Nagamine & Mishima Accounting Office

Accounting practice since 1989

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One of our employees died recently, of a heart attack outside work hours. We don’t think it was work related and there doesn’t appear to be any claim by the survivors to that effect. Is the company obligated to pay anything to the surviving family? If so, what is the legal or customary amount?

March 28, 2012

◇Cause of Death

First of all, it is important to make sure the employee’s death is truly not work-related even if the employer and the survivors are both convinced it is not.

If an employee worked approximately 100 hours of overtime in a month or 80 hours of overtime per month for 6 months prior to his/her death, such death may be considered work-related.

◇Workers’ Accident Compensation Insurance: Survivors’ Benefit

If an employee dies while at work or commuting to/from work, a surviving family member will receive a pension or a lump-sum payment from the government.

◇Workers’ Accident Compensation Insurance: Funeral Expenses

If an employee dies while at work or commuting to/from work, the benefit for funeral expenses will be paid by the government to the individual who holds the funeral.

◇National Pension Insurance / Employees’ Pension Insurance: Survivors’ Pension

If an insured person dies, the survivors’ pension will be paid from National Pension Insurance or Employees’ Pension Insurance to an individual who has shared living expenses with, and has been financially supported by, the deceased person.

◇Employees’ Health Insurance: Funeral Expenses

If an insured employee dies, the benefit for funeral expenses of 50,000yen is paid from the Employees’ Health Insurance to an individual who holds the funeral.

Notes:

– There are eligibility requirements for survivors’ benefit and survivors’ pension.

– When survivors’ benefit and survivors’ pension are both paid, survivors’ benefit will be reduced by multiplying it by the adjustment coefficient because the amount would be very large if both are paid in full.

◇Severance Pay on Death

If a company has Retirement Allowance Regulations, it is obliged to pay “Severance pay on death” to a surviving family member accordingly. Generally, the amount is determined based on the employee’s years of service and last position, any unpaid balance of salary, and sometimes a reward for his/her service will also be included. Even if the company has no Retirement Allowance Regulations, it is an employer’s obligation to pay the employee’s unpaid salary, allowances, and entitlements.

Note that these payments may be subject to inheritance tax for the beneficiary.

◇Congratulations and condolence payments

Congratulations and condolence payments may be paid from a company if they are stipulated in the company’s employment regulations. When there is no rule, funeral expenses or condolence payments for the funeral may be paid by a company. Such payments are nontaxable as long as the amounts are considered socially acceptable and deemed appropriate by the tax authorities (taking into account the specific conditions, such as the cause of incident, the condition of the deceased’s kin, the deceased employee’s position in society, etc.)

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People are Talking

  • “The launch of Berry Bros. & Rudd Limited’s Japanese branch in November 2008 required the support of a knowledgeable, reliable and professional accounting firm and we were therefore fortunate to find all of these qualities working with the Nagamine & Mishima Accounting Office.

    Since assisting us with the initial set-up, N&M have managed our monthly and year-end Accounts as well as handling our Payroll, ensuring compliance with Tax regulations and filing annual Tax Returns and supervising year-end stock counts.  They respond to all queries in a very timely manner, their work is of a high consistency and their approach friendly.

    With N&M assistance we have confidence in the controls and integrity of the accounting information for our Japanese operations.”

    Philip Duggan, Finance Director

    Berry Bros. & Rudd Limited Japan branch