Consulting on Compensation Design
Determining how much to pay each employee is a critical component of business management. However, many business owners may find it difficult to seek advice and end up making decisions on their own. Our office actively provides consulting services related to compensation design. In addition to advising on market standards for total compensation, we also assist in designing salary tables for base pay ranges, allowances related to roles and responsibilities, benefits based on personal circumstances such as commuting or housing, implementation of incentives and commissions, bonuses, salary increase frequency and timing, and compliance with equal pay for equal work. Compensation design is a part of the employment contract between the employer and the employee, and once set, it generally cannot be reduced without the employee’s consent. It is essential to design compensation carefully, taking into account legal knowledge and current hiring market conditions, to avoid unexpected pitfalls.
Wage Structure Design to Manage Overtime Pay
Among the many inquiries we receive related to wages, issues surrounding overtime pay are particularly common. Overtime (i.e., extra working hours compensation) must be paid in accordance with labor laws. However, if employers fail to manage overtime properly and allow employees to work excessively without oversight, unexpected labor costs may increase significantly and place a heavy burden on management. One possible countermeasure is the adoption of a fixed overtime pay system. However, without proper design and implementation, such a system can be deemed illegal and invalid. If a fixed overtime arrangement is ruled invalid, the employer may be retroactively liable for unpaid overtime, potentially resulting in substantial financial claims. In addition to fixed overtime systems, there are various other compensation strategies to address overtime. At our firm, we provide tailored solutions based on each client’s actual situation and management policy.
Subsidy Applications and Wage Structure
Wage structure is also a critical factor in applying for government subsidies. In nearly all subsidy applications, submission of the payroll ledger is required. For the application to be approved, the wage amounts recorded in the payroll ledger, the attendance records (such as timecards and attendance sheets), and the wages stipulated in the employment contract and company regulations (such as the wage rules) must all be consistent. Our firm supports clients in receiving subsidies by helping them establish proper labor management systems that align with applicable laws and the actual conditions of their business.
Executive Compensation Planning Support
Our firm frequently receives consultations regarding executive compensation. Since executive pay is often significantly higher than that of regular employees, poor planning can place a financial burden on the business. We assist clients by advising on appropriate compensation levels based on revenue and profit, suitable payment methods, whether to pay executive bonuses and the optimal timing of such payments, ensuring that executive compensation is set at the best possible balance for the business.