The agency has been investigating Nova since the end of March and expects to have its results at the end of May or beginning of June.
But Nova is not the only company in the ministry’s sights.
“It’s not just Nova that has been failing to enroll its employees. There are other large eikaiwa companies that are in a similar situation,” says Noboru Sugiyama, deputy director of the Health Insurance Division of the Social Insurance Agency. Sugiyama is heading the Nova probe.
The failure of many companies to register employees in Japan’s pension and health schemes is costing the government billions of yen a year in lost payments.
“We have had many requests to clarify and tighten the (pension/health) systems,” he says, “and we will launch an investigation of the eikaiwa industry.”
Non-enrollment of full-time employees is illegal in Japan, where the Health Insurance Law and Employees’ Pension Law stipulate that companies must enroll all workers who have been in Japan for over two months in both the health insurance and pension systems, regardless of nationality.
Under these laws, the burden of payment is split between employer and employee, with each paying half the monthly premium amount.
The General Union in Osaka has estimated conservatively that Nova saves itself at least 1 billion yen annually in premium payments by not enrolling its teachers in the health insurance and pension schemes.
Nova policy demands that all new teachers have insurance before they arrive in Japan. But foreign teachers who are employed by Nova have not been told in the past that enrollment in the Employees’ Insurance System is compulsory and are instead offered private health insurance schemes, one of which — Japan Medical Assistance — is a Nova-group company.
The issue was brought to the the agency’s attention after the union filed a complaint with the prosecutor’s office in Osaka accusing Nova of failing to obey the law.
Nova has admitted that it does not automatically enroll its workers, even though all Nova teachers are employed on a one-year contract basis. Instead it says it lets its instructors join the health and pension schemes “when they wish to.”
Nova declined repeated requests for an interview, and a list of questions e-mailed to the company’s head office in Osaka last week went unanswered.
Although Sugiyama concedes that the Social Insurance Agency has had problems enforcing participation, a failure to enroll still constitutes a breach of the law. “In the worst sense it’s breaking the law,” he says.
“When foreigners come to a country, of course it’s a basic rule that they enter that country’s social insurance system according to the law.” Under Japanese law, the employer, not the employee, is liable for punishment for failure to enroll or pay premiums.
And Sugiyama says the SIA cannot rule out hitting Nova with a hefty back bill. “It’s not impossible that there will be individual cases involving back payments, though the emphasis will be on what to do from now on.”
“If there are people who should have originally enrolled, we will ask them to enroll.”
Dennis Tesolat, of the General Union, says that under the law, Nova is obliged to enroll all full-time workers in the two schemes, irrespective of whether employees want it or not.
“It is 100 percent the responsibility of companies to enroll their employees,” he says.
The point of lodging the complaint, says Tesolat, is not to see Nova punished in any way, however. “The purpose of this action is not to punish the companies but to make sure that the people who work for these companies are getting adequate health care. It is expensive; it doesn’t offer the coverage it should, but it is better than not having it at all.”
He also believes that eikaiwa employees may benefit in other ways from the investigation and subsequent enrollment in the system. “This investigation could result in an increase in wages for teachers, since Nova may have trouble attracting new teachers if they don’t raise wages in line with newly imposed premium payments.”
Nova has claimed it is difficult to convince its teachers of the merits of joining the health and pension systems because of the short duration of most teachers’ stays in Japan.
According to the union, Nova has some 5,000 foreign teachers that it has not enrolled in the health insurance and pension schemes. The union also estimates that some 4,500 Nova teachers have JMA insurance.
“Nova’s position has been ‘We know the teachers are eligible, but it’s not necessary to enroll them. Furthermore, teachers don’t want to join,’ ” says Dennis Tesolat. But Tesolat believes this is the inevitable result of a lack of information provided to teachers.
“If teachers get no information about the schemes, then of course they’re not going to want to join them,” he says. But Tesolat says teachers he has spoken to have expressed their support for joining the system.
The Justice Ministry estimates that some 90 percent of foreign residents in Japan stay for three years or less. For eikaiwa teachers, however, that figure rises to between 96 and 97 percent, making it possible for most to get an almost full refund of their pension premiums.
Under Japan’s Lump Sum Withdrawal Payment system, foreigners who have been paying into the pension scheme for at least six months and up to three years can get back 90 percent of premiums paid. There is no refund of health insurance payments.
Bob Tench, president of the Nova Union, says that Nova’s failure to enroll its teachers while offering JMA insurance is irresponsible. “This JMA insurance is only designed to ‘patch you up and ship you home,’ ” he says. “JMA is travel insurance and should not be used for everyday health care. “The government and the teachers are being ripped off,” he says.
Moreover, the underwriters of the JMA scheme, Mitsui Sumitomo, have told the General Union that Nova suggested that all its teachers were part of the health and pension systems.
Mitsui Sumitomo also said that no resident of Japan can be offered JMA-type insurance unless already enrolled in the national system.
By BARRY BROPHY 2005-04-12
Additional reporting by Tony McNicol