It depends on how deep the client's pockets are. Change orders begging for more money can be issued. Another way to do it is divert the charged time to a different task within the same project that does have budget left.
Generally, at least in Calgary, should there be no chargeable work for you, you should still be paid and be putting your time to overhead or adminstration. If your friend is using vacation hours at work, something is wrong. I've heard of engineering managers at my company who might have to "suck it up" and not charge time nor get paid for work rendered but not for junior staff. I'm sure the situation you describe happens all the time but personally I would draw the line at that.
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