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Workers' Accident Compensation in Japan

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Summary of Coverage and Goal

Coverage

Hazards covered

The workers’ accident compensation insurance system in Japan is under the control of the government, based on the Workmen’s Accident Compensation Law (1947). It gives workers insurance benefits in order to protect them promptly and fairly against injuries, diseases, disabilities or deaths incurred “because of duty”. The definition of “because of duty” is not stipulated by the provisions in related laws. The criteria used by the government administration make it clear, however, that the system is applied to injuries, disabilities or deaths that result from employment, namely “during the duty situation in which workers are under the control of an employer according to work contracts” and “due to an accident or a circumstance caused by this duty situation”. Thus the system is applied to all the injuries, disabilities and deaths incurred while workers are working or commuting to work. It is also applied to “diseases or disorders to workers engaged in work with hazards that can harm health from sudden or chronic action of such hazards”. These because-of-duty diseases include those caused by injury resulting from employment and occupational diseases caused by physical, chemical and biological agents or specific forms of work performance, and those apparently caused by work.

Industries and workers covered

The workmen’s accident compensation insurance system is applied compulsorily to all workers who are employed in enterprises to which the Labour Standards Law is applied and receive wages. They include those regularly or temporarily employed, daily-wage workers, and both full-time and part-time workers, irrespective of the size of enterprises.

All industries are covered by the system, except part of the agriculture, forestry and fishery industries. The exceptions are agricultural undertakings individually owned and employing less than five workers, forestry undertakings not employing regular workers, and fishery undertakings employing less than five workers and operating in sea areas without significant accident. Government employees, local government employees and sailors are covered by separate workmen’s compensation systems.

Types of payment

The following types of insurance benefits are available for on-the-job injuries and diseases:

  • medical benefit: in principle, medical treatment (in exceptional cases cash reimbursement for treatment expenses)
  • temporary disability benefit: when unable to work and earn wages because of treatment
  • injury and disease compensation pension: when not recovered one-and-a-half years after starting to receive treatment and the extent of disabilities remains at a certain level
  • physical handicaps compensation benefit: according to the degree of physical handicap the workers are left with
  • bereaved family compensation benefit: to the spouse, children, parents, grandchildren, grandparents or brothers and sisters who had been supported by the income of the workers concerned
  • expenses for funeral rites
  • nursing compensation benefit: for full-time or occasional nursing in the case of a grade 1 or grade 2 physical handicaps compensation pension or an injury and disease compensation pension.

 

For injury, disease, disability or death incurred during commuting, the following benefits are paid: (a) medical benefit; (b) temporary disability benefit; (c) injury and disease pension; (d) physical handicaps benefit; (e) bereaved family benefit; (f) funeral rites benefit; and (g) nursing benefit. The details of these benefits are the same as in the case of on-the-job accidents or occupational diseases.

The income benefits are calculated on the basis of the average daily wage of the workers concerned. The temporary disability benefit amounts to 60 of the average daily wage and is given starting from the fourth day of absence from work, together with the temporary disability special supplement equivalent to 20% of the average daily wage (the employer must pay compensation equivalent to 60% of the average wage for the first three days). The amount of injury and disease compensation pension, given when workers do not recover within one-and-a-half years, ranges from 245 to 313 days of the average daily wage. The physical handicaps benefit ranges from 131 to 313 days of the average daily wage. The amount of the bereaved family compensation lump sum ranges from 153 to 245 days of the average daily wage.

The temporary disability benefit, the pension and the lump sum benefit are subject to the sliding scale system which reflects the movement of wages. In cases where the average pay of all the workers for a quarter of the year surpasses 110% or falls short of 90% of the average pay for the quarter to which the day belongs when the worker concerned was injured or taken ill, the average daily wage used for the calculation of temporary disability benefit is automatically revised according to the fluctuating average pay rate. Similar calculations are done for pension and lump sum benefits when the average pay of all the workers for a year surpasses or falls short of the average pay for the year in which the worker concerned died or became ill.

