Following our previous newsletter, we will continue to provide practical and useful insights on strategic HR and labor management support in Japan, along with topics that can serve as hints for system design.

In this issue, we have selected key topics that may impact corporate operations and HR strategies, including regulatory changes effective from April 2026, and organized them from a practical perspective. We hope this will serve as a useful reference for your daily operations and system design.

1. Tax-Exempt Limit for Meal Allowances (A “Third Wage Increase”)

■ Key Point

Even when providing the same amount, the tax treatment differs significantly depending on whether it is paid as salary or as a meal allowance.

■ Explanation

Under current Japanese tax rules (as of April 2026), meals provided by the company to employees are not treated as taxable salary if the employee bears at least 50% of the meal cost and the company’s contribution does not exceed JPY 7,500 per month.

By utilizing this system, companies can enhance the value of compensation provided to employees without increasing tax or social insurance burdens for both employers and employees.

■ Example

For instance, even if a company provides JPY 7,500, the treatment differs depending on how it is provided. If paid as an allowance, it is treated as taxable salary subject to income tax, resident tax, and social insurance premiums.

On the other hand, if the same amount is provided as a meal allowance and meets the specified conditions, it is not subject to salary taxation and is treated as tax-exempt.

This illustrates that even with the same company cost, the net benefit to employees can differ significantly depending on the system design.

 

2. Removal of the Matching Contribution Cap in Corporate DC Plans

■ Key Point

Employees will be able to increase their retirement savings voluntarily without requiring any additional employer contributions.

■ Explanation

From April 1, 2026, the restriction on matching contributions in corporate defined contribution (DC) pension plans will be revised. The previous rule—that employee contributions cannot exceed employer contributions—will be abolished.

As a result, employees will be able to contribute amounts exceeding the employer contribution, as long as they remain within the statutory contribution limits.

■ Example

For example, if a company contributes JPY 10,000 per month, previously the employee could only contribute up to JPY 10,000.

After the revision, employees can increase their contributions to JPY 20,000 or JPY 30,000, within the overall system limits, based on their own decision.

This change allows companies to expand asset-building support as part of their benefits package without incurring additional costs.

 

3. Criteria for Determining “Managerial or Supervisory Employees”

■ Key Point

Whether an employee qualifies as a managerial or supervisory employee is determined not by job title, but by actual working conditions (authority, discretion, and treatment).

■ Explanation

Managerial or supervisory employees are exempt from working hours and overtime regulations under the Labor Standards Act. However, this classification is determined based on actual job conditions rather than job titles.

The Ministry of Health, Labor and Welfare indicates that the determination should be made comprehensively based on the following three factors:

(1)  Involvement in management, authority, and responsibility
(2)  Degree of discretion over working hours
(3)  Level of compensation

■ Example

For instance, even if an employee holds the title of store manager or manager, if they lack authority over hiring or evaluations, have strictly controlled working hours, and receive compensation similar to general employees, they may not meet the criteria.

In such cases, they may not be recognized as managerial or supervisory employees, and the company would be required to pay overtime premiums—posing a significant compliance risk.

 

If you have any questions about the topics covered in this newsletter or would like more information, please visit our Contact Us page.