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Summary of the Draft Amendments to the Labor Standards Act



Summary of the Draft Amendments to the Labor Standards Act
Following the promulgation of the amended Labor Standards Act 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 Ministry of Labor is planning to further amend the Labor Standards Act and has therefore released a draft of the amendments on October 31, 2017 in order to gauge the feedback on the proposed changes from the general public.
Below is a summary of the draft amendments to the Labor Standards Act:
1.          Work Hours and Wages on Rest Days
Work hours and wages on rest days will be calculated with reference to employees' actual hours of work. 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.
2.          Restrictions on the Hours of Overtime Work
Current regulations prescribe that overtime work shall not exceed 46 hours per month.  In order to allow for more flexibility, the Ministry of Labor is now considering allowing the maximum number of hours of overtime work to be increased.  The draft amendment therefore puts forward the following two proposals:
(i)    The maximum number of hours of overtime work per month may be increased to 54 hours; or
(ii)   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.
Based on the feedback from the general public, the Ministry of Labor will adopt one of the aforesaid proposals in its final draft amendment for the legislators' consideration.  Notwithstanding the foregoing, any increase in the hours of overtime work will require 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 will be obligated to file a report with the local competent authority for approval.
3.     Hours of Rest between Working Shifts
Under the current regulation which has been promulgated but without an effective date as yet, a mandatory 11 consecutive hours of rest between working shifts is required for employees who follow a rotating shift schedule.  However, if this regulation were to take effect, the industries that implement a 3-shift system will be significantly impacted. Therefore, in order to soften the impact on these industries, the Ministry of Labor is considering adopting one of the two following proposals:
(i)    In principle, at least 8 consecutive hours of rest between shifts shall be provided to employees. However, a longer period of rest exceeding 8 hours may be provided, subject to the approval of the union or the labor-management conference in absence of a union.
(ii)   In principle, at least 11 consecutive hours of rest between shifts shall be provided to employees.  However, the length of such mandatory rest-period may be shortened to 8 consecutive hours, subject to 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.
4.     Adjustment of Fixed Day Off
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 draft amendments 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 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.
5.     Unused Annual Leave
Current regulations prescribe that unused annual leave must be compensated by payment of salary in lieu thereof on a yearly basis.  The draft amendments 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.
Although these draft amendments might still be subject to changes, no drastic alterations are expected to be made. The finalized draft amendments will then be submitted to the legislature for them to go through the usual review procedures, which are scheduled to be completed by the end of 2017.

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