Japanese employees have historically taken only part of their leave, so many arrive at resignation with a large balance. The statutory entitlement reaches 20 days a year after six and a half years' service, and unused days carry over for one year, which means a long-serving employee can have up to 40 days, about two months of working days. The usual pattern is to work through the handover and then take the remaining leave in one block, so that the official leaving date falls weeks after the last day in the office.
The employer has very little room to say no. Its only tool against a leave request is the right to change its timing where the requested dates would seriously disrupt the business, and that right only works if there is another date to move the leave to. The Ministry of Health, Labour and Welfare's long-standing position is that leave cannot be moved beyond the employee's leaving date, so at the end of employment the right effectively disappears. Refusing the leave, or refusing to accept a resignation date that includes it, is unlawful.
Buying out unused leave is generally prohibited while employment continues, because it would defeat the purpose of rest. At the point of leaving, the employer may agree to pay for days the employee could not use, but has no duty to. Some employees prefer that, especially if they want to start the new job sooner.
What it means for a foreign employer
- Add it to the start-date plan. A candidate giving one month's notice may have four to six weeks of leave on top. Ask early how much they hold and how they intend to use it.
- Offer to bridge it. Where you need someone sooner, a sign-on payment to cover leave they agree to forgo, or a negotiated buy-out by the current employer, can shorten the gap.
- Do not ask them to skip the handover. The handover comes first, the leave after. Pressing a candidate to cut either harms the move.
- Expect it when your own people leave. Plan cover for the leave period, and decide your policy on buying out unused days before the first resignation lands.
Sources
- Labour Standards Act, Article 39 (annual paid leave and the employer's right to change timing) and Article 115.
- Ministry of Health, Labour and Welfare, administrative interpretations on annual paid leave at the end of employment and on buying out leave.