How to read your payslips if you work in Japan? - A complete guide
Overview of how your salary is calculated.
Overall, there are 3 main categories that everyone needs to know:
① Total payment（支給額 - shikyugaku）: This is the gross pay which includes your basic wage, overtime pay, allowances etc. before any deduction is taken out.
② Deduction （控除額 - kojogaku）: This is the amount of money deducted from your pay such as insurance, taxes and pension.
③ Net payment（差引支給額 - sashikihi shikyugaku）: This is the amount of money you can take home after all deductions have been taken out. In Japan, it also can be called “Tedori” （手取り）which literally can be translated to “take-home pay”.
So, let’s move on to each item of the 3 main categories.
* Note: Please note that the exact payslip varies from each company but main categories are basically the same, and we will explain items in a typical paycheck in Japan.
① Total payment.
Total payment includes: basic wage, allowances (such as housing, transportation), overtime wages and so on.
1. Base salary （基本給 - kihonkyu）: is the basic wage based on job title, years of employment, skills etc.,, (allowances excluded) and is set at either an hourly rate or as weekly, monthly or annual income. Base salaries are determined by each company’s own salary chart.
2. Fixed salary（固定給 - koteikyu）: is the wage that is paid for a fixed amount of working time and set either an hourly rate or as weekly, monthly or annual income. In general, overtime and commuting allowances are added to this.
3. Family allowance (家族手当 - kazoku-teate）: is an allowance that the company provides or the purpose of supporting the employees’ family in accordance with the employee's dependents. The amount of this item is also determined by the number of dependents.
4. Housing allowance （住宅手当 - jutaku-teate）: is a program which provides partial support to its employees for the cost of housing. For example, I get 30,000 yen of housing allowance if I live within a radius of 5km from my office. Meanwhile, many other companies do not have limitations of distance, thus all employees are equally eligible for housing allowance.
5. Commuting allowance （通勤手当 - tsukin-teate）: this amount of allowance differs from companies. It can cover the full or just a portion cost of your commute.
6. Position allowance （役付手当 - yakutsuki-teate）: is an additional wage for a managerial position or work equivalent to a managerial position.
7. Overtime allowance （残業手当 - zangyou-teate）: is the amount of overtime worked in excess of 8 hours a day or 40 hours a week. Under the Labour Standard Law, it is mandatory that employees are paid 25% of their basic wage, which is considered “regular overtime pay” （普通残業手当 - futsuzagyou-teate）. In addition, you are expected to get paid an additional 25% more for the work done between 10pm and 5am the following day which is known as “midnight shift overtime pay” （ 深夜残業手当 - futsuzagyou-teate）.
Deductions include social insurance, unemployment insurance and other insurance, as well as income tax, resident tax and other company-specific deductions.
1. Health insurance（健康保険 - kenko-hoken）: once you work as a full-time employee, you are required to pay monthly health insurance which can cover a majority part of your medical expenses (if there is). The premium usually bears 70% of the medical costs.
2. Welfare annuity insurance（厚生年金保険 - koseinenkin-hoken）or usually know as Pension （年金 - nenkin）： the amount of pension is calculated based on your salary. As a foreigner, you can request a pension return after you leave Japan permanently.
3. Employment insurance（雇用保険 - koyohoken）: this program provide unemployment benefits etc. if the worker become unemployed. The company and the employee are required to pay a certain percentage of the premiums.
4. Income tax（所得税 - shotokuzei）: is a tax levied on your annual personal income (instead of basic wage).
5. Resident tax （住民税 - juminzei）: is a tax paid by employees to the city, town, village or prefectural government where they registered a certificate of residence. While income tax is based on the employee's salary, resident tax is based on the employee's salary from January to December of the previous year.
③ Net pay
1. Net payment（差引支給額 - sashikihi shikyugaku）: total amount of money after all deductions.
2. Amount transferred（振込支給 - furikomi-shikyu）: the exact amount of money wired to your bank account.
I know that it is sometimes challenging to grasp the meaning and calculation of all items depicted in your paycheck, so I hope that this article could be helpful to you guys :) And make sure to ask your employers or HR staff if you have any concern regarding the salary.