Japanese Government subsidy for COVID-19 Pandemic

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Japanese Government subsidy for COVID-19 Pandemic

June 25, 2020 23:00PM by , 4062 views

This post was revised on June 26 to reflect the Japanese government’s increased COVID-19 subsidy daily amount and extended extraordinary period for application and grants.

To combat the COVID-19 coronavirus pandemic, the Japanese government extended its existing business employment subsidy (the Employment Adjustment Subsidy) to include emergency cash relief for businesses affected by the COVID-19 coronavirus pandemic. If your company is one of the many asking what Japanese business subsidies are available during the coronavirus pandemic, and how their Japanese office can apply for this COVID-19 subsidy, please read on.

  1. What is the “Employment Adjustment Subsidy”? The Employment Adjustment Subsidy (in Japanese 雇用調整助成金) has been available for some time. The subsidy is a form of Japanese furlough encouraging companies to retain employees even though the coronavirus pandemic has reduced income. The brief process is:.
    • The company ascertains if it is eligible for the subsidy.
    • The company agrees a furlough schedule with its employees (which can include shortened work hours as opposed to full absence).
    • The company files an application for the subsidy with the Japanese government.
    • The company pays to each employee at least 60% each month of his or her salary.
    • The Japanese government pays the company a subsidy of up to JPY15,000 a day for each furloughed employee.
    The Japanese government amended the subsidy’s terms to make it available to a wider range of businesses, make it easier to qualify, and increase the cash benefit. Specifically for Japanese companies affected by the coronavirus pandemic, the Japanese government defined an extraordinary period from April 1 – September 30, 2020 during which the easier qualification applies. What follows applies only to subsidy applications made during the extraordinary period; more restrictive terms will apply after the extraordinary period ends.
  2. Qualifying Businesses. To qualify,
    • Your Japanese company must show at least a 5% decline in revenue in any month during the extraordinary period compared with the same month in 2019.
    • Your Japanese company must already be registered as a place of employment with the Employment Security Office (which would have been done when hiring its first employee).
    • The furloughed employees must already be enrolled in employment insurance.
  3. Subsidy Application Procedure. The exact procedure to apply for the Employment Adjustment Subsidy is:
    • Agree a Labor Management Agreement with the employees to determine the furlough schedule, calculation of reduced pay, etc.
    • Agree an individual furlough (or reduced working hours) schedule with each employee.
    • Submit the plan to the Labor Bureau either before or after implementation.
    • Calculate and pay wages in accordance with the Labor Management Agreement to reflect each employee’s furlough allowance and deduction.
    • Complete the application forms for the specific subsidy amount each month and submit to the Labor Bureau with supporting documents showing the wages paid, employee attendance, etc..
  4. Subsidy Percentage Rate. The exact percentage of subsidy a company can receive depends on its size and whether the employees are retained at the end of the furlough period:
    • Small and medium companies, defined as:
      • Retail and Restaurants with up to JPY50M capital or 50 employees.
      • Service companies with up to JPY50M capital or 100 employees.
      • Wholesale companies with up to JPY100M capital or 100 employees.
      • Other companies with up to JPY300M capital or 300 employees.
      These companies can claim subsidies of up to 100% of each employee’s paid furlough wages (up to a maximum of JPY15,000 each employee) for employees who are absent fulltime during the furlough period and to whom the company pays at least 60% of regular wages. If the employee is dismissed during the furlough period, the subsidy is reduced to 80% of the furlough amount.
    • Large companies can claim subsidies of up to 75% of each employee’s paid furlough wages (up to a maximum of JPY15,000 each employee) for employees who are absent fulltime during the furlough period and to whom the company pays at least 60% of regular wages. If the employee is dismissed during the furlough period, the subsidy is reduced to 67% of the furlough amount.

The Ministry of Health, Labour and Welfare has detailed information available here (in Japanese).


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