Can Paid Leave Be Bought Out? Allowed Cases and Points at Resignation

Some workers ask whether unused paid leave can be exchanged for cash. However, buying out paid leave during employment is generally not allowed.

This article explains when buyout is and is not permitted, and how unused leave is handled at resignation.

Buyout during employment is generally not allowed

Workers have the right to take paid leave, and employers must not obstruct it. Paying cash instead of leave during employment may effectively deny that right and is generally not accepted.

An exception relates only to the obligation to ensure five days of leave per year when 10 or more days are granted. Remaining days cannot be substituted with cash.

Unused leave is settled at resignation

When unused paid leave remains at resignation, cash settlement based on average wage is permitted under Article 39, Paragraph 5 of the Labor Standards Act.

Settlement is typically unused days × average wage. Companies usually calculate and pay automatically; work rules may specify the method.

What to confirm at resignation settlement

• Remaining paid leave days (leave records or payslips)
• Calculation basis (average wage period and amount)
• Timing of final grant before resignation (recent grants may still be settled)
• Whether settlement is included in final pay or paid separately

If the company refuses buyout

If an employer offers cash instead of leave during employment, that may be problematic—you are not required to accept cash in place of leave.

If settlement of unused leave at resignation is refused, that may violate the Labor Standards Act. Review resignation documents, remaining days, and work rules, then request settlement.

Downsides of resigning without using leave

Because unused leave can be settled at resignation, some think not using it causes no loss. However, benefits of taking leave while employed—recovery, family needs, job search time—cannot be replaced with money.

Leave rights do not disappear but expire after two years; after resignation they cannot be used, so planned use during employment is advisable.

FAQ

Q. Do I lose money if I resign without using all leave?

Unused days are generally settled in cash, so there is no direct monetary loss. Not taking rest while employed is a separate issue.

Q. Can I use paid leave on my last day?

Yes. Taking paid leave on your resignation date is allowed and wages are paid for that day.

Q. Can I get buyout if the company blocks leave?

Buyout during employment is generally not allowed. If leave is obstructed, consider the Labor Standards Inspection Office.

Summary | Take leave while employed; settle at resignation

Cash buyout of paid leave is generally not allowed during employment; only unused days at resignation may be settled. Paid leave is a statutory right—use it for recovery and life balance. If resignation is near, confirm remaining days and settlement early.

※This article provides a general overview of relevant systems and does not reflect individual employment terms or company work rules. Please confirm specific handling with your employer's HR department; for tax matters, consult the tax office or a tax advisor.