Understanding Salary and Bonus Rules

The delivered rules for determining salary and bonus satisfy Japanese statutory and business requirements. This section reviews some of the requirements and discusses in general terms how the rules satisfy them. Separate topics discuss additional earnings and deductions that affect employee take-home pay.

This section provides an overview of:

  • Base pay setup.

  • Overtime pay.

  • Pay cut due to absence.

  • Bonus.

  • Earning accumulators.

In calculating base pay, Global Payroll for Japan uses the employee's compensation package that you define by using compensation rate codes in PeopleSoft HR. The base pay rate formula (ER FM BASE RATE) gathers the employee's base pay rate codes, converts them to the frequency of the employee's pay type, and sums them to determine the value of the base pay rate variable (ER VR BASE RATE).

Base pay is calculated differently depending on the employee's pay type. If the employee's pay type is daily or hourly, the system also uses time data when calculating base pay. Enter time data each month on Global Payroll Positive Input pages.

You define the value of the variables for overtime premium amounts and overtime premium ratios. The system calculates the employee's overtime base unit, and then calculates overtime pay according to the amount of overtime that you enter for the employee.

The system provides variables for the following overtime premium ratios:

  • Regular.

  • Holiday.

  • Late night.

  • Holiday late night.

Note: Japanese labor law specifies that the number of work hours per day be equal to or less than eight. Employees who work more than eight hours on any day are paid overtime. The premium for overtime must be at least 25%. In cases where employees work more than the scheduled number of hours, but less than the legal hours, the company may decide whether to pay overtime with a premium or not. Overtime pay without a premium is not supported by the PeopleSoft application.

You define the value of the variables for reduction base amounts and reduction ratios. The system calculates the employee's reduction base unit, and then calculates the pay cut based on the amount of absence time that you enter for the employee.

The system provides variables for the following reduction ratios:

  • Tardy arrival and early departure.

  • Special leave.

  • Absence.

  • Sick leave.

The system delivers the bonus earning element (ER BONUS). Use positive input to enter each employee's bonus amount into this element.

For purposes of taxation and insurance premiums, accumulators track the following amounts of each employee's salary and bonus:

  • Taxable.

  • Nontaxable.

  • Cash.

  • Non-cash.

  • Remuneration subject to social insurance premium.

  • Wages subject to labor insurance premium.

Additional accumulators track other details and totals of pay.