The "1.06 million yen wall" is abolished in October 2026. What a business owner should do

In short: From October 2026, the wage requirement (monthly pay of 88,000 yen or more, or about 1.06 million yen a year) for short-time workers to enroll in employees' pension and health insurance will be abolished. As a result, a short-time worker at a company with 51 or more employees who works at least 20 prescribed hours a week becomes eligible regardless of pay. "The 1.06 million yen wall disappearing" does not mean "the insurance-premium burden disappears." Rather, the scope of coverage expands. What a company should first check is: (1) whether it has 51 or more employees, (2) which short-time workers may be affected, and (3) the premiums and procedures after enrollment.

"Now that the 1.06 million yen wall is gone, will our part-timers join social insurance?" and "We have 50 or fewer employees, so it doesn't affect us, right?" — with the autumn of 2026 approaching, business owners are increasingly asking questions like these. This article explains, for owners who employ part-time or casual workers, especially small-business owners, the scope of the October 2026 change and what a company should check.

What was the "1.06 million yen wall" in the first place?

In principle, social insurance (employees' pension and health insurance) covers people who work at least 30 hours a week or otherwise at least three-quarters of a full-time worker's hours. On top of this, short-time workers at companies with 51 or more employees are required to enroll if they meet the following conditions.

• 20 hours or more of prescribed working time per week
• Prescribed pay of 88,000 yen or more per month (roughly 1.06 million yen a year)
• An expected employment period of more than two months
• Not a student

Of these, the wage condition of "88,000 yen or more per month" is the so-called "1.06 million yen wall." Because a worker who was not earning 88,000 yen a month was not covered even when working 20 or more hours a week, some people adjusted their working hours or shifts.

In October 2026, what changes and what remains?

Under the pension system reform law enacted in June 2025 (Act No. 74 of 2025), the above wage requirement (88,000 yen or more per month) is abolished in October 2026. The table below summarizes the position.

Requirement	Before	From October 2026
Wage requirement (88,000 yen/month or more)	Required	Abolished (removed)
Prescribed working time per week	20 hours or more	20 hours or more (remains)
Company-size requirement	51 or more employees	51 or more employees (remains for now)
Employment period	More than two months expected	More than two months expected (remains)
Not a student	Required	Required (remains)

The key point is that the only thing removed is the wage condition. The "20 or more hours a week," "more than two months expected," and "not a student" conditions remain, and the company-size condition of "51 or more employees" also remains for now.

Accordingly, a company with 50 or fewer employees is not directly affected by this change as of October 2026. It is a mistake to think that "because the 1.06 million yen wall was abolished, small companies change immediately too." However, as explained below, the company-size requirement will be phased out in stages, so it will become harder to write it off as "not our concern."

What actually happens when "the wall disappears"?

Let me clear up common misunderstandings.

• "The 1.06 million yen wall disappearing means the insurance-premium burden disappears" is wrong. On the contrary, a person who previously did not enroll because their pay was under 88,000 yen a month may newly become eligible by working 20 or more hours a week.
• "Nothing changes once you exceed 1.06 million yen" is also wrong. A short-time worker who works 20 or more hours a week becomes subject to an enrollment decision regardless of pay.

In other words, this reform is intended to lower the hurdle and expand coverage. Enrollment brings an insurance-premium burden for both the worker and the employer, but it also brings more substantial protection, such as a future employees' pension and injury and sickness allowance or maternity allowance in the event of injury or childbirth.

How do the 1.06 million, 1.3 million and tax "walls" differ?

The "income walls" include not only 1.06 million yen but also 1.3 million yen and the tax walls (1.03 million yen, 1.5 million yen and so on). Each has a different meaning, so it is important not to confuse them.

Type	What it is a standard for	Treatment in October 2026
1.06 million yen wall	Enrollment in social insurance for short-time workers (wage requirement)	Abolished
1.3 million yen wall	Whether a spouse is a dependent (Category III insured person under National Pension, or a dependent under health insurance)	Remains (a separate system)
Tax walls (1.03 million yen, 1.5 million yen, etc.)	The spousal deduction, special spousal deduction and other tax standards	Separate from social insurance (remains)

"Abolishing the 1.06 million yen wall" does not mean "abolishing the 1.3 million yen wall." The 1.3 million yen wall (the annual-income standard for being a dependent) does not disappear as of October 2026. Dependent status and social-insurance enrollment are separate systems and must be considered separately. Note that the operation of the Category III insured person determination was revised in April 2026, and further government consideration is expected. The tax matters (such as the spousal deduction) are a separate system from social insurance and are the domain of a tax accountant.

