Across the globe, the spread of the coronavirus is having a significant humanitarian impact and increasingly, an economic impact from stock markets, global supply chains, business continuity, and employment. As governments move rapidly to contain the spread of the virus, employers are also working to address how to manage employees while continuing business operations.
At an unprecedented pace, government authorities are reviewing their responses and enacting changes to provide relief to affected employers. Below, we have summarised key developments adopted in response to the coronavirus pandemic that impacts employers and individuals in Japan.
COVID-19 special provision for employment adjustment subsidy
Employment Adjustment Subsidy is a monetary relief to help businesses forced to reduce operations due to economic causes (set out below) pay for statutory leave allowances and wages where they place employees on temporary leaves, occupational training, or secondments in the aim of maintaining employment.
Examples of economic causes
- A reduction of business operations in response to reduced orders from COVID-19 affected customers, clients, or suppliers.
- A reduction of business operations due to voluntary business closure in response to a government request.
- Customer decline due to public restraints in response to a government request.
- Customer decline due to continuous cancellation of reservations from tourists as a result of reputational damage.
- A reduction of business operations due to voluntary business closure in response to COVID-19 infected employees.
All employers affected by COVID-19 who:
- are registered with employment insurance
- suffer 5% or more decline in production index (measured in sales volume, revenue and other index representing business operation) in the month prior to submission of a furlough plan compared to the same period in the previous year
- place employees on furlough in accordance with a furlough plan executed with employees
- pay more than 60% of the average wage to employees on furlough
- consent to be audited/inspected by the Labor Bureau at a later time.
Amount of subsidy
|Subsidy details and amounts||Rate subsidised
(Small and mid-size company)
|Applicable period||1 April 2020 to 30 June 2020|
|Maximum daily amount JPY 8,330||2/3 (3/4 if employment is maintained)||4/5 (9/10 if employment is maintained)|
|Addition for occupational training||JPY1,200/employee per day|
|Maximum payment days||100 days/year + Eligible period|
Small and mid-size companies are defined as those within the following threshold based on each industry. A large company is defined as those not meeting the criteria for a small and mid-size company.
|Retail (includes restaurants)||Less than JPY 50M capital and 50 employees|
|Service||Less than JPY 50M capital and 100 employees|
|Wholesale||Less than JPY 100M capital and 100 employees|
|Other industry||Less than JPY 300M capital and 300 employees|
- Consider, draft, discuss and execute a furlough plan with employees
- File the furlough plan with the Employment Security Office / Labor Bureau (this may be after point 3)
- Implement furlough plan
- File application package for Employment Adjustment Subsidy under COVID-19 special provision
- Review by Labor Bureau
- Payment into employer’s designated bank account.
The process is estimated to take approximately one month.
Employment adjustment subsidy
As of 27 April 2020, for certain small businesses, the Japanese Government is in discussion to increase the amount paid under the Employment adjustment subsidy to the entire amount where the employer does not terminate any employee and pays 100% of wages as compared to the previous year to employees on furlough.
Economic relief payment
The Japanese Government has announced to grant JPY 100,000 to all residents of Japan registered on local municipalities’ Resident Register as of 27 April 2020. The 'Economic relief payment' will be available irrespective of income level and is expected to be non-taxable. Payment will be deposited to the bank account of the head of the household for the entire household members. Individuals may elect not to receive the grant by checking a box on the application form. Should the entire household elect not to receive the payment they need only to ignore the application form.
Foreign nationals with visa status exceeding three months who registered with the Resident Register will qualify as well as those living overseas but maintaining their registration on the Resident Register. While minors will also qualify, newborn babies must be born on or before 27 April 2020 to be eligible. There is no procedure in place to eliminate imprisoned personnel and members of anti-social forces. Payments will begin in May 2020.
The role of human capital professionals
Human resources leaders play a critical role in ensuring businesses execute their global growth strategy. Accordingly, these professionals increasingly having a seat at the C-suite table.
The COVID-19 outbreak presents a range of unique and complex challenges to businesses – sustaining business operations while ensuring the safety and wellbeing of employees. With proactive engagement with the business, human capital professionals can help navigate uncertain paths ahead – understanding complexities, identifying risks, managing costs, enabling employees to continue working, and ensure the business continues.