Other aspects

Welfare services

The purpose of the Workmen’s Accident Compensation Insurance is to advance the welfare of workers by promoting return to work or social life of the victims, to give support to them and their bereaved families and to secure proper working conditions. Therefore the system has separate provisions for various welfare services and some preventive measures. Some of these services are managed by the Labour Welfare Services Association, to which the insurance system supplies the funds. Welfare services include the establishment and management of employment injury hospitals, spinal cord impediment centres, rehabilitation workshops, housing loans, relief funds for education and long-term family nursing, installation and operation of special care facilities for workers suffering from employment injuries, home help services and nursing device leasing.

Extension of coverage

Employers of small and medium-sized enterprises and self-employed persons to whom it is appropriate to give the same protection as workers considering the nature of their business may be covered by the workers’ compensation insurance. Entry into the insurance system is allowed to employers of small and medium-sized enterprises which entrust insurance procedures to a labour insurance business association, as well as to the self-employed who join an organization capable of executing insurance procedures.

Workers who are dispatched overseas by employers in Japan or dispatched as representatives for overseas small and medium-sized enterprises are covered.

Description of the System

History

The need for compensating workers for on-the-job injury was first noted by the Factory Law (1911) and the Mine Law (1905). These laws stipulated that employers were responsible for providing sufferers of industrial injuries with assistance. The Health Insurance Law (1922) covered short-term injuries incurred on or outside the job by workers engaged in enterprises to which these laws were applicable. The coverage was later extended to long-term injuries and to civil engineering, construction and transportation workers. A new stage began when the two principal laws described below were enacted in 1947, following the termination of the Second World War. The Labour Standards Law introduced for the first time the idea of employers’ liability and compensation in place of “assistance” in the case of employment injury. The Workmen’s Accident Compensation Insurance Law set up insurance within the jurisdiction of the newly established Ministry of Labour. The insurance system has been improved by repeated revisions of the law. It operates as a system independent from the social security programmes of the country.

Types of insurance coverage

Workmen’s Accident Compensation Insurance is a state insurance system administered by the government. The scope of the insurance extends to all on-the-job accidents and diseases and commuting accidents. It covers both medical and cash income benefits. The medical and rehabilitation costs for workers suffering from injuries or diseases covered by this system are paid by the insurance, a separate treatment not covered by health insurance schemes.

Employers covered by Workmen’s Accident Compensation Insurance are no longer liable for compensation stipulated by the Labour Standards Law for cases compensated by this insurance. However, there are collective agreements that provide for supplementary compensation beyond the levels provided by the state insurance. Furthermore, there are a number of private enterprises that join the compensation insurance schemes managed by private insurance companies.

Disputes about the amount of supplementary compensation for victims of occupational injuries and disease and their families are often brought before the court.

All types of employment and commuting injuries are covered. As for diseases, there is a list of occupational diseases attached to Article 35 of the Enforcement Ordinance of the Labour Standards Law (revised in 1978). The list is comprehensive and covers in effect all types of work-related diseases. The following nine categories are mentioned:

  • diseases caused by injury resulting from employment
  • diseases caused by physical agents (13 items)
  • diseases caused by specific forms of work performance in which an extreme physiological tension is involved (5 items)
  • diseases caused by chemical substances and others (8 items)
  • pneumoconiosis caused by work in places where dust is dispersed, and diseases complicated by pneumoconiosis stipulated by the Enforcement Ordinance of the Pneumoconiosis Law (1960)
  • diseases caused by bacteria, viruses and other pathogenic organisms (5 items)
  • diseases caused by carcinogenic substances or agents, or work performed in a carcinogenic manufacturing process (18 items)
  • other diseases designated by the Minister of Labour
  • other diseases apparently caused by work.

