carpenters/construction workers, foresters, and fishers.

MHLW recently added animators, entertainment personalities (supporting roles for the entertainment industries included), and a Judo therapist/bone setter, effective from April 1, 2021.

The enrollment procedures for the special enrollment system must always be done through a proxy (the industries' respective unions or relevant agencies). You can find more details of eligibility requirements and the various application procedures here on the MHLW site.

Are foreign workers and non-Japanese employees covered?

Yes. Foreign workers in Japan are covered by Workers’ Accident Compensation Insurance in exactly the same way as Japanese employees.

Coverage is based on the employment relationship, not nationality. If a person is employed by a company in Japan, they are generally insured under the system administered by the Ministry of Health, Labour and Welfare.

In practice, the following workers are covered as long as they are employed in Japan:

• foreign nationals working under any residence status,

• full-time and part-time employees,

• contract and temporary workers, and

• dispatched workers.

There is no difference in benefit eligibility, compensation levels, or medical coverage based on nationality.

Claims and accident reports are reviewed by the local Labor Standards Inspection Office. While the system itself is the same for everyone, application forms and guidance are usually provided only in Japanese, so foreign workers may need assistance from their employer, a labor representative, or a professional advisor when filing a claim.

How does the claim process work? (How to file for workers’ accident compensation insurance)

When a worker is injured, becomes ill, or is involved in a commuting accident, benefits under workers’ accident compensation insurance (労災保険) are claimed by submitting an application to the local Labor Standards Inspection Office, which operates under the supervision of the Ministry of Health, Labour and Welfare.

The basic claim flow is as follows.

Step 1: Report the accident to the employer

The worker should notify their employer as soon as possible after the accident or the discovery of a work-related illness. The employer is legally required to record and report work-related accidents.

Step 2: Confirm whether the case is work-related or commuting-related

The accident or illness is reviewed to determine whether it qualifies as:

• a work-related accident (業務災害), or

• a commuting accident (通勤災害).

This classification affects how the case is processed, but both are covered under the same insurance system.

Step 3: Prepare the benefit claim form

The worker (or, in practice, the employer on the worker’s behalf) prepares the prescribed workers’ compensation benefit claim form. Different forms are used depending on the type of benefit, such as:

• medical care benefits,

• leave (absence from work) compensation, or

• disability or survivor benefits.

Medical institutions usually complete the medical section of the form.

Step 4: Submit the application to the Labor Standards Inspection Office

The completed claim form is submitted to the local Labor Standards Inspection Office that has jurisdiction over the workplace.

Although the employer’s cooperation is commonly required in practice, the worker has the legal right to file a claim even if the employer is uncooperative.

Step 5: Review and determination

The Labor Standards Inspection Office examines:

• whether the accident or illness is work-related or commuting-related, and

• whether the legal requirements for each benefit are met.

If necessary, the office may request additional documents or explanations from the employer, the worker, or the medical institution.

Step 6: Payment of benefits

Once the claim is approved, insurance benefits are paid directly to the worker or the medical institution, depending on the type of benefit.

For example:

• medical expenses are usually paid directly to the hospital, and

• compensation for missed work or disability is paid to the worker.

Important points to note

• There is no application fee for filing a workers’ accident compensation claim.

• Claim forms and procedures are generally provided only in Japanese.

• Foreign workers may need assistance from their employer or a professional adviser when preparing and submitting documents.

How to enroll in workers' accident insurance

When enrolling in workers' accident insurance, the following documents must be submitted to the local Labor Standards Inspection Office: 

• Notice of Establishment of Labor Insurance Affiliation 保険関係成立届 = hokenkankei seiritsu todoke

• Declaration of Estimated Labor Insurance Premiums 労働保険概算保険料申告書 roudouhoken gaisan hokenryou shinkokusho 

• Certificate of All Historical Matters 履歴事項全部証明書（写）a copy of rirekijikou zenbu shoumeisho 

The submission deadline is within 10 days from the establishment date of the insurance relationship. Specifically speaking, the deadline for the document "Declaration of Estimated Labor Insurance Premiums" is 50 days. Still, it is generally recommended to submit it together with other documents and pay insurance premiums within 10 days. 

How much does workers' compensation insurance cost?

You can calculate the workers' accident insurance premiums with the following formula: (total annual wage of all employees)* x (insurance premium rate)** = workers' accident insurance premiums.

*The total employee wages are calculated by totaling the monthly wages and bonuses paid each month.

**You can find a list of insurance premium rates by industries posted here (Japanese PDF) on the MHLW site. The rates have not changed since 2018.

Insurance rates differ by industry because certain businesses are more prone to work-related accidents than others.

If you are a 継続事業 = keizokujigyou "continuing business," you will pay the year's estimate of the workers' accident insurance premiums beforehand, with the difference settled at the end of the fiscal year.

If employees are hired or retire in the middle of a fiscal year, you file a report within 50 days of the event. And, if applicable, the difference will be refunded to you.

Premium rates are reevaluated every 3 years for establishments with 100 or more employees, according to the number of reported work-related accidents (merit system). If your business applies to this system, the labor bureau will notify you when a change has been made to the premium rates, so you do not need to make an application. 

You can find forms for filing and paying insurance premiums here on the Labor Insurance Information Center site. 

While calculating these premiums is done via self-evaluation, the MHLW site provides excel file templates to help with your calculations. 

Many software solutions assist companies with these calculations, and accounting firms can help with this payroll task. 

Final thoughts

In a nutshell, workers' accident insurance in Japan is insurance paid by employers and not by employees. The purpose of this insurance is to protect the health and livelihood of employees, as well as dispatched workers and part-timers, too. 

Also, keep in mind the term "labor insurance" in Japan typically refers to both unemployment insurance (covered previously) and workers' accident insurance (covered in this article). 

For most cases, companies enrolling in unemployment insurance are also enrolled in workers' accident insurance, and they pay both premiums together.

Note: This article and the previous articles in this series, "Employees' Pension Insurance in Japan," "Employees' Health Insurance in Japan," and "Unemployment Insurance in Japan" are intended to provide you with general information only.