Labor Organizations Propose Amendments to the Labor Standards Act
In early August, the Labor Reform Alliance (the “Allianceâ€) in Taiwan released a draft proposal (the “Proposalâ€) for amendments to Taiwan’s main labor and employment legislation, the Labor Standards Act (the “LSAâ€), which establishes the minimum labor terms in favor of employees. The Alliance is a Taiwanese labor/worker organization comprising the Taiwan Confederation of Trade Unions, Taiwan International Workers Association, and other local labor unions and organizations. The Proposal highlights the following key amendments:
1. Increase in Overtime Pay Rates: The Proposal suggests revising overtime pay rates as follows: For hours worked beyond the standard work hours, but up to 2 hours, the overtime pay rate would increase from one and one-third times the regular hourly wage to twice the regular hourly wage. For hours worked beyond 2 hours, but less than 4 hours, the rate would rise from one and two-thirds times the regular hourly wage to three times the regular hourly wage.
2. Stipulation of National Holidays: The Proposal stipulates that the minimum number of national holidays each year should be no less than 19 days.
3. Elimination of Pension Payment Cap: Currently, employees receive a pension amounting to 2 months’ average salary for each year of service upon retirement, up to a maximum of 15 years. For employees with more than 15 years of service, the pension is calculated at 1 month’s average salary for each additional year beyond the first 15 years, capped at a total of 45 months’ average salary. The Proposal removes this cap, stipulating that employees should receive 2 months’ average salary for each year of service, with no upper limit on the total pension amount.
4. Introduction of a Contract Review Period: The Proposal introduces a requirement for a seven-day contract review period when an employment relationship is terminated by mutual agreement. Employers must provide this period and cannot include contractual terms that waive this right.
5. Retention of All Employees during Company Mergers, Restructuring, or Changes in Ownership: The Proposal mandates that during corporate mergers, restructuring, or changes in ownership, the principle should be to retain all employees. Original employers must first obtain agreement from the labor union on the conditions for contract termination and consult employees about their willingness to stay. If employees choose not to remain, the employer may then issue notice of contract termination and provide severance pay.
6. Removal of Provision Regarding Flexible Work Hours: The Proposal seeks to eliminate Article 84-1 of the LSA, which allows certain workers, such as system development and maintenance engineers or personnel involved in the construction or maintenance of offshore and onshore wind farms, to negotiate flexible working hours with their employers, exempting them from standard LSA restrictions.
7. Increase Penalties for Employer Violations of the LSA: The Proposal includes several measures to enhance penalties for violations:
• Representatives of employers who accumulate wage arrears or other compensation exceeding NT$1 million may face restrictions on departure.
• Employers who violate the LSA twice within one year, representatives of employers may be required to undergo labor law education.
• Representatives of employers whose violations result in excessive workloads causing occupational injuries may face criminal liability.
The Proposal is still under discussion among the Alliance, scholars and legislators. Once it is finalized, the Alliance plans to collaborate with legislators who support labor rights to formally present the Proposal to Taiwan’s Congress for review. However, the specific timing for this has not yet been determined by the Alliance at this stage.
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