My “2005 Christmas article” briefed about the difference in payroll cycles between US and Japan. Employees in US are paid biweekly while employees in Japan are only paid once a month. This forces spendthrift expatriates (basically Americans) to budget their spending, something many aren’t good at. Quite a few times I’ve encountered in my practice where an expatriate employee would, like an allergic reaction, reject the notion of being paid on a monthly basis and insist he (and he mostly) be paid biweekly. (For my Japanese readers not accustomed to the practice of being paid on a biweekly basis, a year is divided into 52 weeks and employees are paid 26 times a year, usually on every other Thursday or Friday.)
As mentioned earlier in “is your employer behaving at least to the law’s minimum expectations?”, Labor Standard Law sets employment standards employers are required to maintain at the minimum. Therefore, even though Labor Standards Law Article 24 states that wages be paid at least once a month on a definite date of the month, employers are free to pay employees more than once a month. A biweekly payroll cycle is possible in Japan too. It’s just that the concept is still foreign to the Japanese. And in addition, payroll calculation gets a little complicated which is probably the bigger reason why Japanese will come up with just about any excuse to avoid such practice. How complicated?
Basically, the withholding tax table widely for payroll calculation is based on a monthly payroll cycle. Therefore, to implement a biweekly payroll cycle, a few extra steps need to be taken to adjust the monthly amounts on the table to the appropriate biweekly amounts. First, your biweekly payroll amount must be determined. This can be done by dividing your annual gross pay by 26 (or divide by 52 and multiply that by 2). Then, multiply this amount by two to derive the monthly amount. Look for this monthly amount on the withholding tax table and search for the withholding tax amount that corresponds with the appropriate number of dependents you claimed. Finally, divide this amount by two and withhold that amount from your biweekly paycheck.
That wasn’t too bad huh? That’s because we’ve only looked at the withholding tax portion of the calculation. Don’t forget that there are other deductions such as health insurance premiums, pension contributions, and employment insurance premiums that need to be adjusted to a biweekly basis. Complications arise because there are no set rules as to how to compute these other deductions. Employers are on their own to figure it out, and that’s just why they want to avoid biweekly payroll cycles.
Thinking about working in Japan? Preparing to move overseas almost becomes a full-time job in the final weeks of your departure. Many people quit their jobs weeks before so they can devote their time to preparation. But what about your health insurance? Short-term health insurance plans are a great solution. ↓
Below are links to Certified Social Insurance and Labor Consultants providing services in English. Also below are useful links related to working in Japan and links to women balancing career and personal happiness. WJA realizes and promotes women's increasing value in the labor market.