Reader R.S. writes: “I have a question about paid leave. I resigned from work a few days ago and I have 19 days of unused paid leave. When I consulted HR, they said I could use them if my manager agreed.
“However, when I asked HR if paid leave could be converted to cash, the answer was no. Is HR correct?”
All regular employees have the right to paid leave. Any worker who has been employed continuously for six months from the day they were hired and has worked at least 80 percent of their assigned workdays must be granted annual paid leave. This is stipulated in Article 39 of the Labor Standards Act, meaning that even if annual paid leave is not guaranteed in your employment contract, you have the right to take it as long as you fulfill the conditions above.
The number of days of paid leave depends on how long an employee has continuously worked for a company. According to Article 39, a worker is entitled to take 10 days of paid leave for their first year of service — a right that kicks in after six months of continuous employment. Similarly, they are entitled to take an additional 11 days after working one year, 12 days after two years, 14 days after three years, 16 days after four years, 18 days after five years and 20 days — where it tops out — after six years.
For example, if an employee has worked continuously for 1½ years, they are entitled to take 11 days of paid leave for their second year of service in addition to any remaining days left over from the 10 days they are entitled to from their first year.
Workers need to be careful about the cut-off date for using paid leave, which is two years. Taking the example of an employee who has worked more than two years and has only used up six of the 10 days of leave owed from their first year of employment, that worker has lost the right to use the remaining four days owed.
The point of paid leave is to enable an employee to recover physically from day-to-day work and refresh themselves. Therefore, for that worker to forgo that leave and be paid the amount equivalent to the value of the period in cash is, in principle, not permitted.
However, occasionally companies do pay out for the period of paid leave remaining at the time of an employee’s resignation. In such cases, it is considered that because a departing employee has been unable to exercise his or her right to paid leave, paying them for the unused period does not contradict the intent of Article 39. But an employee does not have the legal right to demand payment for these days upon resigning. Whether the period of paid leave is converted to cash is at the discretion of the company.
So, in R.S.’s case, I’m afraid that the company is well within its rights not to pay for the unused paid leave days.
Ryoko Minagawa is an attorney with the Foreigners and International Service Section at Tokyo Public Law Office, which handles a wide range of cases involving foreigners in the Tokyo area (www.t-pblo.jp/fiss; 03-6809-6200). FISS lawyers address readers’ queries once a month. Your questions and other comments: firstname.lastname@example.org