Terrie's Job Tips -- Exchanging Holidays for Pay

For many people in the IT sector, life is a flurry of activity from morning to evening. There is an acknowledged shortage of IT engineers in Japan, and an even bigger shortage of bilingual ones. So it’s not that unusual for bilingual IT people in Japan to have to work long hours and get few holidays. Today’s reader letter is from just such an engineer.

My current employer is a large foreign IT services firm that is working on a major contract with a foreign bank in Tokyo. My company is flooded with work and we don’t really have sufficient staff to service the client. I have been pulling lots of overtime, and have now had enough and have decided to resign. I have around one month’s holiday allowance accumulated. Can I take this holiday prior to resigning, or is my employer allowed to buy up my holidays and have me work right up until the last day?

The law clearly says that employees have to be allowed to take holidays up to the mandated minimum every year. For many people in the first year this is 11 days, with an extra day for every year worked, until you hit 20 days. Recently, foreign firms and large Japanese ones are giving even more favorable leave conditions, starting the first year with as many as 14-15 days.

Holidays from one year can be carried over to the next year, but not to the third year. So, if you don’t take your leave from one particular year within 12 months of that year ending, it is most likely that you will lose that first year’s allowance. Also, the maximum number of days that can be carried over is 20 days. Check your company’s Work Rules (and your Employment Contract), because it could be that your company offers more favorable conditions – especially in the IT sector.

Our reader is presenting two questions here: 1) Can a company insist on an employee working through to the end of their employment term instead of using up accumulated holidays? 2) Can a company offer to buy out an employee’s holidays in order to have them work until their last day?

The simple answer to the first question is that if an employee is entitled to holidays, their request to take those holidays cannot be refused. Now, this doesn’t mean that the employee automatically gets to choose when to take the leave. Instead – especially if there is an overall company holiday such as a factory’s summer break – they are expected to negotiate with the company to pick an acceptable holiday period. However, in our reader’s case, since he has one month’s leave accumulated and is giving one month’s notice, then the company has no option but to accept his request and give him the final month to take his accumulated leave.

But for people whose presence at the company is vital for its continued operation, and where it will take the company a while to find and train a replacement, then so long as you both agree, the company can buy out your holiday leave (generally at the usual rate of pay) and you can work until the last day of employment. Since this is a side agreement between the parties, and is a departure from normal procedure, it is a good idea as an employee to make sure that you have something in writing agreeing to this arrangement before going ahead and working the extra days (although this is not required by law).

Note that this ability to buy up your holiday leave only applies to people leaving their employer. It is not legal for companies to buy up the holiday leave of those still working for the firm. Further, if you resign before your first six months of employment are up, then the above discussion probably doesn’t apply because unless your company has a more generous policy, leave can normally only be taken after the employee has worked the full six months. The good news is that at six months and one day, you can apply for your full year’s leave allowance regardless of whether you have been at the firm for that full year.