Nenko joretsu 年功序列

Seniority-based pay and promotion. Also written nenkō joretsu, seniority wages.

Under nenko joretsu, pay rises every year you stay, and promotion to section manager or department manager comes at a broadly predictable age. The system pairs with lifetime employment: the company pays you less than you are worth when you are young and more than you are worth later, and the deal only works if you stay.

No law requires it, and many large companies have spent the last decade moving towards job-based or role-based grades. But in a great many Japanese companies, age still predicts salary better than job title does.

What it means for a foreign employer

Sources

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General information for employers, not legal advice. Thresholds and dates are checked against the sources listed and dated above; confirm anything you act on with a Japanese employment lawyer or a licensed labour and social security attorney.