The Ministry of Health, Labor and Welfare (MHLW) has announced details of a package of enhanced support as an immediate measure to address the so-called “annual income barrier” problem, in which workers adjust their employment to avoid a decrease in their take-home pay due to the burden of social insurance premiums. The package will be implemented gradually starting in October.
◆Correspondence to the 1.06 million yen barrier
1) Establishment of a new course of Career Upgrade Subsidy
Employers who make efforts to increase the income of workers when they newly insure short-time workers are eligible to receive subsidies (up to 500,000 yen per worker) for a certain period of time.
The subsidized efforts include not only wage increases and extension of scheduled working hours, but also the provision of an allowance equivalent to the reduction in take-home pay due to the burden of insurance premiums (allowance to promote social insurance coverage).
2) Exclusion from calculation of standard remuneration for social insurance coverage promotion allowance
Employers are entitled to pay the “allowance for promotion of social insurance application” to such workers separately from their salaries and bonuses. In order to reduce the burden of insurance premiums on both employees and employer, the allowance for promotion of social insurance application is excluded from the calculation of standard monthly remuneration and standard bonus for up to two years, up to the amount equivalent to the worker’s portion of the insurance premiums.
◆Correspondence to the 1.3 million yen barrier
Facilitate certification of dependents through certification by employers
If the most recent annual income is expected to exceed 1.3 million yen, the certification as a dependent will not be immediately revoked, but will be made promptly based on a comprehensive assessment of the expected future income.
In addition to previous tax documents, pay stubs, and job agreements, a person can be confirmed as a dependent by providing evidence from the employer that the salary change is only a temporary result of longer working hours caused by labor shortage.
◆Correspondence to spousal benefits
Facilitate a review of corporate spousal benefits
The existence of a spouse allowance with income requirements, along with the social security system, has become a factor in employment adjustment. In order to review this system, it is necessary to pay attention to the Labor Contract Act and judicial precedents, and it is also necessary for companies to deepen their understanding of the necessity, merits, and procedures of the review. In order to promote the review of spousal benefits even among small and medium-sized enterprises, easy-to-understand materials such as a flowchart showing the review procedure should be prepared and made public.
