Most Taiwan companies do not have a labor union and ignore the importance of the labor-management conference (LMC). Although the LMC cannot enter into a collective bargaining agreement with the employer as the labor union, it is granted certain statutory powers to serve as a platform between the employer and the employees to negotiate the employment terms.

Below please find a brief introduction on the LMC's establishment and functions:

1.Number of labor representatives and employer representatives

Employers hiring one or more employees are required to establish the LMC. The LMC shall consist of an equal number of employee and employer representatives. There shall be 2 to 15 representatives from each side depending on the size of the business entity. Where a business entity has 100 or more employees, the number of representatives from each side shall not be less than 5. Also, the representatives from the labor side shall be allocated in accordance with the number of employees in each branch office, department or job and be elected separately.

2.Election of the representatives

Management representatives: Management representatives shall be appointed by an employer from those who are experienced in the business and the labor affairs of the business entity.

Labor Representatives: In case there is no labor union, the business entity shall make an announcement asking the employees to nominate candidates and shall bear the cost of the election. The date of election shall be announced 10 days in advance.

First line managers who exercise the management right on behalf of the employer shall not serve as labor representatives. If the number of employees of any single gender in a business entity represents 50% or more of the total number of employees, at least one-third of the total number of labor representatives shall be for that gender. The number of substitute-labor representatives shall not exceed the total number of labor representatives.

3.Term of the representatives

All representatives to the LMC shall have a term of 4 years. Labor representatives are eligible for re-election, whereas the management representatives are eligible for re-appointment.

4.Matters should be approved by LMC and Quorum

Under Taiwan law, an employer should convene the LMC to approve the following matters (an one-time approval is sufficient):

a.Overtime work;

b.Female workers working between 10 p.m. and 6 a.m.; and

c. Flexible working hour's arrangement.

Although there is no time frame for convening the LMC to approve the above statutory matters and the LSA imposes no punishment on business entities which have yet to convene any LMC, the employer would be subject to administrative fines ranging from NT$20,000 to NT$1,000,000 for failure to obtain the LMC's approval.

Except for the above statutory matters to be approved by the LMC, although the LMC has no statutory power to sign a collective bargaining agreement or other binding contract with the company, it can serve as a platform that provides an opportunity for routine communication between the employer and the employees so as to avoid any unnecessary misunderstandings or conflicts.

The quorum for convening a conference is a majority of the total number of representatives from each side, and resolutions thereof shall be made through discussion to reach a consensus; if a consensus cannot be reached, resolutions shall be adopted by the votes of at least three-fourths of the representatives present at the meeting. The approved resolutions would then be forwarded by the business entity to the labor union/relevant department/relevant staff for implementation.

5.Frequency of the convention of the LMC

A regular conference shall be convened at least once every three months, and special meetings may be convened whenever necessary.