"I hope to encourage employees to quit smoking through incentives rather than penalties or coercion", Takao Asuka, the Piala Inc CEO, told Kyodo News.
To date, no fewer than 30 of the company's 120 employees have taken additional days off under the new system since it was introduced, said Matsushima - himself a non-smoker who has used the additional paid holidays to take his family to a hot spring resort for a couple of days.
The scheme has also encouraged four people to give up smoking, he added.
According to the World Health Organisation, 21.7 per cent of Japanese adults smoke, although the figure is higher among males and older generations.
Japanese companies are increasing efforts to protect employees from the impact of second-hand smoke, with Lawson Inc, an operator of 24-hour convenience stores, in June banning smoking in its head office and regional offices.