Taiwan: Labour Ministry Crackdown On Companies In Taiwan

Last Updated: 8 November 2017
Article by Angela Wu

Taiwan's Ministry of Labour is ramping up onsite inspections due to a high rate of company non-compliance with changes to the Labour Standards Act.

On 16 June 2017 the Taiwanese government announced several changes to its enforcement rules for the Labour Standards Act. Four months on, the Ministry of Labour is increasing its onsite inspections due to a high number of companies failing to comply with some, or all, of the changes.

Key changes

The amendments made are intended to promote a better work/life balance for employees, and include the following new enforcement rules for employers:

  1. The attendance record can be in paper form, punch card, badge record, electronic form or any other tool that has time-in and time-out recorded in the format of date, hour, and minute.
  2. Worker annual leave entitlement can be based on their anniversary year, calendar year, fiscal year or the period agreed upon between employer and employee. The employee and employer should mutually agree on one of the above.
  3. Workers should be notified of their annual leave entitlement within 30 days of qualification for annual leave.

    Statutory annual leave is as follows:

    Years of service Previous allowance Allowance since 1 January 2017
    0.5 - 1 year 0 3
    1 - 2 years 7 7
    2 - 3 years 7 10
    3 - 5 years 10 14
    5 - 10 years 14 15
    10+ years 14 days + 1 day for every additional service year, capped at 30 days 14 days + 1 day for every additional service year, capped at 30 days
  4. When annual leave reaches the end of the agreed base year, the employer should pay out any untaken leave within 30 days of the year-end. The payment is based on the worker's daily wage, calculated as a monthly wage divided by 30 days.

Compliance

Despite the Taiwanese government communicating the Act changes when they were made, many companies are not yet in full compliance. The fact that outstanding leave must be paid out to the employee, and cannot be carried forward to the following year remains a confusing point for some. There has also been quite a lot of debate and confusion about the changes relating to 'one regular day off and one rest day.' This is because the employer must decide which day will be the employees' regular day off, and which day will be their rest day.

One rest day must follow six consecutive working days, however, companies in several industries find this a difficult requirement to meet. For example, auditors in a certified public accounting firm will work two consecutive weeks during the busy audit season. For IT companies, employees may be required to work for more than seven consecutive days during system implementation. Companies believe there should be more flexibility in the laws to accommodate scenarios such as these.

Inspections

Companies that do receive a Ministry of Labour onsite inspection can expect to be scrutinised on the following key points of the Act, among others.

  1. Time and attendance: workers' time and attendance must be recorded accordingly, in the format of date, hour and minute, and the data must be kept for five years.
  2. Wage data must be kept for five years and include each wage type, detail and gross-to-net calculation.
  3. Working hours: Eight hours per day, 40 hours per week. Overtime must be paid after eight working hours per day.
  4. Overtime: Employers must pay any overtime, and the overtime payment calculation must meet the minimum legislative calculation formula. On weekdays, the first two hours of overtime are calculated at an hourly rate*(1+1/3). After the first two hours, overtime is calculated at an hourly rate*(1+2/3). On a rest day, if overtime hours are less than four hours, the employer must pay four hours. If overtime hours are more than four hours and less than eight hours, the employer must pay either hours. If overtime hours are more than eight hours and less than 12 hours, the employer must pay 12 hours.
  5. Overtime total hours can't exceed 46 hours per month, or the working hours + overtime hours cannot exceed 12 hours per day.
  6. Workers must have a 30 minute break for every four working hours.
  7. Labour pension and severance payment – labour insurance must be 70% paid by the employer, 20% paid by employees and 10% paid by the government, and employee salaries must be reported accurately.

Penalties

With increased onsite inspections comes the increased risk of fines for Taiwanese companies that are not yet complying with some or all of the Labour Standards Act rule enforcement changes.

Fines can range from NT$20,000 to as much as NT$1,000,000 for regulation breaches, and the government will publish the company name, responsible person's name and type of breach on the Bureau of Labour Affairs portal.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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