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The Working Hour System Practices in Taiwan and the Influence of Implementing the 40 Working Hour System



I.        Foreword

 

Since the 19th Century, the "8+8+8 system" (eight hours of work, eight hours of rest, and eight hours of sleep) has become the mainstream in international working hour system. In 1935, International Labor Organization (ILO) promulgated Convention No. 47 and established the "40-hour work week principle." In 1962, in order to realize the 40-hour work week principle, Convention No. 116 proposing the reduction of work hours was promulgated, urging member states to adopt the idea. Furthermore, in 1976, Article 7 of the International Covenant on Economic, Social, and Cultural Rights emphasized that everyone is entitled to working conditions that include just and reasonable work hours.

 

In order to promote the two-day weekend system in Taiwan, in 1997, the Legislative Yuan decided to implement the system starting with government employees in 1998, with a progressive approach of two two-day weekends per month. In 2000, the Civil Servant Work Act and related laws and regulations were amended to establish the 8-hour day, the 40-hour work week, two regular days off every week and a total of 11 national holidays throughout the year for government employees. This means that the two-day weekend system was fully implemented for government employees starting on January 1, 2001.

 

II.   The Current Practices of Working-Hour System of the Labor Standards Act

 

The Labor Standards Act ("LSA") applies to the working conditions of employees of private enterprises. Pursuant to the current regulations of the LSA, the regular working time may not exceed 8 hours a day or 84 hours every 2 weeks. An employee shall have at least one regular day off every seven days. Employees shall be granted a total of 19 national holidays throughout the year shall be granted special vacation days after serving for a certain period of time.

 

The common working hour systems in practice and the total annual work hours and days off are listed in the following chart:

 

Working Hour System

Annual Regular Working Hours (hour)

Annual Days Off (day)

One day off weekly

(42 working hours weekly)

2184

7 (hours) x 6 (days) x 52 (weeks)=2,184

71

52 (Sundays)+19 (holidays)71

Two days off every other week

(84 hours in 2 weeks)

2184

8 (hours) x 5 (days) x 52 (weeks)=2,080

4 (hours) x 26 (weeks)=104

110

52 (Sundays)+26 (Saturdays)

+13 (0.5 day on Saturdays)+19 (holidays)110

Two days off weekly with Transferable Holidays

(84 hours in 2 weeks)

2184

8 (hours) x 5 (days) x 52 (weeks)=2,080

4 (hours) x 26 (weeks)=104

110

52 (Sundays)+52 (Saturdays)+6 (holidays)110

Two days off weekly by two-week flexible working hours

(84 hours in 2 weeks)

2184

8.4 (hours) x 5 (days) x 52 (weeks)=2,184

123

52 (Sundays)+52 (Saturdays)+19 (holidays)123

Two regular days off weekly

(40 working hours weekly)

2080

8 (hours) x 5 (days) x 52 (weeks)=2,080

123

52 (Sundays)+52 (Saturdays)+19 (holidays)123

 

The chart above shows that in the past 15 years in Taiwan, working hours, regular days off and the commemorative holiday system for employees not only differ between the public sector and the private sector, but also differ among employers in the private sector. Working hours, days off and holidays, differ among employees employed by different employers.

 

Employers must first determine whether the working hours pertain to regular work days or days off in order to properly calculate wages and overtime pay and to prevent excessive working hours forbidden by law. In practice, it is common for employers to list Sundays as regular days off, Saturdays may be listed as days off based on different working hour systems. When employees perform duties on Saturdays, the employees and the employers often disagree on whether such working hours shall be paid as working hours of a regular work day or as overtime on days off. Therefore, disputes often arise on the determination of overtime working hours on Saturdays and the overtime pay.

 

III.  Relevant Main Points in the Reduction of Working Hours in the Labor Standards Act

 

In 2000, the LSA was amended to reduce the regular working hours from 48 hours weekly to 84 hours in every two weeks. The working hours have not yet been further reduced to 40 hours weekly. According to data from the Ministry of Labor ("MOL"), in 2013 the total working hours in Taiwan reached 2,124 hours yearly, ranking third in the world. In response to the international system of having the two regular days off per week, the Legislative Yuan passed an amendment to the working hours in Article 30 of the LSA in May 2015 to standardize that the legal regular working hours will be reduced from 84 hours in every 2 weeks to 40 hours weekly, starting from January 1, 2016. For this purpose, the MOL amended the Enforcement Rules of the LSA in August 2015. The main points of the amendment to the working hours in the LSA and its Enforcement Rules include:

 

1.      Legal regular working hours will be reduced to 40 hours weekly. (Article 30, Paragraph 1)

 