What happens to the company-size requirement going forward?

Although "51 or more employees" is the target as of October 2026, the law provides that this company-size requirement will be reduced and abolished in stages from October 2027 to October 2035. First, in October 2027, the target expands to companies with 36 or more employees, and after further stages, ultimately all companies, regardless of size, will be covered.

In other words, even a company that is "not covered because it has 50 or fewer employees" today could become covered within a few years. Business owners are expected not just to judge whether they are covered now, but to look ahead to when they may become covered.

Are our part-timers eligible for enrollment?

Here is the flow an owner actually follows, using general concrete examples.

1. A part-timer working around 20 hours a week: if the prescribed working time is 20 hours or more per week, they may become eligible regardless of pay. Conversely, if they work less than 20 hours a week, this wage-requirement abolition has no effect.
2. A person whose pay changed due to a minimum-wage increase: a person previously outside the scope because "their pay was under 88,000 yen a month" becomes eligible if they work 20 or more hours a week once their pay rises with the minimum wage. From October 2026 the amount of pay itself is no longer used in the decision.
3. A person whose working hours fluctuate with shifts: whether the prescribed working time exceeds 20 hours a week is judged on the basis of the prescribed standard (in the contract or work rules), not actual hours. Where prescribed hours fluctuate under a variable working-hours system or the like, they are judged by means such as the average prescribed hours, so it is necessary to check not only attendance but also the contract and the work rules.
4. A person who wants to work within the dependent limit: while the meaning of "staying under 1.06 million yen" changes in October 2026, the 1.3 million yen wall (dependent status) remains, so a person who wants to be a dependent still needs to keep the 1.3 million yen annual-income standard in mind. 1.06 million yen and 1.3 million yen are different things.
5. A person working at a small company: if the company has 50 or fewer employees, it is not directly affected by this change as of October 2026. However, note that it may become covered later as the company-size requirement is phased out.

This is a general summary. Whether an individual employee is eligible is judged comprehensively, taking into account the size of the workplace, prescribed working time, employment period, student status and so on. If in doubt, it is safer to confirm with a specialist early.

In the end, what should a company do?

It is easier to keep reform responses in order by following this flow:

Follow the news → confirm with primary sources (Ministry of Health, Labour and Welfare, Japan Pension Service, etc.) → apply to your own employees → reflect in payroll, attendance and social-insurance procedures

Specifically, start with the following three points.

1. Identify your company size and the affected workers: check whether you have 51 or more employees and which short-time workers work 20 or more hours a week.
2. Check the working conditions of the affected workers: cross-check prescribed working time, employment period and student status against the contract and work rules. For putting work rules in order, see from how many employees are work rules mandatory.
3. Reflect in payroll, attendance and social insurance: once enrollment is decided, you need to calculate premiums and deduct them from pay, keep attendance records, and complete the acquisition procedures. For payroll overall, see how much does it cost to entrust payroll to a Shakai Hoken Roumushi; if you are considering handling payroll in-house, see what to ask a Shakai Hoken Roumushi when you want to handle payroll in-house with freee.

For the basics of social-insurance enrollment decisions, see what happens to social insurance when you hire someone for short hours.

Why is this a topic you may want to consult a Shakai Hoken Roumushi about?

The rules around social insurance keep changing, with government policy, statutory amendments, effective dates and transitional measures arriving one after another. For an owner, following the news, reading the law, deciding on enrollment for every employee, and then reflecting this in payroll, attendance and social-insurance procedures while running the business is a considerable burden.

Moreover, this reform is not the end of the story. The company-size requirement will continue to be reduced in stages, and the treatment of dependents (Category III insured persons) remains under discussion. It is necessary to keep sorting out the impact on your own company while distinguishing "laws that have been enacted," "matters to be implemented," and "matters the government is still considering."

