Newsletter
Summary of the Latest Amendments to the Labor Standards Act
Following the promulgation of the amended Labor Standards Act ("LSA") on December 21, 2016, many people from a wide spectrum of the general public have expressed concerns about the flexibility of the amendments, particularly regarding overtime pay on rest days, restrictions on the hours of overtime work, the weekly fixed day off and annual leave entitlements. Responding to such concerns, the Legislative Yuan (Taiwan's Legislature) passed the amendments to 8 provisions under the LSA on January 10, 2018. Such amendments will take effect on March 1, 2018.
Below is a summary of the key amendments to the LSA:
1. Work Hours and Wages on Rest Days (Article 24)
Current regulations stipulate that if an employee works on a rest day, (i) 4 hours of work or less shall be counted as 4 hours, (ii) 4 to 8 hours of work shall be counted as 8 hours; and (iii) 8 to 12 hours of work shall be counted as 12 hours. After the amendments to the LSA, work hours and wages on rest days will be calculated according to employees' actual hours of work.
2. Restrictions on the Hours of Overtime Work (Article 32)
Current regulations prescribe that overtime work shall not exceed 46 hours per month. In order to allow for more flexibility, the amendments to the LSA stipulate that if the employer obtains the approval of the labor union or the labor-management conference in the absence of a labor union, the maximum number of hours of overtime work per month may be increased to 54 hours, provided that the maximum number of overtime hours shall be limited to 138 (46*3) per quarter.
Moreover, if an employer has more than 30 employees, the employer will be obligated to file a report with the local competent authority for approval.
3. Compensatory time off in lieu of Overtime Pay (Article 32-1)
Current regulations are silent on the issue regarding how to calculate the hours of the compensatory time off when employees choose to take the compensatory time off in lieu of the overtime pay. After the amendments to the LSA, if employees choose to accept compensatory time off in lieu of overtime pay and the employer agrees, the hours of compensatory time off will be calculated according to employees' actual hours of overtime work. The period for taking compensatory time off may be negotiated between the parties ("Period"). However, if employees fail to use up their compensatory time off before the Period or the termination of their employment, the unused hours of compensatory time off shall be compensated by the payment of salary, which are calculated based on the statutory rates for overtime pay.
4. Hours of Rest between Working Shifts (Article 34)
After the amendments to the LSA, in principle, a mandatory 11 consecutive hours of rest between working shifts is required for employees who follow a rotating shift schedule. However, the length of such mandatory rest-period may be shortened to 8 consecutive hours, subject to (i) the announcement of the Ministry of Labor after the approval of the authority in charge of the company filing the application in consideration of the characteristics of work or special circumstances, and (ii) the approval of the union or the labor-management conference in the absence of a union. Moreover, if an employer has more than 30 employees, the employer is obligated to file a report with the local competent authority for approval if the length of the mandatory rest-period is to be shortened.
5. Adjustment of Fixed Day Off (Article 36)
Current regulations stipulate one fixed day off per week (or two fixed days off every two weeks for a business entity, only if that business entity has adopted a four-week flexible working-hour system). The amendments to the LSA allow for more flexibility to the arrangement of the weekly fixed day off. That is, even if an employer is not eligible to adopt a four-week flexible working-hour system, the one fixed day off per week may be adjusted every 7 days, subject to (i) the approval of the authority in charge of the company filing the application, (ii) the company filing the application falls in the list of industries designated by the Ministry of Labor, and (iii) the approval of the union or the labor-management conference in the absence of a union, but an employer who has more than 30 employees will be obligated to file a report with the local competent authority for approval if the weekly fixed day off is to be adjusted. In other words, under such adjustment, the one fixed day off may be freely assigned on a given 7-day period. As a result, the interval of two fixed day offs can be 12 days apart in an extreme case, i.e. the 1st and the 14th day of a given 14-day period.
6. Unused Annual Leave (Article 38)
Current regulations prescribe that unused annual leave must be compensated by payment of salary in lieu thereof on a yearly basis. The amendments to the LSA stipulate that unused annual leave at the end of a year may be carried over to the next year, subject to negotiation and agreement between employers and employees. However, if any portion of the deferred annual leave entitlement remains unused at the end of the next year or upon termination of the employment contract, the unused annual leave entitlement must still be compensated by payment of salary in lieu thereof.