Two different salary systems in Japan

| Posted Nov. 11, 2020 | Salary and Benefit

One of the most important things to consider when changing a job in Japan is the salary amount, and most companies usually offer either annual salary (nemposei, 年俸制), or monthly salary (gekkyusei, 月給制).


Nemposei, is a lump-sum salary which is renegotiated annually, and the amount varies depending on your experience and performance. To calculate your gross monthly salary, you can just simply divide your annual salary by twelve, but sometimes depending on the company’s rules, you might need to divide your annual salary by thirteen, or fourteen.


Gekkyusei, is a fixed salary that is paid by the employer every month, and the amount transferred to your account is the after-tax income, which is usually around 75% to 85% of the gross monthly salary. Additional bonuses are provided once to twice a year, and the amount of the bonuses varies depending on the profit obtained by the company.


Important things to consider when changing your job


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In general, you won’t be dealing with terms like nemposei or gekkyusei unless you’re changing your job. You will see those terms in job listings or job sites in Japan, and before you talk to the recruiters or headhunters, you need to decide the amount of net income you expect from the company. If you don’t get it right, your income maybe lower than your previous job.


For most of the time, nemposei includes your annual bonuses, unless the job offer mentions that separated bonuses will be provided. Instead of dividing your income by twelve, divide it by thirteen, or fourteen, to get the amount of your gross salary. For example, if the amount of the annual income is 4.2 million yen per year, your gross monthly income will be 300,000 yen per month.


Gekkyusei on the other hand is a fixed salary that is paid every month by the employer, so additional bonuses are provided once to twice a year, and sometimes you can’t get the bonuses if the company is not performing well. To know your annual income, you can just simply multiply the amount of monthly salary listed in the job offer by twelve.


So, why sometimes nemposei can be lower than gekkyusei?


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As we have mentioned before, nemposei usually includes your annual bonuses, so your gross monthly salary is calculated by dividing your salary by thirteen or fourteen, so if you don’t do the calculation correctly, your income maybe lower than your previous job.


Assume that you worked for company A, which uses gekkyusei system, and the amount of your gross monthly salary was 280,000 yen per month. Your gross annual salary was basically 3.36 million yen, and if there were bonuses, it could go up to 3.92 million yen.


After working for company A for three years, you decided to change your job and ended up working for company B, which uses nemposei system. The annual income in the job offer was 3.5 million yen, including one time bonus. In this case, your gross monthly income will go lower than 280,000 yen, because you need to divide 3.5 million yen by thirteen instead of twelve, so the gross monthly salary you will get from company B is actually 269,000 yen a month.


What to tell your recruiters about your desired salary


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Your salary changes depending on your experience and ability, and most job offers mention “monthly / annual salary of over ____ yen” or  “monthly / annual salary of ____ yen to ___ yen”. Make sure to tell the gross amount of the salary when recruiters or headhunters asked you about your desired salary. If you mention the net income, they would think of it as the gross salary, so you will have a lower income than the one you wanted. Make sure to also mention the minimum gross monthly income you want, so you will still get your expected monthly income even though the company uses nemposei system.





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