Salary structures in Japan

If you come to work in Japan for the first time you might not be familiar with salary structures here as they may be different from what you are used to in your home country.

There are different types of salaries in Japan, the most common are hourly, monthly and annual.

The hourly salary is mostly found in part-time work. You get paid for each hour your work. If you work overtime (more than 8 hours per day) you should get an increase of your hourly rate according to overtime regulations. Usually hourly rates are higher for jobs that you work during nighttime. In most jobs you only get paid for the days you actually work but some part time jobs offer paid holidays as well.

For full time jobs monthly or annual salaries are common. When you get a monthly salary you will get a fixed amount each month no matter how many work days the month actually has. According to your contract you will also have a certain number of paid holidays. If you take unpaid leave a corresponding amount will be subtracted from you salary. If you work overtime you will get paid according to the overtime regulations of your company. Some companies pay you for each hour, others already include a certain amount of overtime in your base salary and only pay for each additional hour.

A lot of companies also offer bonus payments. These can be paid several times per year, usually it is twice -- in summer and winter. The bonus amount can differ from less than your monthly salary to several times your monthly salary. How it is determined is different from company to company. Some base it on the company results for the past half-year, others on your personal results and others on a mix of both. Also, the bigger the company is, the larger the bonuses tend to get.

The big issue with bonuses is that the company has no obligation to pay them and you have no right to receive them. So if the company is in not performing well, management can decide that no bonuses will be paid and there is nothing you can do except, perhaps, start looking for a new job.  The problem with that is that when you join a company in Japan you will usually be presented with a salary offer that includes these bonus payments and most employees plan their spending with these bonuses in mind. If at one point your company stops doing well, your annual income might drop quite a bit and you will have to make do with less money. This can be especially problematic for people with loans as in a lot of loans it is possible to include a bonus payment, where you repay a certain amount out of your bonus and thereby reduce your monthly rate or shorten the loan term.

On the other hand if your company is performing really well, you might also get more than expected, however this is less often the case I believe.

An annual salary gets rid of all these bonus issues. You will have a fixed annual salary that is simply divided by 12 and paid to you every month. With such a salary structure there are no bonus payments and in a lot of cases no overtime payment as well but you can be 100% sure about the amount of money you will make in a given year.

Have you worked in Japan already and how were you paid? Were you satisfied with the payment structure?