Taiwan: Further Changes to the Labor Standards Act

Prompted by criticisms from both employers and employees to its amendments to the Labor Standards Act (the "Act") in December 2016 (the "first amendments"), the Taiwanese Government proposed further revisions to the Act (the "further amendments"), less than a year after the first amendments were implemented. These recent amendments will take effect from 1 March 2018 and relate to rest days, overtime work and overtime pay and are aimed at providing employers greater flexibility in conducting their businesses and in managing the work schedules of their employees.

The first amendments

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

On 16 June 2017, various amendments were also introduced to the Enforcement Rules of the Labor Standards Act (the "Enforcement Rules") in order to address concerns relating to how the amended Act would apply to employers in practice including in relation to wage and attendance records, payment of work on rest days and the cycle for calculating annual leave. It was also reported that the Ministry of Labour increased the frequency of its inspections onsite to monitor and enforce employer compliance with the amended Act.

The further amendments

In November 2017, the Ministry of Labor announced that it was seeking to make further amendments to the Act to provide for more flexible working arrangements. Shortly after, the draft amendments were approved by the Executive Yuan. These amendments have now been passed by the Legislature and will take effect from 1 March 2018.

The key aspects of the further amendments are:

• Weekly rest days: changes have been made to the rule that mandates one fixed rest day and one flexible rest day off each week. Employers will now be able to change the fixed rest day each week provided that they have obtained certain approvals.
• Rest between shifts: In certain industries and subject to certain approvals, the minimum rest period for shift workers may be reduced to eight hours (as opposed to 11 hours under the first amendments).
• Overtime hours: An increase in the number of overtime hours from 46 to 54 hours per month will be permitted provided that a maximum of 138 hours over three months is not exceeded.
• Overtime pay: Overtime pay for work done on rest days will be calculated on the actual hours worked, rather than in blocks of four hours as is currently the case. Time off in lieu of such overtime pay will also be based on the actual hours of overtime worked.
• Annual leave: Any unused annual leave can now, by agreement with an employee, be carried over for one year (i.e. any unused annual leave at the end of the second year must be paid out).

Key takeaways

While the changes will generally be welcomed by employers, it will again be necessary to review employment practices, contracts and work rules to ensure they reflect the new provisions and permit employers to take advantage of the increased flexibility.

Written by Fatim Jumabhoy, Partner, and Tess Lumsdaine, Senior Associate