Many Japanese companies set two ages for their managers. One is the mandatory retirement age, usually 60 or 65, when employment ends or switches to re-employment. The other, earlier, is the age at which a manager must give up a line position such as department head or section chief. After this "post-off", the employee stays with the company, often as a specialist, adviser or individual contributor, frequently on lower pay.
It is not required by law. Companies introduced it mainly when the retirement age rose from 55 to 60, to keep management posts open for younger staff and to control the cost of seniority pay. In the National Personnel Authority's 2023 survey of private employers, about 17% had a managerial retirement age rule. Among companies with such a rule, 55 is the most common age. It is more common at larger employers. In one widely reported survey of affected employees, just over half said their annual pay fell by 10% to 30%. Some large employers have abolished it as they extend retirement ages and move to job-based pay.
What it means for a foreign employer
- It creates a pool of experienced senior candidates. Managers in their mid-50s who have just lost their post, or are about to, are often open to a role where they can keep leading. Many have strong networks and decades of industry experience.
- Check the timing. Ask candidates in their 50s about their company's post-off age. It explains why they are moving now, and sometimes why their current pay has dropped.
- Plan the role's horizon. A candidate hired at 55 will usually expect to work into their mid-60s, so be clear about your own retirement and re-employment terms.
- Do not copy it carelessly. Introducing a post-off rule with a pay cut for existing staff is a disadvantageous change to working conditions and needs a strong justification.
Sources
- National Personnel Authority, Survey of Working Conditions in Private Companies, 2023.
- Diamond Online, survey of employees affected by managerial retirement age.
- Act on Stabilisation of Employment of Elderly Persons.
- Labour Contract Act, Articles 9 and 10.