2.      Employers shall not use the reduction of regular working hours as a reason to reduce employees' wages. (Article 30, Paragraph 7)

 

3.      Employers may, based on the needs of employees to tend to their family members, allow employees the flexibility to adjust their starting and finishing work time of up to one hour of the daily regular working hours. (Article 30, Paragraph 8)

 

4.      The term "overtime" shall mean the part of working hours that exceeds 8 hours per day or the part of working hours that exceeds a total of 40 hours per week. (Article 20-1 of the Enforcement Rules)

 

5.      Employers shall prepare employees' attendance records. The time period that employers shall keep attendance records was extended from one year to five years. The fines for employers failing to prepare attendance records was raised to an amount between NT$90,000 and NT$450,000. (Article 30, Paragraph 5; Article 79, Paragraph 2)

 

6.      The attendance records that employers prepare shall register the attendance of employees on a daily basis to the minute. The manners of attendance records include attendance books, time cards, clock-in machines, access cards, biometric identification systems or records of other tools that can truthfully record attendance. The records can be in written form. Employers may not refuse when employees request for duplicates or photocopies of the attendance records. (Article 30, Paragraph 5; Article 21 of the Enforcement Rules)

 

7.      The unexpected events referred to in the LSA shall mean (i) non-regular events that have significant effects on the employees' or employers' rights, which cannot be controlled or foreseen and necessitate immediate attention; (ii) events that have significant effects on the people's life, body, or personal freedom, which cannot be controlled or foreseen and necessitate immediate attention. (Article 21-1 of the Enforcement Rules)

 

8.      National holidays stipulated in the LSA have been reduced from 19 to 12 (keeping Labor Day). If a commemorative holiday coincides with a regular day off or rest time derived from reduced legal regular working hours, compensatory leave shall be granted. (Article 23 of the Enforcement Rules)

 

Relevant responding measures and other amendments of the working hours in the LSA include: the total of allowed monthly overtime has been increased to 54 hours and employees on rotated shifts shall be granted at least 11 hours of rest between shifts. Attendances on a regular work day or a day off shall, within 10 days of the occurrence of the fact, claim payment for overtime or compensatory leave within 6 months, based on the overtime payment rate. If the compensatory leave is not taken within 6 months, employers shall pay wages instead. Regulations stating that employees who cancel a day off and tend to work due to an act of God, an accident or unexpected event shall be paid double wages by the employer and granted compensatory leave within seven days are still pending to be deliberated in the Legislative Yuan.

 

IV. Effects of Reduced Working Hours

 

After the LSA implements the 40-hour week system, from the employees' point of view, those who currently have one day off weekly, two days off weekly with transferable holidays, and two days off by two-week flexible working hours are benefitted because the total days off increase by six days, derived from the 104-hour reduction in the annual working hours (equivalent of 13 days) and the seven-day reduction of national holidays. For those who currently have two regular days off, the total annual working hours shall remain unchanged, but national holidays are reduced by seven days; therefore, there is no actual benefit in this amendment for such employees. In addition, the reduction of working hours along with the reduction of national holidays in the amendment will reduce the days when employees receiving hourly wages can claim double wages due to national holidays from 19 days annually to 12 days next year.

 

If the observation is done from a corporate point of view, the reduction of legal working hours will have greater impact for the manufacturing industry, which operates on a 24-hour rotation shift, and the service industry, which is manpower intensive. The overall corporate overtime or manpower demands are expected to increase. Under the impact of such adjustment in working hours, enterprises must start to contemplate on how to adjust the management pattern to increase employees' efficiency and to flexibly arrange manpower in order to prevent a burden on productive costs derived from overtime pay due to reduced legal working hours. Tangibly speaking, managers of an enterprise can offer the operators analysis of policies and suggestions, including: the evaluation of extra overtime pay, the adjustment in the production and service process, the addition of manpower allocation and flexible utilization, the improvement in the employees' morale and efficiency, partial outsourcing, and the expansion of rotation shifts in order to handle the increased workload after the reduction of working hours and other responsive measures.

 

V.   Conclusion

 

In response to the international trend of industry competitiveness and flexible labor force, the working hour policy for employees is closely connected to the overall economic development and international competitiveness. After the 40-hour week of the LSA is implemented in 2016, topics such "flexibility in working hours," "flexibility in wages," "flexibility in labor," "health and the right to rest" and "work-life balance" shall all be discussed or planned alongside the "reduced working hours." This way, a humane and flexible working hour system can be established to satisfy the needs of the industries in Taiwan and to follow the international trend, aiming for a mutually beneficial situation for the employees, the employers, and the government.


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