---
title: Giving equity to Japan staff? Write the exit terms first
description: Three ex-employees say their last day fell days before an RSU vesting date, costing nearly $1 million. Write what happens to vesting on exit, in Japanese.
image: https://nobusato.jp/hubfs/blog-covers/equity-for-japan-staff-write-the-exit-terms-first-en.png
---

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# Giving equity to Japan staff? Write the exit terms first

[Nobu Sato](https://nobusato.jp/en/profile?hsLang=en)

![Giving equity toJapan staff? Writethe exit terms first](https://nobusato.jp/hs-fs/hubfs/blog-covers/equity-for-japan-staff-write-the-exit-terms-first-en.png?width=1200&height=630&name=equity-for-japan-staff-write-the-exit-terms-first-en.png)

HQ grants RSUs to the Japan entity's core staff. Four-year vesting, one tranche a year. In year three HQ restructures and two Japan roles have to go. HR works out the dates. A last day of March 31 means the third tranche isn't owed. April 15 means it is. March 31 it is. At HQ this looks like ordinary cost control. In Japan it becomes a labour tribunal, and the kind you struggle to win.

A lawsuit now under way in the United States shows the shape of the problem.

## Ten days' notice and two months' notice

In spring 2026 a large software company ran an AI-themed reorganisation, cut more than 300 jobs at its California headquarters site, and gave notice on March 31. Most of those cut received more than two months' notice, and the company extended their separation date to June 5 so that the period's stock could vest. Three remote employees say they received about ten days' notice, with a last day of April 10, and that this date fell just before their RSU vesting dates. Together they say they lost nearly $1 million in stock. By their account, the severance offered was several thousand dollars less than the stock was worth. They declined to sign the separation agreement, took a statutory payout of about $26,000, and filed suit on October 7 in Alameda County Superior Court.

So far these are the plaintiffs' allegations. The company has not responded and no court has ruled. I do not know why two groups received different notice periods; there may be reasons unrelated to stock. Whatever the reasons, the case exposes a simple structure. Vesting happens on a date. Separation is a date. When nobody has written down who sets those dates and by what principle, one side will always conclude the other was calculating.

Mar 31Reorganisation notice300+ at HQ siteApr 10Three remote employees' last dayabout ten days' noticemid-AprPlaintiffs: RSU vesting datesa few days laterJun 5Other laid-off staff's separation dateextended past vestingPer Redwood City Pulse; plaintiffs' allegations, no company response, no ruling

**Fig.1**One reorganisation, two separation dates. The plaintiffs say the difference fell on either side of the vesting date and cost nearly $1 million.

## The Japan version

In Japan the problem differs in three ways, and each one makes writing it down first more important.

Dismissal itself is hard. Japanese dismissal requires objectively reasonable grounds and social appropriateness, and redundancy dismissal has four further tests: necessity, efforts to avoid it, reasonable selection, proper procedure. Most foreign-company "layoffs" in Japan actually proceed as taishoku kanshō, encouraged resignation, which is a negotiated exit. The separation date in a negotiated exit is negotiated, not set unilaterally. Put it just before a vesting date and the first question from the employee's lawyer is why that date. See [Foreign-company layoffs: your rights in Japan](https://nobusato.jp/en/blog/foreign-company-layoffs-your-rights-in-japan?hsLang=en).

Then the paperwork. The plan documents are usually in English and governed by the law of HQ's home state, and they say unvested shares lapse on termination with no obligation on the company. But Japanese employment terms must be set out in writing, and a Japanese court looks at the person's employment relationship in Japan. I wouldn't guarantee how much weight a Japanese court gives an English plan the employee can't read and nobody explained.

Tax. Japan's Supreme Court ruled in 2005 that options from a foreign parent are taxed as employment income at exercise. RSUs are employment income at vest. So the employee pays a substantial tax in the vesting year. If asked to leave before vesting, they have carried all the risk of the holding period and receive nothing. Japanese employees usually understand this structure far less well than HQ assumes, which is why the anger afterwards is greater.

## What to write before granting

Company-initiated exits first. The cleanest clause says that for any company-initiated exit, including encouraged resignation, the separation date is no earlier than the next vesting date, or the next tranche vests pro rata and early. With that clause you give up, in advance, the option of playing with dates. It costs a little stock. In return you never have to explain in a tribunal why March 31.

Employee-initiated exits. This can be stricter. Lapse of unvested stock is industry practice, and Japanese employees accept it. But define whether "separation date" means the last working day or the end of the employment contract. In Japan a month of paid-leave run-off often sits between the two. If that month crosses a vesting date, does it count? Unwritten, it will be fought over.

Write it in Japanese, attach it to the employment contract, explain it once at onboarding. Not a translation of the English plan. One page saying what you will receive, when, under what conditions you will not, and what tax applies. That page protects the company too, because it proves the employee knew. See [Read your offer in three tracks](https://nobusato.jp/en/blog/read-your-offer-in-three-tracks?hsLang=en).

The last point is for HQ. Equity retains people in a Japan entity as it does anywhere. What differs is that in Japan one instance of calculation on equity terms reaches the whole office within six months and is remembered by everyone for ten years. [Four kinds of relationships and pay design](https://nobusato.jp/en/blog/four-relational-models-and-pay-design?hsLang=en) argued that pay expresses a relationship. It applies here with force. Letting someone go ten days before vesting expresses something, and everyone hears it.

This article summarises public reporting and general principles. It is not legal or tax advice; for the design of an equity plan consult a Japanese lawyer, tax accountant and licensed labour and social security attorney. The lawsuit described reflects the plaintiffs' allegations; the company has not responded and no judgment has been issued.

References

- [Redwood City Pulse: Lawsuit: Ex-employees claim Oracle layoffs cheated them of $1 million in company stock (2026-10-23)](https://www.rwcpulse.com/news/2026/10/23/lawsuit-ex-employees-claim-oracle-layoffs-cheated-them-of-1-million-in-company-stock/)

---

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