Toyota is reportedly planning to revise how it compensates factory workers in order to reward performance and encourage young talent.

A Nikkei report said the plans would put less emphasis on seniority and would apply to about 40,000 Japanese employees aged 18 to 65, or about 60% of the company's 68,000 Japanese workers.

It said the company has unveiled proposals to its labour union and hoping to roll out the new system in 2016.

Among the proposals are a reshuffle of allowances for dependants to provide greater benefits to workers who are raising children. The report also said that employees would be evaluated twice a year on performance criteria with remuneration adjusted accordingly.