Job in Japan 6 -Compensation
Hi there! I’m Aki, a Japanese former HR head from the global finance industry. Let’s talk money—how Japan pays, taxes, and perks you. Pay’s monthly, deductions are wild, and overtime’s a beast—here’s the scoop for foreigners as full-time permanent employees.
1. Typical Compensation Structure: Base Salary (Monthly vs. Annual) + Bonus
Japan sticks to monthly salaries—unlike the U.S.’s annual lump. If your offer letter lists ¥300K/month, multiply by 12 for ¥3.6M yearly. Compensation reviews typically run January to March, tied to performance evaluations, with merit increases (or rare cuts) hitting April’s pay. Cycles vary—please ask HR for your company’s cycle. Most firms offer off-cycle bumps for stellar work or demotions too.
Bonuses typically roll in twice yearly—summer (June/July) and winter (December)—usually 2-3 months’ pay. Bonus is not guaranteed unless your contract says so—company profits steer the ship. A great year might mean 3 months; a rough one, 1.5. Even a rough year, zero bonus is rare. Firms dig deep to keep morale up. Top performers at Japanese shops? It’s team over stars—no extra for shining. Foreign firms lean “pay-for-performance,” bumping standouts more.
Sales roles often get tweaks—low base, fat bonus cuts as incentives, or kickers for hot products, with pools split from back-office (HR, IT, Finance).
Foreign firms go wilder:
Company Options: Stock vesting over years.
Long-Term Incentives (LTIs): Cash or stock for 3-5 year goals
Make-Whole Payments: Cash to offset prior job bonus losses.
Sign-On Bonus: One-off to join.
Retention Bonus: One-off to stay.
Spot Bonus: For a clutch project.
After 12 years in the U.S., I saw the gap—a U.S. hire griped, “Where’s my performance bump?” at a Japanese firm, then jumped to a foreign one for options, LTIs, and a fat sign-on. Foreign setups dazzle—seniority-tied pay can frustrate expats craving merit bumps. But Japanese compensation’s built for the team, and it’s got upsides: stable—bonuses don’t vanish like U.S. wild cards; fair—everyone shares, no jealousy wars. It’s harmony—less pressure, more “we’re in this together.” In the U.S., I’ve heard folks fume over subjective evaluations—Google says psychological safety boosts performance. Your call!
2. How to Read a Pay slip
Pay slips are a puzzle—here’s the breakdown (kyuyo meisaisho in Japanese):
Basic Info: Name, Employee ID, department, payment date.
Attendance: Work days/hours, paid leave, basic overtime, holiday/weekend hours, late-night hours (10pm-5am). (OT calc’s complex—see below!)
Income: Base salary + benefits (commutation, housing, title, family, business trip, certification allowances—check HR) + overtime pay (late-night, holiday/weekend) + miscellaneous (one-off payments/adjustments). Bonuses get separate slips.
Deductions:
Employee Contributions: Health insurance, welfare pension, senior care, unemployment —employer chips in too, off-slip.
Income Tax: Scales with pay
Resident Tax: Last year’s income, deducted monthly if opted in—or pay solo.
Miscellaneous: iDeCo (retirement savings), group savings (if any).
Note: Workers’ comp is 100% employer-paid—no deduction.
Net Income: Gross minus deductions = bank deposit.
Year-end adjustments tweak for family changes or extras (e.g., earthquake insurance, housing loans). If you make over ¥20M income, you are not Year-end adjustment eligible, file a tax return. Post-adjustment, you get a Gensen Choshu-hyo—your annual pay statement. Save both pay slips and statements for loans, tax returns, or job switches. If you lost one, HR can reissue.
3. Overtime (OT) Calculations
Overtime’s a hot topic in Japan—labor authorities watch it closely for two reasons:
Japanese workers historically grind late—government pushes cuts for health and family time.
Some firms dodged proper OT pay—now tracking’s mandatory, records kept 3 years. Some firms still use excel sheet to track working hours. Yikes.
In the U.S., OT eligibility splits by exempt/non-exempt status under FLSA—non-exempt get 1.5x. All non-supervisors (Rules of employee doesn’t apply for Board members. So no OT payment to Board members.) get OT, but “supervisor” isn’t just a title. A famous McDonald’s case proved it—shop managers sued for unpaid OT, winning when labor courts ruled “supervisor” means real authority (near CEO-level influence, subordinates, high pay), not just a badge.
Here’s the OT breakdown:
Basic Overtime (Beyond 8/day or 40/week): 25% (1.25x)
Late-Night Overtime (10pm-5am): 50% (1.5x)
Holiday/Weekend Overtime: 35% (1.35x)
Excess Overtime (Over 60 hours/month*) 50% (1.5x)
*Rrates stack (e.g., late-night holiday = 60%, 1.6x).
This is so complicated to calculate. Some firms now push “fixed OT payment”—a flat sum covering up to, say, 45 hours basic OT rate amount is already included in total salary. Crazy, right ?
Wrap-Up
Pay’s steady, OT’s tricky—master this, and you’re golden!