Introduction

On December 6 2016 the Legislative Yuan passed a number of amendments to 10 provisions under the Labour Standards Act. All of the amendments took effect on January 1 2017 except the required rest time between shifts, which is expected to take effect after one year.

Key points of the amendments include:

  • the implementation of a five-day working week;
  • a sharp increase in wages for working on a rest day;
  • a reduction in national holidays;
  • an increase in the number of days of annual leave;
  • workers' rights to arrange annual leave and payment for unused annual leave;
  • rest time between shifts;
  • employers' obligation to provide information on wage calculation;
  • protection of whistleblowers' and workers' right to file complaints; and
  • an increase in fines for violations of the Labour Standards Act.

The amendments will have a significant impact on costs and human resources; employers are therefore advised to consider the amendments carefully.

Five-day working week

According to Article 36(1) and (2) of the act, a worker must have two days off (one fixed day and one rest day) every seven days. The actual day of the fixed day and the rest day will be decided by the employers and workers. The usual arrangement is to set Sunday as the fixed day off and Saturday as the rest day.

The main difference between a fixed day off and a rest day is that employers are prohibited from asking 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 significantly increased.

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

  • at least one fixed day off every seven days and at least four days of fixed days off and rest days every two weeks for workers under a two-week flexible working-hour system;
  • at least one fixed day off every seven days and at least 16 days of fixed days off and rest days every eight weeks for workers under an eight-week flexible working-hour system; and
  • at least two fixed days off every two weeks and at least eight days of fixed days off and rest days every four weeks for workers under a four-week flexible working-hour system.

Wage calculation for rest day work

According to Article 24(3) and (4) and Article 36(3) of the act, for work on a rest day:

  • four or fewer hours will be counted as four hours;
  • between four and eight hours will be counted as eight hours; and
  • between eight and 12 hours will be counted as 12 hours.

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

According to Article 24(2) of the act, the following formula for calculating wages for working on a rest day is now in place:

  • Work for four or fewer hours will be counted as four hours and wages will be calculated as follows:
    • the hourly wage for the first two hours will be the regular hourly rate plus at least time-and-one-third of the regular hourly rate; and
    • the hourly wage for the following two hours will be the regular hourly rate plus at least time-and-two-thirds of the regular hourly rate.
  • Work for four to eight hours will be counted as eight hours and wages willl be calculated as follows:
    • the hourly wage for the first two hours will be the regular hourly rate plus at least time-and-one-third of the regular hourly rate; and
    • for the remaining six hours, the hourly rate will be the regular hourly rate plus at least time-and-two-thirds of the regular hourly rate.
  • Work for eight to 12 hours will be counted as 12 hours and wages will be calculated as follows:
    • the hourly wage for the first two hours will be the regular hourly rate plus at least time-and-one-third of the regular hourly rate; and
    • for the remaining 10 hours, the hourly rate will be the regular hourly rate plus at least time-and-two-thirds of the regular hourly rate.

Labour Day and national holidays

According to Article 37, workers are entitled to holidays set by the Ministry of the Interior, as well as Labour Day and other holidays set by the central competent authority.

There are 12 national holidays per year:

  • Founding of the Republic of China (New Year's Day) – January 1;
  • Chinese New Year's Eve – the last day of the 12th month (lunar calendar);
  • Spring Festival (also known as Chinese New Year) – first three days of the first month (lunar calendar);
  • 228 Peace Memorial Day – February 28;
  • Children's Day – April 4;
  • Tomb Sweeping Day – Qingming festival of the lunar calendar;
  • Labour Day – May 1;
  • Dragon Boat Festival – fifth day of the fifth month (lunar calendar);
  • Mid-autumn Festival – 15th day of the eighth month (lunar calendar); and
  • National Day/Double Tenth Day – October 10.

Annual leave and wage calculation for unused leave

According to Article 38, the days of annual leave for workers are as follows:

  • three days for workers who have worked for more than six months but less than one year (new addition);
  • seven days for workers who have worked for one year or more but less than two years (unchanged);
  • 10 days for workers who have worked for two years or more but less than three years (three more days than previously);
  • 14 days for workers who have worked for three years or more but less than five years (four more days than previously);
  • 15 days of annual leave for workers who have worked for five years or more but less than 10 years (one more day than previously); and
  • one additional day for each year of service over 10 years, up to a maximum of 30 days (unchanged).

While workers have the right to decide when to take annual leave, employers may negotiate arrangements with workers in the event of urgent operational demands or personal reasons. Employers must notify workers to arrange their annual leave once they become eligible. For any unused annual leave, employers must pay workers for the unused leave at the year-end settlement or on termination of the employment contract. Employers must document the number of days of each worker's annual leave and unused annual leave on the payroll roster and notify workers in writing each year.

The burden of proof lies with an employer in the event of a dispute over annual leave or wages for unused leave. The purpose is to require the employer to preserve evidence in the event that it is unwilling to pay for unused annual leave.

Rest time between shifts

According to Article 34(2), when a shift work rotation is adopted, workers on such shifts will be granted at least 11 consecutive hours of rest between shifts.

Detailed wage calculation statements

According to Article 23, employers must provide workers with detailed statements of itemised wage calculation methods and include information regarding such statements in the payroll roster.

Whistleblowers' and workers' right to file complaints

According to Article 74, a worker may file a complaint with his or her employer, the competent authorities or inspection agencies on discovery of any violation by his or her employer of the Labour Standards Act, other labour statutes or administrative regulations.

An employer must not discharge, transfer or deduct wages or cause damage to a worker's rights under any statutes, contracts or practice, or take any unfavourable measure against a worker who files a complaint pursuant to Article 74.

Within 60 days of receiving a worker's complaint, the competent authorities or inspection agencies must commence an investigation and notify the worker of the investigation findings and subsequent remedial measures. The competent authorities or inspection agencies must ensure the complainant's confidentiality and disclose no information which may identify him or her. Anyone that violates this regulation is liable for any loss or damage sustained by the complainant and will be subject to criminal and civil liabilities due to civil servant status.

Raising maximum fine for violations

According to Article 79, the maximum fine for employers in violation of the provisions on wages, working hours, rest time, holidays and leave has been raised from NT$300,000 to NT$1 million.

The maximum fines have been raised for violations of the provisions on:

  • minimum wage;
  • direct full payment to workers;
  • overtime records;
  • wage discrimination based on gender;
  • regular working hours;
  • flexible working hours;
  • attendance records;
  • deduction of wages due to decrease in legal working hours;
  • overtime;
  • 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; and
  • compensation for occupational hazards.

The maximum fines have also been raised for:

  • failure to pay wages within a given period;
  • failure to adjust working hours as ordered by the competent authorities;
  • failure to grant workers leave pursuant to the Regulations Governing Leave Taking of Workers; and
  • failure to pay minimum wage on leave days.

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

Comment

The final version of the amended act was announced by the president and entered into effect on January 1 2017 (except the required rest time between shifts, which is expected to take effect after one year). It is recommended that all employers begin to make arrangements with regard to:

  • shifts;
  • wages;
  • working on rest days;
  • notice of annual leave;
  • wages for unused annual leave;
  • detailed wage statements; and
  • revision of work rules.

For further information on this topic please contact T C Chiang at Lee and Li Attorneys at Law by telephone (+886 2 715 3300) or email (tcchiang@leeandli.com). The Lee and Li website can be accessed at www.leeandli.com.