The Legislative Yuan (Taiwan's Legislature) passed the amendments to 10 provisions under the Labor Standards Acts (the "LSA") on December 6, 2016.  Such amendments will take effect on January 1, 2017.

The key points of the amendments are: implementation of a five-day work week; a sharp increase of wage for working on a rest day; reduction of national holidays; increase of days of annual leave; method of arranging annual leave and payment for unused annual leave; rest time between shifts; employers' obligation to provide information on wage calculation; protection of whistleblowers’/workers' right to file complaints; and raising fines for violations of the LSA.  The amendments have significant impact on employers' cost and arrangement of human resources.  Employers must take such amendments into careful consideration.

An explanation of these amendments is as follows:

I.            The implementation of a five-day work week (i.e. two days off per week) with one fixed day off and one rest day (Paragraph 1 & 2, Article 36 of the LSA)

1.       A worker shall have two days off (one fixed day off and a rest day) in every seven days. The actual day of the fixed day off and that of the rest day shall be decided by the employers and the workers. The common arrangement is to set Sundays as the fixed days off and Saturdays as the rest days.

2.       The main difference between a fixed day off and a rest day: Employers shall not ask workers to work on fixed days off unless in the event of a natural disaster, accident or emergency. While employers may ask workers to work on rest days, the wage for working on a rest day has been significantly increased (See Sections 2 and 3 below for details).

3.       For an employer which adopts a flexible working-hour system pursuant to the law, fixed days off and rest days can be arranged as below:

(1)     For workers under a two-week flexible working-hour system, they shall have at least one fixed day off in every seven days and at least four days of fixed days off and rest days in every two weeks.

(2)     For workers under an eight-week flexible working-hour system, they shall have at least one fixed day off in every seven days and at least 16 days of fixed days off and rest days in every eight weeks.

(3)     For workers under a four-week flexible working-hour system, they shall have at least two fixed days off in every two weeks and at least eight days of fixed days off and rest days in every four weeks.

II.      Calculation of wage for working on a rest day (Paragraphs 3 and 4, Article 24 and Paragraph 3, Article 36 of the LSA)

1.       For a worker’s work on a rest day, work for four hours or less shall be counted as four hours; work for between four to eight hours shall be counted as eight hours; and work for between eight to 12 hours shall be counted as 12 hours.

2.       When calculating the maximum number of overtime hours, all the hours worked on a rest day shall also be included, except for the overtime hours in the event of a natural disaster, accident and other emergency.

III.    Calculation of wage for working on a rest day (Paragraph 2, Article 24 of the LSA)

The following is the formula for calculating the wage for working on a rest day:

1.           Work for four hours or less shall be counted as four hours, and the wage for four hours of work shall be calculated as follows: the hourly-wage for the first two hours shall be the regular hourly rate plus at least one and one-third of the regular hourly rate;  the hourly wage for the following two hours shall be the regular hourly rate plus at least one and two-thirds of the regular hourly wage.

2.           Work for between four to eight hours shall be counted as eight hours, and the wage for eight hours of work shall be calculated as follows: the hourly-wage for the first two hours shall be the regular hourly rate plus at least one and one-third of the regular hourly rate; for the remaining six hours, the hourly rate shall be the regular hourly rate plus at least one and two-thirds of the regular hourly wage.

3.           Work for between eight to 12 hours shall be counted as 12 hours, and the wage for 12 hours of work shall be calculated as follows: the hourly-wage for the first two hours shall be the regular hourly rate plus at least one and one-third of the regular hourly rate; for the remaining ten hours, the hourly rate shall be the regular hourly rate plus at least one and two-third of the regular hourly wage.

IV.    Legal basis for Labor Day and national holidays (Article 37 of the LSA)

Workers are entitled to the holidays set by the Ministry of the Interior as well as Labor Day and other holidays set by the Central Competent Authority; there are 12 days of national holidays per year, namely:

-     Founding of the Republic of China (New Year's Day): January 1

-     Chinese New Year's Eve: Last day of the 12th month (Lunar calendar)

-     Spring Festival (a.k.a. Chinese New Year): First three days of the 1st month (Lunar calendar)

-     228 Peace Memorial Day: February 28

-     Children's Day: April 4

-     Tomb Sweeping Day: Qingming Festival of the Lunar calendar

-     Labor Day: May 1

-     Dragon Boat Festival: 5th day of the 5th month (Lunar calendar)

-     Mid-Autumn Festival: 15th day of the 8th month (Lunar calendar)

-     National Day/Double Tenth Day: October 10

V.      Number of days of and method for arranging annual leave as well as calculation of wage for unused annual leave (Article 38 of the LSA)

1.    Days of annual leave for workers are as below:

(1)     Three days of annual leave for a worker who has worked for more than six months but less than one year (new addition).

