Do You Get Paid During a Leave of Absence in Japan? Wages, Bonuses and Absence Deductions Explained

Wages during a leave of absence in Japan are not paid as a rule, because no obligation to pay arises for a period in which no labour is provided. This is not a rule fixed by statute, however, and some employers do continue pay.

This article deals only with money paid by your employer, setting out how wages, bonuses and absence deductions are treated in different situations. The public benefit from health insurance is a separate topic.

Why Wages Stop: The No Work, No Pay Principle

Wages are paid in exchange for labour. A leave of absence releases you from the duty to work, so the corresponding wages do not arise either. That is the basic reasoning.

This is only the default position, though, and nothing prevents an employer from choosing to pay. Some companies provide in their work rules that a portion of wages continues for a set period from the start of leave. Which category your own employer falls into cannot be known without reading the leave chapter of the work rules.

Absence Before Leave Is Treated Differently

This is easily overlooked. At most employers you do not go straight onto leave when your health declines; absence accumulates first, and only once it passes a certain threshold does the arrangement switch to a formal leave of absence. Wages are handled differently in the absence period and the leave period.

• Absence period: You remain employed on the basis that you will work. An absence deduction removes the days not worked from your monthly salary.
• Leave period: The duty to work is suspended altogether, so where leave is unpaid the amount payable is zero.

The method for calculating an absence deduction is not fixed by law and depends on the work rules. Because the number of scheduled working days varies from month to month, the same number of days off can produce a different deduction.

Using Paid Leave First

Once formal leave begins, applying annual paid leave to that period is generally not possible. So if you use up remaining paid leave while absence is still accruing, those days attract normal wages.

There is a trade-off, however. Days on which paid leave produces full wages fall outside the injury and sickness allowance, or attract only the difference. Whether to exhaust paid leave before moving to the allowance, or to hold some back, turns on how long your treatment is likely to run.

Bonuses Depend on the Assessment Window

There is no statutory obligation to pay a bonus; whether one is paid and how much are governed by the work rules or a bonus policy. Two points matter during leave.

1. How much of the assessment window you were employed and working: Most employers reduce the bonus in proportion to the share of the window actually worked. Being on leave for the entire window can mean no payment at all.
2. Whether you are employed on the payment date: Many employers impose an employed-on-payment-date requirement, and being on leave still satisfies that requirement in itself.

Some people worry that receiving a bonus will count as income for that month and affect the injury and sickness allowance. What the allowance is adjusted against is remuneration for the period of absence, which is different in character from a bonus rewarding past service. If you are unsure, check with your health insurer.

You Still Get a Payslip When Pay Is Zero

Even on unpaid leave, a payslip is issued, because social insurance contributions and resident tax still have to be deducted. This produces a situation in which gross pay is zero while deductions remain, leaving a negative net figure. That negative amount is something you pay to your employer.

Employers handle payment differently: a monthly bank transfer, offsetting against the injury and sickness allowance, or settling the total after you return. So that the accumulated figure does not come as a shock, confirm the monthly amount and the method before your leave begins.

Common Questions About Wages During Leave

Does leave count toward length of service?

You remain employed, so it counts as time with the company. That said, some employers provide that leave is excluded when calculating severance pay or assessing eligibility for promotion. This too comes down to the work rules.

Is there a year-end tax adjustment if I was unpaid?

If any wages were paid during the year, you are covered. Note that the injury and sickness allowance is not taxable and does not count as income. As a result, your income for the year in which you took leave falls considerably.

What happens to my resident tax the following year?

Resident tax is charged on the previous year's income, so the year after your leave is lighter. Put the other way round, the resident tax falling due in the year your leave starts was calculated on the previous year's higher income, and you pay it while your income has dropped. This is the part of the first year of leave that weighs most heavily on cash flow.

My absence deduction is larger than I expected.

The figure changes depending on whether allowances as well as base pay are subject to deduction, and on what denominator is used for the daily rate. Compare the formula in the work rules against your payslip, and if they do not match, raise it with HR.

Summary: Three Places to Look in the Work Rules

Wages during leave are unpaid as a rule, but the definitive answer lies only in the work rules. Check three things: the provision on wages during leave, the formula for absence deductions, and the rules governing the bonus assessment window. With those three in hand, you can form a reliable picture of what money will come from your employer while you are on leave.

This article sets out general principles. The treatment of wages, bonuses and absence deductions varies considerably with your employer's own rules. For specific figures ask your HR department, and for questions about the schemes themselves consult a qualified professional such as a certified social insurance and labour consultant.