 

Role of social partners

Development of compensation principles

Workmen’s Accident Compensation Insurance started as an insurance system financed wholly by employers. Partial payment by the government began in 1960, when long-term injury and disease compensation was adopted and lump sum payment was replaced with annuity payment for the physically handicapped. In 1965, government subsidies were introduced for the expenses of administering the workers’ compensation insurance and for insurance payments. This was accomplished by serial amendments of the Workmen’s Accident Compensation Law, which in the beginning was applicable only to enterprises regularly employing five or more workers, except part of the agriculture, forestry and fishery industries. Any such enterprise is obliged to automatically join the insurance system as soon as its business starts. Administration of the insurance system is supervised by the Bureau of Labour Standards of the Ministry of Labour. Penalties are applied in the case of violations. Thus the roles of employers and workers are basically what they were at the beginning of the system.

The benefits received by the injured workers and the bereaved families have been improved by several modifications of the law. These modifications improved long-term benefits and bereaved family compensation pensions, introduced the sliding scale of payments as determined by wage level changes, extended benefits to all commuting accidents, and established the special supplement system and the labour welfare services in 1976. In 1981, the adjustment rules between the workers’ compensation insurance benefit and the civil damage compensation were established. Nursing compensation benefits are being introduced.

Deciding whether an injury or disease is because of work duty is based on administrative interpretations. Those who are not satisfied with the decisions may demand an examination or arbitration by a Workmen’s Accident Compensation Insurance examiner appointed by the Minister of Labour. If they are not satisfied with the examiner’s decision, they may demand a re-examination of their case by the Labour Insurance Council. Those who are dissatisfied with the council’s decision can file a suit in court.

Mechanism for updating

The terms of operation of the insurance system are approved by the Council of Workmen’s Accident Compensation Insurance, in which employers, workers and academia are represented. The development of the system and modifications of insurance benefits are examined by the council. As a result, the Workmen’s Accident Compensation Insurance Law was revised several times as mentioned above.

Decisions of the appeal and the civil court systems concerning compensation cases contribute to updating of benefit levels and criteria.

Finances

The government collects the insurance premium from employers. The premium is calculated by multiplying the total wages payable to all the workers in the enterprise in the insurance year by the premium rate. This premium rate is determined for each category of enterprise, taking into account the past accident rates and other factors. A merit system is applied in determining the premium rate for different industries. The premium rates as of April 1992 for different industries are given in table 1.

Table 1. Premium rates of workmen’s accident compensation insurance in Japan (April 1992)

Industry

Types of undertaking

Premium rate

Forestry

Felling and transport of wood

0.142

 

Others

0.041

Fishery

Sea fishery (except below)

0.067

 

Fishery by stationary nets or by culture

0.042

Mining

Coal mining

0.111

 

Metal and non-metal mining

0.099

     
 

Others other than below

0.040-0.072

     
 

Petroleum or natural gas mining

0.010

Construction

New construction or power plants and tunnels

0.149

 

New construction of railroads

0.068

 

New construction of roads

0.049

 

Others

0.025-0.038

Manufacturing

Ceramics

0.020-0.027

 

Wood products

0.026

 

Ship building and repair

0.023

 

Metal products

0.022

 

Foundry

0.021

 

Others

0.006-0.018

Transport

Ship loading/unloading

0.053

 

Other kinds of cargo handling in ports

0.029

 

Freight handling other than above

0.019

 

Traffic and transportation

0.007

Supply of electicity, gas, water or heat

 

0.006

Others

Cleaning,, cremation or meat-processing

0.014

 

Others

0.006-0.012

 

Special exceptional measures to increase or decrease the premium rate determined throughout the merit system are to be applicable starting in 1997 to small and medium-sized enterprises that have taken special measures to secure the safety and health of workers.

The injured workers or bereaved families are expected to provide the information necessary for demanding the insurance payment. The workers who receive the medical benefit for commuting injuries must have contributed to the expenses up to the limit of two hundred yen for the first medical treatment.

Prevention

Some preventive measures are undertaken as part of the labour welfare services within the Workmen’s Accident Compensation Insurance. These include:

  • establishing and managing occupational health centres; and
  • supporting industrial safety and health associations.

 

As a result, a variety of preventive activities are supported by means of the insurance funds.