(2)     Seven days of annual leave for a worker who has worked for one year or more but less than two years (same as before).

(3)     10 days of annual leave for a worker who has worked for two years or more but less than three years (three more days than before).

(4)     14 days of annual leave for a worker who has worked for three years or more but less than five years (four more days than before).

(5)     15 days of annual leave for a worker who has worked for five years or more but less than 10 years (one more day than before).

(6)     One additional day of annual leave for each year of service over 10 years, up to a maximum of 30 days (same as before).

2.       While workers have the right to decide when to take their annual leave, employers may negotiate such arrangement with workers in the event of employers’ urgent operational demands or workers' personal reasons.

3.       Employers shall notify workers to arrange time for taking their annual leave when they become eligible to take annual leave. For any unused annual leave, employers shall pay workers wages for the unused annual leave at the year-end settlement or upon the termination of the employment contract. Employers shall document the number of days of each worker’s annual leave and unused annual leave on the payroll roster, and notify workers of such information in writing every year.

4.       The burden of proof lies with an employer in the event of a dispute over annual leave or the wage for unused annual leave. The purpose of this provision is to require an employer to preserve evidence in the event that he/she/it is unwilling to pay a worker for unused annual leave.

VI.    Rest time between shifts (Paragraph 2, Article 34 of the LSA)

When a shift work rotation is adopted, workers on such shifts shall be granted at least 11 consecutive hours of rest between shifts.

VII.   Provision of detailed wage calculation statements (Article 23 of the LSA)

Employers shall provide workers with detailed statements of itemized wage calculation method and incorporate information on such statements into the payroll roster.

VIII.  Protection of whistleblowers’/workers' right to file complaints (Article 74 of the LSA)

         A worker may, upon discovery of any violation by his/her employer of the LSA or other labor statute or administrative regulations, file a complaint with the employer, the competent authorities or the inspection agencies.

         An employer shall not discharge, transfer, deduct wages, cause damage to a worker's rights under any statutes, contracts, or practice, or take any unfavorable measure against a worker who files a complaint pursuant to the preceding paragraph.

         The competent authorities or the inspection agencies shall, within 60 days of receiving a worker's complaint, commence investigation into the complaint and notify the worker of the investigation findings and the subsequent remedial measures. The competent authorities or inspection agencies shall ensure the confidentiality of the complainant and shall not disclose any information which may identify the complainant. Any violator of the aforementioned regulation shall be liable for any loss and damage sustained by the complaint, and be subject to criminal and civil liabilities due to its civil servant status.

IX.    Raising the maximum fine for violations of the LSA (Article 79 of the LSA)

         For employers in violation of the following provisions on wages, working hours, rest time, holidays and leaves, the maximum fine has been raised from NT$300,000 to NT$1,000,000:

1.       Violations of provisions on minimum wage, direct full payment to  workers, records of overtime hours, wage discrimination based on gender, regular working hours, flexible working hours, attendance records, deduction of wages due to decrease of the legal working hours, overtime hours, rest time between shifts, rest time for continuous work, fixed days off and rest days, national holidays, annual leave, wages for work on rest days, working hours and compensatory days off for work in the event of a natural disaster or emergency, female workers on night shifts, compensation for occupational hazards, and so on.

2.       Failure to pay wages within a given period or to adjust working hours as ordered by the competent authorities, and so on.

3.       Failure to grant workers leave pursuant to the Regulations Governing Leave-Taking of Workers, or failure to pay minimum wages on leave days.

The competent authorities may further raise the amount of a fine by 50% of the maximum amount depending on the size of the business entity, and the number and degree of violations.

The finalized version of the amendments to the LSA, as summarized above, will be announced by the President. These amendments are scheduled to take effect on January 1, 2017 pending the presidential announcement. We recommend that all employers start making plans for the next year with respect to the arrangement of shifts, the wage and working-hour calculation for work on rest days, notice of annual leave and wage for unused annual leave, detailed wage statements, and revision of work rules.