Read your offer in three tracks

Two offers, both saying 8 million yen a year. One is base pay 6 million plus bonus 2 million. The other is base 4.5 million, role allowance 1.5 million, bonus 2 million. Most people look at the total and call them equal. I look at the structure and see two offers whose risk differs by a factor of two.

Three tracks: three kinds of money, each tied to something different

When I design pay for a company, I use three tracks. Base pay is tied to grade: it pays for your position in the organization, stable, unmoved by short-term results. Responsibility pay is tied to the role: it pays for the block of responsibility you carry, and changes when the role does. Bonus is tied to results: it pays for what you produced, and resets every year. The three are kept apart because they correspond to three different relationships, as Four kinds of relationships explains.

Turned around for a job seeker, it becomes one question: of these 8 million, how much is track one, how much track two, how much track three?

Track one: is anything mixed into base pay?

The most common contamination in Japanese offers is fixed overtime pay (minashi zangyō). "Base 4.5 million" is sometimes actually "base 3.8 million plus 0.7 million for 30 hours of fixed overtime a month." The labor ministry requires job postings to state the amount, the hours it covers, and that excess hours are paid separately, but offer letters that leave it vague are still common.

Why it matters: bonus, retirement allowance and overtime are usually calculated on base pay, not base plus fixed overtime. Two companies both writing base 4.5 million, one including 30 hours of overtime and one not, will diverge by millions of yen in bonus and retirement pay over five years. The first thing to ask when an offer arrives: does base pay include fixed overtime, and for how many hours?

Track two: role money disappears with the role

Position allowances, duty allowances, overseas allowances are tied to the role. The upside is that they reflect real responsibility; the downside is that they vanish when the role changes, and in Japan, reassignment is the company's right, written into nearly every rulebook. Since April 2024, employment contracts must state the "scope of change" for work location and duties, and that clause is what tells you how stable track two is.

Ask two things: is this allowance attached to me or to this role, and does the company have the right to move me into a role without it. An offer heavy in track two looks good on paper, but what you actually hold is money that lasts "as long as you're in this seat."

Track three: is the bonus a custom or really performance-linked?

Japanese bonuses come in two kinds that look identical and differ completely. One is "base pay times four months," paid summer and winter by custom, in full whenever the company isn't in trouble; in substance it is deferred base pay, track one. The other is tied to individual or company performance, and can be zero or double; that is track three.

Find out which kind the "bonus 2 million" in the offer is. The first kind is probably still 2 million in a bad year (a Japanese company cutting it has to hold an all-hands to explain). The second kind might be 500,000. In the opening example, if the first offer's 2 million is "four months of base" and the second's is performance-linked, the first has a floor of 8 million and the second a floor of 6 million.

How to compare after splitting

Break each offer into three lines: track one (with fixed overtime separated out), track two, track three, and next to each write a bad-year figure. A bad year is: no overtime, a transfer, poor company results. The three bad-year figures summed are the offer's floor. Compare floors, not headline totals.

If the floors match, compare the share of track one. An offer heavy in track one can't be moved by a transfer, a new boss or a bad quarter, and it is the base for your "current pay" at your next job change. When a recruiter asks what you earn now, you say the total, but the hiring company calculates on base.

Why companies design it this way

Not to cheat you. The employer is calculating how many times salary a hire really costs in Japan, and every yen of fixed cost adds pressure in a bad year, so it wants to shift money toward tracks two and three. That's rational. Your job is only to know how much was shifted, then decide whether you'll carry that risk, and for how much.

One rule of thumb: an offer low in track one and high in track three suits you when you're confident about the company's results and can influence them. Joining a company you don't yet know, the higher the share of track one, the safer.

The offer in your hand, split into three tracks: what's the floor in a bad year?