Off-topic nit: I think you mean "arbitrage", the practice of buying something where it's cheap and selling it where it's expensive. "Arbitration" is a method of resolving disputes by having a neutral third party decide what the correct outcome is.

Strictly speaking, this is not an arbitrage, because (a) you run the risk of not getting an above-inflation pay rise, and (b) even if such a pay rise is a certainty, you are locking your money up while you wait for it. The latter point makes it a carry trade, rather than an arbitrage.

If you could sell your future interest in refundable vacation days now, for more than it cost you to buy them, that would be an arbitrage.

I do something similar though different with my German employer. My employer lets me send my yearly bonus (or part of it) into a time account, i.e. the money gets converted into hours based on my hourly salary. Every five years, I have the option of withdrawing hours from the time account to take a sabbatical (with the normal salary payments just continuing in the meantime). And if I don't withdraw all of it by the time of retirement, the rest gets withdrawn for an early retirement with full pay.