Summary of Cost Experience

The changes in the numbers of enterprises and workers covered by the workers’ compensation system and the total annual amount of insurance payments are indicated in table 2. It should be noted that sliding scales of pension rates were first applied in 1983 and that the lowest and highest limits of average daily wage of temporary disability benefit for those who need prolonged care were established in 1990. The table shows that the number of workers covered by the insurance system has been steadily increasing, but that the number of cases receiving insurance payments has decreased since 1988.

Table 2. Enterprises and workers where the workmen’s accident compensation insurance was applicable and amount of benefits in Japan

Fiscal year

(April-March)

Number of applicable
plants
(thousand)

Number of applicable workers (thousand)

Amount of insurance benefits
(million yen)

Number of
new
beneficiaries (thousand)

1960

808

16,186

27,172

874

1965

856

20,141

58,372

1,341

1970

1,202

26,530

122,019

1,650

1975

1,535

29,075

287,640

1,099

1980

1,840

31,840

567,288

1,099

1985

2,067

36,215

705,936

902

1986

2,110

36,697

724,260

859

1987

2,177

38,800

725,922

847

1988

2,270

39,725

733,380

832

1989

2,342

41,249

741,378

818

1990

2,421

43,222

753,128

798

1991

2,492

44,469

770,682

765

1992

2,542

45,832

791,626

726

1993

2,577

46,633

799,975

696

1994

2,604

47,008

806,932

675

 

In 1994, 25% of the total insurance benefits were for medical benefits, 14% for temporary disability benefits, 6% for physical handicaps compensation lump sum, 39% for pension and 14% for special grants. The distribution of the insurance benefits by industry is given in table 3.

Table 3. Payment of insurance benefits by industry in Japan

Industry

Applicable plants1

Applicable workers1

Amount of insurance benefits2

 

Number

(%)

Number

(%)

(Thousand yen)

(%)

Forestry

26,960

(1.0)

126,166

(0.3)

33,422,545

(4.2)

Fishery

6,261

(0.3)

56,459

(0.1)

3,547,307

(0.4)

Mining

6,061

(0.2)

55,026

(0.1)

58,847,081

(7.3)

Construction

666,500

(25.6)

5,886,845

(12.5)

268,977,320

(33.6)

Manufacturing

544,275

(20.9)

11,620,223

(24.7)

217,642,629

(27.2)

Transportation

70,334

(2.7)

2,350,323

(5.0)

64,536,818

(8.1)

Supply of electricity, gas, water or heat

1,962

(0.1)

188,255

(0.4)

1,344,440

(0.2)

Others

1,281,741

(49.2)

26,724,978

(56.9)

151,657,177

(19.0)

Total

2,604,094

(100%)

47,008,275

(100%)

799,975,317

(100%)

1 As of end of the 1994 fiscal year.

2 As of end of the 1993 fiscal year.

 

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Additional Info

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" DISCLAIMER: The ILO does not take responsibility for content presented on this web portal that is presented in any language other than English, which is the language used for the initial production and peer-review of original content. Certain statistics have not been updated since the production of the 4th edition of the Encyclopaedia (1998)."

Contents

Preface
Part I. The Body
Part II. Health Care
Part III. Management & Policy
Disability and Work
Ethical Issues
Education and Training
Development, Technology, and Trade
Labour Relations and Human Resource Management
Resources: Information and OSH
Resources, Institutional, Structural and Legal
Topics In Workers Compensation Systems
Work and Workers
Worker's Compensation Systems
Part IV. Tools and Approaches
Part V. Psychosocial and Organizational Factors
Part VI. General Hazards
Part VII. The Environment
Part VIII. Accidents and Safety Management
Part IX. Chemicals
Part X. Industries Based on Biological Resources
Part XI. Industries Based on Natural Resources
Part XII. Chemical Industries
Part XIII. Manufacturing Industries
Part XIV. Textile and Apparel Industries
Part XV. Transport Industries
Part XVI. Construction
Part XVII. Services and Trade
Part XVIII. Guides

Workers' Compensation, Topics in References

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