a deep dive into the first employment insurance overhaul in 30 years. the 15-hour workweek is being abolished in favor of an actual compensation standard, closing employment insurance loopholes and strengthening N-jobber protections. from the new jobseeker's allowance calculation to simplified employer reporting, get the lowdown on the key changes.
employment insurance overhaul in 30 years: 'Earnings-based' transition expands safety net for N-jobbers and workers
the labor market landscape has changed dramatically in recent years, with more and more n-jobbers earning income from multiple sources instead of sticking to a single job, and short-time work and platform work becoming more common. However, the existing employment insurance system, which has been in place for nearly 30 years, has not kept up with these realities. In particular, the "15-hour workweek" standard has created a number of "employment insurance blind spots" where workers are not covered because they are difficult to identify at the workplace.
in response, the government announced fundamental changes. through amendments to the Employment Insurance Act and the Employment and Workers' Compensation Insurance Premium Collection Act, the criteria for employment insurance coverage, premium collection, and job search benefit calculation will all be unified under the "actual remuneration" standard. This represents a paradigm shift from simply tinkering with the system to applying a social safety net based on an individual's total contribution to economic activity, not just their working hours. let's take an expert's look at the three key changes that are at the heart of this reform to move towards a universal safety net for all, and how you can benefit from them.
3 key changes in the Employment Insurance reform
[Change 1] Employment insurance eligibility criteria: "earnings" will replace "hours worked
the core of the change is to change the criteria for determining whether a worker is eligible for employment insurance from 'prescribed hours worked' to 'actual compensation'.
background of the earnings test: the key to closing blind spots
the current 15-hour workweek standard was difficult to verify accurately in the field, resulting in frequent under-enrollment, and it was impossible for administrative agencies to find and protect under-enrollees on their own, which contributed to the employment insurance blind spots for short-time workers.
the new standard is "remuneration" (actual remuneration minus non-taxable income under the Income Tax Act). The most powerful advantage of introducing employment insurance based on workers' income is the linkage with the National Tax Service's income information. the government will set up a system to easily check workers who are missing from the enrollment every month through computerized inquiry of National Tax Service income data and enroll them ex officio. this is expected to expand employment insurance coverage and eliminate blind spots.
Attention, job seekers: Aggregation of income from multiple workplaces will be protected
one of the most substantial beneficiaries of this reform is low-income workers who work at multiple workplaces, namely those who wish to enroll in both N-Jobbers and Special Employment Insurance. previously, dual enrollment in employment insurance was limited to one main workplace. if their earnings at each workplace fell below the applicable threshold, they could not enroll in employment insurance even if their total income was sufficient.
however, the revised Employment Insurance Law solves this problem. even if the income from each workplace falls below the threshold, a worker can apply for combined employment insurance by combining income from multiple workplaces. for example, a low-income worker who works at two jobs and earns less at each, but whose combined income exceeds the threshold for employment insurance coverage, will be able to receive protection. this is the government's intention to recognize and protect the total economic activity of low-income workers in a fragmented work environment.
classification existing method (based on hours worked) post-reorganization (based on actual compensation) eligibility criteria prescribed working hours (15 hours or more per week) based on actual compensation (income) multiple workplaces dual enrollment restriction, only main workplace applies workers can apply for enrollment if their combined income meets the criteria eliminate blind spots difficult (on-site investigation required) linking to national tax income, possible to identify missing enrollment[Change 2] Changes to premium collection criteria: employers will no longer be required to file double reports
the employment insurance reform will dramatically reduce the administrative burden on both workers and employers. this is one of the key points of the revised Employment Accident Insurance Premium Collection Law.
abolition of gross remuneration reporting, the beginning of administrative simplification
until now, employers were required to report their employees' income to the National Tax Service and separately report their employees' total compensation for the previous year to the Labor and Welfare Service by March each year.
the government will abolish the obligation to report the total remuneration separately and will now charge employment insurance premiums using the income information reported by employers to the National Tax Service. This will relieve employers of the burden of reporting the same information to both the National Tax Service and the Welfare Corporation, and is expected to improve the accuracy of insurance administration.
a link to the future administrative system
beyond the current administrative convenience, this measure is considered an important step in laying the foundation for future employment insurance administration. once the National Tax Agency's income-based premium charging system is established, the government's real-time income identification system will be further solidified. In particular, as the system of monthly reporting of commercial workers' income to the National Tax Agency will be implemented from January 2027, the administration of employment insurance premium charging and collection will become a faster and more automated system.
