In Japan, additional benefits other than monthly income, which is generally an incentive, are called "bonus".（ぼーなす）In general, bonuses are a significant part of the compensation package for many employees. Known as "bonuses" or "winter/summer bonuses," they are typically paid twice a year, in June and December, respectively.
Japanese bonuses are not legally obligatory as guaranteed by the minimum wage. Most companies pay at employer`s discretion.
Here is definition of Ministry of Health, Labour and Welfare
This refers to payments that are made regularly or temporarily according to the worker's work performance, business conditions, etc., and the amount of which is not fixed in advance.
How company decide amount of "Bonus"?
The amount of the bonus depends on various factors, such as the company's performance, the employee's job performance, and their tenure at the company. The bonus is usually a percentage of the employee's base salary, with the percentage ranging from a few months' worth of salary to over a year's worth of salary in some cases.
How company decide so-called "bonus" depends on the size of your company.
For small and start-up companies, it is often up to management to decide. If the company makes a lot of profit, it will be paid a lot, and it seems that there are many levels of salary of about 1 to 2 months.
If you work for a start-up, you may get stock options and physical stocks instead of bonuses.
In the case of a large company, where there is in-house labor union, management and workers discuss every spring (around March) whether to give a bonus for several months of salary. So, for example, it is decided whether to pay 4 months' worth of monthly salary or 3 months' worth. The below is example of settlement of bonus.
Mitsubishi Electric responds to full lump sum payment 5.7 months a year, baseup 1000 yen
For large Japanese companies, it's usually between 3 and 6 months` worth range.
The amount of the bonus in Japan
What should not be misunderstood here is that not all are paid at the same level. This means the total amount of resources to be distributed to union members. In addition to this, individual performance evaluation is added, so it is not a calculation that you can simply get 4 months' worth of monthly income.
More importantly, in the case of large Japanese companies, it is usually paid twice a year. In most cases, you will be paid in June and December. The payment level decided by the labor union and management is often paid in two installments.
In other words, of course, bonuses will be paid after taxes and social insurance premiums have been deducted.
From the worker's point of view, Japanese people take it for granted that they can get bonuses. Many people take it for granted as part of their living expenses. Although the payment is not legally guaranteed, many Japanese recognize it as a long-standing practice. So if management sets the bonus payment to zero for some reason, there will be a big discord.
Also, in Japanese companies, trade unions often play a major role in bonus negotiations, so workers' bonuses are rarely reduced significantly. On the other hand, for managers, there are no restrictions, so if management becomes difficult, the bonus will be cut off immediately.
Other unique aspects
One unique aspect of bonuses in Japan is that they are often considered part of the employee's regular income, rather than a one-time payment. As a result, bonuses are factored into various financial calculations, such as loans and taxes. For example, if an employee is applying for a mortgage, their bonus income may be taken into account when determining their eligibility and the amount they can borrow.