Newsletter:
"Newsflash Subsidies for Employers related to COVID-19 (May 2020)"

Newsflash Subsidies for Employers related to COVID-19 (May 2020)

Published: (Tue) 12 May 2020

To alleviate the financial burden of employers in light of the COVID-19 pandemic, the Japanese government has decided to subsidize certain employment related cost-reduction measures which may contribute to the avoidance of dismissals. In this Newsflash we describe the main measures for which employers may obtain governmental subsidies.

1: Business Suspension
Q 1.1: Are subsidies available for employers suspending their business due to Corona?
In case an employer suspends its business temporarily, the employer is in principle required to pay to the employees at minimum 60% of their average salary during the time of the business suspension (“Leave Allowance”) if the suspension is attributable to the employer. To cover a part of this Leave Allowance to be paid by the employer, the Japanese law offers employment adjustment subsidies (EAS). In order to be eligible, the conditions for the grant of EAS have been considerably eased in light of the COVID-19 crisis.

Q 1.2: What are the conditions for EAS?
The criteria for the grant of EAS depend on the time period of the business suspension. For business suspensions during the time period from 1 April 2020 to 30 June 2020, the following applies.

Main application criteria

Applicants

  • Employers (companies and individuals in Japan, including foreigners)
  • whose business is affected by the Corona pandemic,
  • who are suspending their business and need to pay Leave Allowance, and
  • who are paying contributions to the national unemployment insurance with respect to their employees.

Employees

  • Available also for employees not enrolled in the national unemployment insurance (e.g. part-time workers working less than 20 hours/week, etc.)
  • Available also for employees employed for less than 6 months.

Income decrease of applicant

  • Decrease of at least 5% of the productivity index (sales volume etc.) of the employer during the period of one (1) month preceding the suspension, compared to the same period in the preceding year.

Business suspension plan

  • The time period/days of the suspension, and the employees subject to the suspension, need to be determined in a suspension plan to be notified to the employees.
  • Subsidies are also available if the suspension applies only to a part of the employees, e.g. a certain department, section or shop, provided that in such case, the ratio of days of business suspension compared to the regular working days of the employees concerned in the reference period (usually one month) is at least 1/40 (small and middle-sized companies) or 1/30 (large companies).
  • Whereas the suspension itself can be unilaterally determined by the employer, a labor-management agreement regarding the suspension plan needs to be concluded with the representative of the employees representing the majority of the employees or with the union representative, if established, to apply for subsidies.
  • Although principally, the suspension plan needs to be submitted to the local employment agency (Hello Work) prior to the start of the suspension in order to be eligible for EAS, this deadline has been abolished for business suspensions due to COVID-19, so that the suspension plan can also be submitted with retroactive effect after the start of the suspension; the deadline for submission of the suspension plan is 30 June 2020. The business suspension plan can be filed prior to, or together with, the application for EAS.

Application

1 year waiting period since last grant of employment adjustment subsidies

  • Not required

Maximum available period

  • Time period between 1 April 2020 and 30 June 2020; EAS for business suspensions outside this period are subject to a limit of 100 days/year and 150 days/3 years and different conditions.

 

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