[Change 3] Job Search Benefit Calculation Criteria: 3 months $\to$ 1 year's compensation to increase livelihood stability
the change in the job search benefit calculation standard focuses on enhancing the livelihood security of unemployed workers. this is the key to increasing the rationality of the real compensation-based employment insurance system.
reducing the risk of short-term income fluctuations
previously, jobseeker's allowance was calculated based on the "average wage for the three months preceding the separation from employment," which could disadvantage workers with unstable incomes (e.g., a temporarily high performance bonus or a sudden decrease in wages just before leaving a job) or cause changes in jobseeker's allowance to be out of line with actual employment insurance contribution levels.
the new job search benefit calculation is based on "compensation for the year prior to the date of separation". by significantly expanding the calculation period to a full year, the impact of temporary income fluctuations or salary deviations will be reduced, resulting in a much more stable job search benefit amount. this contributes substantially to livelihood security when a worker loses their job, and is especially helpful for workers who experience ups and downs in their income.
ensure reasonable payouts and predictability
the change also establishes a rationalized system that aligns the criteria for collecting contributions (earnings) with the criteria for paying jobseeker's benefits, meaning that workers will receive benefits commensurate with the level of contributions they have made over time. this will make employment insurance more predictable and better fulfill its function as a safety net.
category current base (3-month average wage) post-reorganization (1-year compensation) calculation period 3 months prior to separation 1 year before the date of separation calculation Criteria 3-month average wage 1 year compensation (income) worker benefits vulnerable to short-term income fluctuations reduce income volatility, increase livelihood stability and affordabilitycheck it out! Practical FAQs about the Employment Insurance Reform
Q1. When will the employment insurance reform take effect?
A. The government is promoting amendments to the Employment Insurance Law with the goal of implementing the Employment Insurance changes in 2025. the revision process is currently underway and will be implemented after consultation with relevant ministries and submission to the Diet. once the enforcement decree is finalized, specific income thresholds will be released.
Q2. I work at multiple workplaces, what do I need to do to combine my income?
A. Workers working at multiple workplaces will need to apply to enroll in employment insurance based on their combined income. after the system is implemented, you will need to check whether your combined income information exceeds the enrollment threshold with the Labor Welfare Corporation or your local employment center and go through the application process.
Q3. Will the change to the income threshold automatically increase my employment insurance premiums?
A. The reform does not change the premium rate itself. However, part-time workers and N-jobbers who were previously excluded from enrollment due to the abolition of the working hours standard will now be required to pay premiums, increasing the total number of people eligible to pay. this should be viewed as a necessary cost of securing an "employment safety net" that will allow them to receive unemployment benefits if they lose their jobs.
Q4. I am a business owner, will I no longer have to report my total compensation to the Labor Welfare Organization?
A. Yes, the Employment Insurance Act will be amended to eliminate the obligation for employers to report their total compensation for the previous year to the Welfare Service separately. instead, income information reported to the National Tax Agency will be utilized to charge employment insurance premiums.
conclusion: A leap toward a universal safety net that captures changes in the labor market
the reforms are a significant institutional recognition of changes in the labor market. By replacing the outdated "hours worked" with a more realistic "earnings" measure, a solid foundation has been laid for closing the employment insurance blind spot.
making it easier for short-time workers to enroll in employment insurance, protecting n-jobbers through multi-employer earnings aggregation, and strengthening worker livelihood security by expanding the job search benefit calculation to one year are all clear steps towards a universal employment safety net that protects all working people.
employment insurance is the most basic social shield that protects us from the risk of losing our jobs, so please share this important reform with those you know. if you have any questions or comments before the implementation, please feel free to share them in the comments. subscribe and set up notifications for more professional and informative labor policy information!