Taiwan: Compliance checks - changes to Labor Standards Act

On 6 December 2016, a number of amendments to the Labor Standards Act (Act), relating to rest days, national holidays, annual leave, breaks between shifts, pay slips and whistle-blower protections, were passed by the Legislative Yuan in Taiwan. The amendments also substantially increased the penalties for non-compliance with certain provisions of the Act.

Key changes

Implementation of five-day workweek

Employees will be entitled to two days of per week. One rest day is to be fixed (e.g. every Sunday) and one other rest day to be agreed with the employee. Employers will not be permitted to request workers to work on the fixed rest day save for in the event of certain emergencies. The penalty rates have been substantially increased where an employee works on the non-fixed rest day.

Reduction of designated national holidays

The number of national public holidays has also been cut from 19 to 12 a year with effect from 1 January 2017.

Changes to annual leave entitlements

The minimum annual leave entitlements have been varied for certain employees with increased annual leave entitlements for employees with more than two years' service and a new entitlement to three days of annual leave for workers with at least 6 months but less than a year's service. There are also changes to an employer's obligations in managing annual leave.

Breaks between shifts

Under the new regulations, shift workers must now get at least 11 hours of rest between shifts.

Payslips

Employers will be required to provide employees with detailed payslips setting out itemised wage calculations and such information must be maintained on the employer's payroll system.

Whistle-blower protections

Under the amended Act, employees who file a complaint with their employer or the Labor Office regarding breaches of the Act or any other labor statute or administrative regulation will be protected from dismissal, transfer, reduction of wages or any conduct by the employer which adversely affects the employee's rights. Violations of this protection may result in civil and criminal liabilities.

Time to review contracts and work rules

While the final version of the amendments to the Act is yet to be announced by the President, the amendments are set to take effect from 1 January 2017. Given the broad ranging changes, companies will need to review their employment practices, contracts and work rules to ensure they are compliant. This will be particularly important as the amendments also increase the penalties for non-compliance with certain provisions of the Act from NT$300,000 to NT$1,000,000.

Herbert Smith Freehills can assist you with achieving compliance. To discuss how, please contact Fatim Jumabhoy.