Using Up Paid Leave Before Leaving a Job in Japan: Setting Your Last Working Day and Your Pay
Once you've decided to leave a job in Japan, you'll want to use as much of your remaining paid leave as you can. This article covers how to set your last working day and retirement date with leave in mind, what to watch for if a grant date falls before you go, whether your company can refuse, buying out unused leave, and how pay during paid leave is calculated.
The basic steps for using up paid leave
Paid leave can't be used after your retirement date, and whatever remains simply disappears. So when using it all before leaving, people usually treat the retirement date and the last working day as separate dates, and take paid leave from the day after the last working day through the retirement date.
- 1
Check your current balance
Look up your balance on your pay slip or in the attendance system, then calculate it yourself from your hire date and days used to see whether they match.
- 2
See whether a grant date falls before you leave
If your next grant date comes before your retirement date, new paid leave is granted on that day. On the other hand, some carried-over days may expire before you leave.
- 3
Estimate the working days you need for handover
Once your leave starts, you won't be coming in, so secure the days you need for handover first.
- 4
Decide your last working day and retirement date, then tell your company
Giving the leave period in writing or by email along with your resignation letter helps prevent misunderstandings later.
Working back to your last working day
Paid leave can be used only on your company's scheduled working days. If your company is closed on weekends and holidays, skip those and count only working days. Counting calendar days makes you set your last working day too early.
| Retirement date | Paid leave left | Leave period | Last working day |
|---|---|---|---|
| Mon, Nov 30, 2026 | 20 days | Fri, Oct 30 – Nov 30 | Thu, Oct 29 |
| Mon, Nov 30, 2026 | 30 days | Fri, Oct 16 – Nov 30 | Thu, Oct 15 |
| Mon, Nov 30, 2026 | 35 days | Thu, Oct 8 – Nov 30 | Wed, Oct 7 |
These examples are for a company closed on weekends and holidays. October 30 through November 30 spans 32 days, but excluding 10 weekend days and 2 holidays (Culture Day and Labor Thanksgiving Day) leaves 20 working days. If your company has its own closure days, exclude those too. For more on counting, see how to count business days.
Can your company refuse?
When leave would interfere with the normal running of the business, a company has the right to ask you to change the timing of your leave. But there's no date to move it to after you've left, so in practice this right can't be used against leave taken before leaving. Treatment such as "people who are quitting can't use paid leave" or "your retirement allowance will be cut if you take paid leave" isn't allowed either (disadvantageous treatment for taking paid leave is prohibited).
Even so, starting leave with your handover unfinished easily leads to trouble. In practice, it's best to talk it through and adjust, for example by moving your retirement date back a little to secure handover days or by having part of your balance bought out.
Buying out leave you can't use
Paid leave is a right to take time off, so promising in advance to buy it out and not letting you take it is illegal. On the other hand, it's not illegal for a company to voluntarily buy it out in the following cases.
- Days that would disappear unused because you're leaving
- Days that would expire
- Days the company grants on its own beyond the legal minimum
In all of these, the company has no obligation to buy out your leave, and it sets the amount. The money you receive is taxed as either salary or a retirement allowance. Received as a retirement allowance, the tax may be lower than on salary because the retirement income deduction applies.
Many companies set the buyout at daily wage × days, but there's no fixed formula. If you use your leave, you're paid through your retirement date and your social insurance coverage also runs longer, so using it normally brings in more overall than a buyout. If a buyout is proposed, compare it with using the leave before deciding.
How pay during paid leave is calculated
Wages for days of paid leave are paid by one of the following 3 methods, set in the work rules or similar (Article 39, Paragraph 9 of the Labor Standards Act).
| Method | Details | Where it's common |
|---|---|---|
| Normal wages | Wages for working your scheduled hours that day. On a monthly salary, the company simply makes no deduction for absence | Most regular employees |
| Average wages | Total wages for the previous 3 months ÷ calendar days in that period (with a guaranteed minimum) | Part-timers whose hours vary by shift |
| Standard daily remuneration | Health insurance standard monthly remuneration ÷ 30. Requires a labor-management agreement | Some companies |
For people on a monthly salary using up leave, most companies apply normal wages, so you get the same pay as in months you came in. For part-timers paid hourly, the basis is hourly wage × scheduled hours that day. Social insurance premiums and taxes are deducted as usual from pay during leave. For take-home calculations, see how to calculate take-home pay. For the basics of how much leave is granted, see paid leave days and when they start. For when unemployment benefit can start after you leave, see when unemployment benefit starts after quitting.
FAQ
- Can I use all my paid leave before leaving?
- Yes. Workers choose when to take paid leave, and because there's no date to move it to after you leave, the company can't effectively use its right to change the timing. Taking handover into account and telling them your last working day early makes things go smoothly.
- Can I start at my next company while using up paid leave?
- You're still employed by your old company through your retirement date, so it can be a problem if the work rules ban side jobs. Social insurance would also overlap, so people usually set their start date at the new company on or after the day following their retirement date.
- If a grant date falls just before I leave, do I get the new leave?
- Yes, if you're employed on the grant date and your attendance over the previous year was 80% or more. The company can't withhold it because you're leaving. Simply setting your retirement date after the grant date increases how much leave you can take, so check your grant date before deciding your schedule.
- Can my remaining paid leave be bought out when I leave?
- Your company has no obligation to, but voluntarily buying out days that would be lost when you leave isn't illegal. Check whether the work rules cover it or ask HR. The amount varies by company.
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