Salary System in Japanese Companies

These days in Japan, due to the influence of globalization, the salary system of many companies is changing significantly, although the situation of course depends on the company. Speaking of employees, until the mid 1990s, the majority of most companies employed regular staff, but now the numbers of contract employees, temporary employment agency staff and part-time workers in companies are growing. The salaries of these staff members are calculated either monthly or on a daily basis. However, except for part-time workers Japanese companies do not have a practice of making weekly payments like many companies in western countries do.

Salaries are commonly paid monthly on a fixed day. Most companies pay salaries on the 25th or at the end of each month. Under the lifetime employment system, it used to be a Japanese custom for regular employees to receive a raise in their salaries every April, and a bonus in summer and winter. However, recently, the company gap has been widening resulting in this raise/bonus payment system collapsing, and there has been an increase in the number of companies that do not raise salaries or pay bonuses.

Salaries for regular staff are generally comprised of basic salary and benefits. The basic salary is calculated based on the employee’s age and abilities, and benefits are paid to make up the remainder of the salary. These benefits may include a managerial position allowance, a housing allowance, and others. A commuting allowance is also one of them. Since the basic salary forms a basis for calculating the retirement allowance, companies tend to set it up as low as possible and make up the difference with allowances.

Take for an example, a salary of 250,000 yen: this might consist of a basic salary of 150,000 yen, a managerial position allowance of 50,000 yen, a housing allowance of 30,000 yen and a commuting allowance of 20,000 yen. As income tax, a social insurance premium, etc, would be deducted from this salary, about 220,000 yen would remain. This amount is called "tedori" ('take-home pay). You should be aware of the amount of take-home pay before you join a company. Most companies pay the salary into employees’ bank accounts.

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