Japan Human Resource Management
Principles of wage payment
Employers must pay wages in legal tender, directly to the employee, not less than once per month, and on a specified date. However, employers are allowed to remit wages into a bank account specified by the employee where the employee agrees to that method of payment, and may also deduct social insurance premiums, taxes and similar expenses from wages.Guarantee of minimum wage
The minimum wage is determined according to region and industry. Where an employee is subject to two different minimums, the employee is entitled to the higher of the two minimum wages. To give an example, following the latest revision in October 2007, the current minimum wage for Tokyo is 739 yen per hour.
It is typical for Japanese companies to pay wages on a monthly basis, and to pay employees summer and winter bonuses. One characteristic of Japanese wages is the make-up: monthly wages usually include a basic wage and a range of allowances, which may include accommodation, family and transportation allowances. Another characteristic is that the amount paid in bonuses makes up a relatively high proportion of total wages paid to employees. An effect of the high proportion of wages made up of various allowances and bonuses consequently is to lower the rate of overtime pay paid for work outside normal working hours. The typical wage system in Japan has traditionally been based on seniority, whereby employees' wages increase in accordance with the number of years of service at a company. However, recently, an increasing number of businesses are introducing ability-based and duty-based pay systems, and some are even implementing performance-based pay systems where wages are determined according to each employee's rate of achievement of set targets. As a result, more and more businesses are adopting a yearly wage system. Further information is available through the Basic Survey on Wage Structure statistics collated annually and provided by the Ministry of Health, Labor & Welfare in both Japanese and English.