四葉社会保険労務士事務所 is not merely an office that handles procedures on your behalf; it places value on continuously following regulatory changes and, for each company, sorting out "what should we actually do?" Business owners can concentrate on their main work, and — where necessary — leave the follow-up of regulatory changes and the sorting out of the impact on the company to a Shakai Hoken Roumushi. Consultation is free. For fees, see the fee schedule.

When responding to regulatory changes, if employee information, working hours, payroll and social-insurance data are scattered, decisions and procedures take more effort. Keeping HR and labour data organized in one place lightens the burden of responding to reforms like this one. Using tools such as freee HR and Labour can be considered in that context.

Frequently asked questions

Q. From October 2026, do all our part-timers join social insurance?
A. No. Those who become eligible are, in principle, people at a company with 51 or more employees who work 20 or more prescribed hours a week, with an expected employment period of more than two months, and who are not students. Only the wage condition disappears; the other conditions remain. A company with 50 or fewer employees is not directly affected as of October 2026.

Q. We have 50 or fewer employees. Do we need to do anything?
A. As of October 2026, you are not directly affected by this wage-requirement abolition. However, the company-size requirement will be reduced in stages from October 2027 and, ultimately, all companies will be covered by October 2035. Rather than thinking "we are not covered, so it doesn't matter," we recommend preparing while looking ahead to when you may become covered.

Q. If the 1.06 million yen wall disappears, does the 1.3 million yen wall disappear too?
A. No. The 1.06 million yen wall concerns social-insurance enrollment (the wage requirement), while the 1.3 million yen wall concerns whether a spouse is a dependent (Category III insured person under National Pension, or a dependent under health insurance); they are separate systems. The 1.3 million yen wall remains as of October 2026.

Q. If someone becomes eligible, what should the company do?
A. Identify the affected employees, check their prescribed working time, employment period and student status, and then calculate premiums and deduct them from pay, keep attendance records, and complete the acquisition procedures. For individual decisions and procedures, you can consult a Shakai Hoken Roumushi.

Sources

• Act Partially Amending the National Pension Act, etc., to Strengthen the Functions of the Pension System in Response to Changes in the Socio-Economic Environment (Act No. 74 of 2025, passed on 13 June 2025 and promulgated on 20 June 2025). It abolishes the wage requirement (88,000 yen or more per month) among the enrollment requirements for short-time workers under employees' insurance (employees' pension and health insurance), and provides that the company-size requirement will be abolished in stages between October 2027 and October 2035.
• The enrollment requirements for short-time workers (20 or more prescribed hours a week / 88,000 yen or more per month / more than two months expected / not a student) are based on materials published by the Ministry of Health, Labour and Welfare on the expansion of social-insurance coverage and on the content of the pension system reform law. With the abolition of the wage requirement in October 2026, the working-time requirement of 20 or more hours a week becomes the practical dividing line.
• The staged reduction of the company-size requirement is scheduled to expand in October 2027 to companies with 36 or more employees and, ultimately, to cover all companies regardless of size by October 2035 (please check the effective dates in announcements by the Ministry of Health, Labour and Welfare and the Japan Pension Service each time).
• The 1.3 million yen wall (dependent determination for Category III insured persons under National Pension and dependents under health insurance) is a separate system from the 1.06 million yen wall. As of October 2026 the dependent standard remains. The revision of the operation of the Category III insured person determination (April 2026) and future institutional consideration are based on information published by the Ministry of Health, Labour and Welfare and the Japan Pension Service.
• The tax walls (the 1.03 million yen spousal deduction, the 1.5 million yen special spousal deduction, etc.) are income-tax and local-tax systems, separate from social insurance. Tax matters are the domain of a tax accountant.

This article does not decide whom to consult. Social-insurance enrollment decisions, payroll, attendance management and the preparation of work rules are the work of a Shakai Hoken Roumushi. Tax matters (such as the spousal deduction) are the domain of a tax accountant. For fees when consulting 四葉社会保険労務士事務所, see the fee schedule; for frequently asked questions, see the FAQ.

This article is general information. Whether the system applies and individual enrollment decisions are made by a qualified professional after a consultation, in light of the latest primary sources (the Ministry of Health, Labour and Welfare, the Japan Pension Service, etc.) and individual circumstances. Written by Joji Uramatsu (Shakai Hoken Roumushi, Gyoseishoshi, Registered Real Estate Transaction Specialist).