An Employer’s Guide to Annual Leave Entitlements in Japan

If you are employing in Japan you will find an unusual situation when it comes to annual leave.  Many western nations grant generous leave that employees are eager to take, such as in Europe where 30 days of annual leave is commonly offered.  But in Japan the work culture is such that employees are actually reluctant to take leave days and miss work, fearing it will affect their career.

A study showed that the average Japanese employee only takes 60 percent of their leave each year, leading to problems with overwork and burnout.  In response, the Japanese government imposed a new law in 2019 that stipulated an employee is required to take at least 5 days of leave each year, and the employer must confirm that or face penalties.

Many employees will take annual leave when they are sick as there is no sick leave in Japan, and apparently, that is permitted.  As an employer in Japan, you will want to be aware of all these nuances to avoid any problems with non-compliance, so we will provide you with the basic guidelines.

How many annual leave days are employees entitled to in Japan?

Employees in Japan are entitled to 10 to 20 annual leave days depending on the length of service. Here are the maximum statutory leave days based on years of service with the same employer, beginning after six months of employment:

Can unused annual leave be carried over to the next year?

Despite the policy requiring leave to be used, up to two years of unused leave can be carried over to the next year.  After that, the leave would expire, so it’s as though there is a ‘rolling’ two years of leave that can be carried over.

Client Case: Can unused leave be cashed out in Japan?

Context:

Our client with employees in Japan wanted to know if they were required to pay out unused annual leave each year to a current employee.

Solution: 

We let them know that for current employees there is no requirement to pay out unused leave, and it would likely be discouraged due to the new policy of employees using leave.  However, if an employee is terminated, all unused leave must be paid out regardless of the reason for termination.

Do you need more information about Japan?

If you are new to the Japanese employment culture you might have additional questions such as:

How do employers enforce the 5-day minimum leave requirement each year, especially for remote employees?

Can partial leave days be taken e.g., 6-12 hours?

Upon termination, how is leave payout calculated if the employee’s salary fluctuated?

Differences in culture and employment regulations are a challenge for overseas employers, and our clients rely on us to bring them solutions to questions like this in the areas of payroll, benefits, and entitlements.  We make international employment simple.