This article is written by a Japanese local.
When foreign employees start working in Japan and receive their first “payslip,” HR departments almost inevitably receive inquiries bordering on complaints. They express frustration, saying, “The take-home amount is much lower than my contracted salary,” or “Why is the company taking insurance premiums out of my pay without my permission?”
In many countries around the world, salaries are paid in gross amounts, and employees are responsible for paying their own taxes and insurance later. Therefore, Japan’s system of “salary deduction (withholding at source)” can appear to them as unfair exploitation.
If this dissatisfaction is left unaddressed, it directly leads to distrust toward the company. HR managers must explain the clear differences between “Social Insurance (Shakai Hoken),” which corporate employees join, and “National Health Insurance (Kokumin Kenko Hoken),” which self-employed individuals join. It is essential to communicate, as an objective fact, how the company is actually shouldering a massive financial burden on the employee’s behalf.
1. The Basic Structure of “Social Insurance (Shakai Hoken)” for Corporate Employees
[Summary] As a rule, corporate employees must join “Social Insurance,” a comprehensive package of health insurance and employee pension. This is a legal obligation in Japan with no room for opt-outs.
Foreign employees working full-time for a corporation in Japan are legally obligated to enroll in “Social Insurance (Health Insurance and Employees’ Pension Insurance),” regardless of nationality. Personal requests to opt out, such as “I’m healthy so I don’t need insurance” or “I have private insurance in my home country, so please remove me,” are strictly prohibited as they constitute illegal labor practices.
By enrolling in Social Insurance, medical costs for non-work-related illnesses or injuries are reduced to a “30% out-of-pocket” co-pay, and they gain the right to receive future pension benefits (or a lump-sum withdrawal payment upon returning to their home country). The first step is to firmly establish the premise: “This is a mandatory obligation under Japanese law.”
2. Presenting the Overwhelming Benefit of the “50/50 Split”
[Summary] While National Health Insurance requires you to pay 100% of the cost, Social Insurance means the company pays “half” of the premiums. Salary deduction is a mechanism designed to protect the employee.
The key to resolving the frustration of foreign employees is explaining the mechanism of the “50/50 Employer-Employee Split (Roushi-Seppan).”
If an employee were to join the “National Health Insurance (Kokuho)” and “National Pension” as a freelancer or unemployed person, they would be responsible for “100% of the exorbitant monthly premiums out of their own pocket.” However, under the corporate “Social Insurance (Shaho),” the company pays “half (50%)” of the monthly premium out of its own funds and submits it to the government on the employee’s behalf.
Seeing tens of thousands of yen deducted from a payslip feels like a loss, but in reality, “the company is matching that amount with its own money and paying it to the state for your insurance.” By logically explaining this fact, you can help them realize that salary deduction is not exploitation, but a “massive financial support from the company.”
3. Eliminating the Risk of “Visa Renewal Rejection” Due to Unpaid Bills
[Summary] Salary deduction is the ultimate defense mechanism to prevent unpaid premiums caused by forgetting, thereby securing smooth visa renewals and status changes in the future.
In recent years, Japan’s Immigration Services Agency has been strictly scrutinizing the “payment status of taxes and social insurance premiums” during the renewal screening of foreigners’ residence statuses (work visas, permanent residency, etc.).
If, instead of salary deductions, the employee had to pay National Health Insurance premiums themselves at convenience stores, the risk of “non-payment (delinquency)” due to language barriers or simply forgetting would skyrocket. A single record of unpaid premiums can lead to the denial of their next visa renewal, potentially resulting in forced deportation.
Withholding from the salary at the source is the safest automated system to protect foreign employees from such fatal compliance violations.
4. Practical Q&A (Troubleshooting HR Should Guide)
[Summary] Answers questions regarding the exception that makes dependent family members’ insurance free, and how to resolve “double billing” troubles with National Health Insurance.
Q. I brought my wife and two children to Japan. If I have to pay insurance for all of them, my entire salary will be gone. What happens?
A. This is the greatest advantage of corporate Social Insurance (Shaho). Under National Health Insurance (Kokuho), the premium increases on a per-capita basis for every family member added. However, under corporate Social Insurance, by registering eligible spouses and children as “Dependents (Fuyo),” the insurance premium for the family becomes “completely free (zero additional cost).” A health insurance card is issued to the entire family for the price of just the employee’s single premium, drastically reducing the financial burden.
Q. I received a bill for “National Health Insurance” in my mailbox. I am already paying Social Insurance from my salary; do I have to pay both?
A. Absolutely do not pay it. This is a state of “double enrollment.” If you enrolled in “National Health Insurance” at the city office for the few days between your arrival in Japan and your first day of work, it is not automatically canceled when you switch to the company’s “Social Insurance.” The employee must go to the city office with their new corporate health insurance card and perform the “National Health Insurance withdrawal procedure,” or the bills will keep coming. Instruct them to cancel it at the ward office immediately.
Conclusion: Build Trust by Logically Explaining “Deductions”
Foreign employees’ dissatisfaction with payroll calculations stems from “ignorance and anxiety” about Japan’s complex social security system. HR managers should not dismiss them by simply saying “it’s the law.” Instead, eliminate their anxieties about their new life by clearly presenting objective benefits: “the company pays half,” “it’s an automation that protects your visa renewal,” and “family coverage is free.”