In Japan, salaries are generally paid once a month on a predetermined date. The 25th of the month is a relatively common pay date, although many companies also use the 20th, the last day of the month, or other dates. There is no legally prescribed date on which salaries must be paid. Each company establishes its payroll cut-off date and pay date in its work rules, employment contracts, or other relevant documents and pays salaries according to those rules.
Salaries Must Be Paid on a Fixed Date Each Month
Under Japan’s Labor Standards Act, wages must, in principle, be paid at least once a month on a fixed date.
Companies therefore establish payroll schedules such as:
Month-end cut-off / paid on the 25th of the same month
20th cut-off / paid on the 25th of the same month
Month-end cut-off / paid on the 15th of the following month
The 25th is a relatively common pay date in Japan, but there is no legal requirement to pay salaries on that particular date.
The law also requires the pay date to be fixed. Therefore, a rule such as “the last day of each month” is acceptable even though the actual calendar date varies by month. However, a rule such as “the third Friday of each month,” where the pay date itself varies from month to month, is not permitted.
The Payroll Cut-off Date and Pay Date Are Different
When explaining a Japanese payroll schedule to an overseas HR or Payroll team, it is important to distinguish between the Payroll Cut-off Date and the Pay Date.
For example, at a company with a month-end cut-off and a pay date of the 25th of the same month, fixed salary items such as base salary may be paid on September 25. However, variable items such as overtime may have an earlier cut-off date and be adjusted in the following month’s payroll.
By contrast, if a company uses a month-end cut-off and pays on the 15th of the following month, salary for the period from September 1 through September 30 will be paid on October 15. In this case, the payroll period and the actual payment month are different.
Some companies therefore use different cut-off periods for fixed salary items and variable items such as overtime.
When setting up payroll in Japan, it is important to confirm not only when the salary will be paid, but also which working period is being paid in each payroll cycle.
What Happens If the Pay Date Falls on a Weekend or Public Holiday?
If the scheduled pay date falls on a Saturday, Sunday, or public holiday, many companies pay salaries on the preceding bank business day.
Postponing the pay date to the next business day is not prohibited in all circumstances. However, particularly where the regular pay date is the last day of the month, postponing payment into the following month may conflict with the requirement to pay wages at least once each month.
The timing of salary payments may also affect employees’ rent, loan payments, and other financial obligations. For this reason, from a practical perspective, it is generally advisable to establish a rule under which salary is paid earlier when the regular pay date falls on a non-business day.
As most companies now pay salaries by bank transfer, bank business days also need to be taken into account when setting the payroll processing and bank file submission schedule.
When Does a New Employee Receive Their First Salary?
Depending on the company’s payroll cut-off date and pay date, the period between an employee’s joining date and their first salary payment can vary considerably.
For example, if an employee joins a company on April 1 and the company uses a month-end cut-off with payment on the 25th of the same month, the employee will normally receive their first salary on April 25.
By contrast, if the company uses a month-end cut-off and pays on the 15th of the following month, the employee’s April salary will be paid on May 15.
Therefore, depending on the company’s payroll schedule, an employee may not receive their first salary until the month following their joining date.
For new employees, particularly foreign employees who may not be familiar with Japanese payroll practices, it is also important to clearly explain when they will receive their first salary when they join the company.
What Should Be Confirmed When Setting Up a Payroll Schedule in Japan?
When a foreign company starts payroll operations in Japan, it is important to determine more than just the salary payment date.
The company should confirm:
- Payroll cut-off date
- Salary payment date
- Cut-off date for variable items such as overtime
- Treatment when the regular pay date falls on a non-business day
- Payroll treatment for new hires and departing employees
These rules should also be consistent with the company’s employment contracts, work rules, payroll regulations, and other relevant documents.
The Pay Date Affects the Entire Payroll Schedule
Japanese payroll requires consideration not only of the salary payment date itself, but also of the entire payroll process: when payroll data must be finalized, when calculations are performed, when payroll results are approved, and when payment data must be submitted to the bank.
This is particularly important when an overseas HR, Finance, or Payroll team exchanges payroll information with a team or payroll provider in Japan. Time differences and the time required for internal approvals should also be taken into account when establishing a Payroll Calendar with sufficient time for each step.
We have supported foreign companies with payroll operations in Japan for more than 15 years. Based on this experience, we focus not only on calculating payroll accurately, but also on working closely with overseas HR, Finance, and Payroll teams to establish payroll schedules that can be operated effectively in Japan.
