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HR workshop on the Labour Standards Law

The ECCT's Human Resources committee held a special workshop on the topic "Enforcement Rules of the Labour Standards Law - Practical advice for companies on how to demonstrate compliance". During the workshop, guest speaker: Kuo, Kuo-wen, Deputy Minister of the Ministry of Labour gave a presentation to members outlining the main provisions of the "Enforcement Rules on the Labour Standards Act", which were released on 17 March. The rules lay out procedures companies must follow in order to comply with the most recent amendments to the Labour Standards Act (LSA), promulgated on 6 December 2016. After the presentation, an extensive Q&A session was held to answer questions of clarification on the enforcement rules and compliance with the LSL. The workshop was followed by a networking lunch.

ECCT members had previously pointed out to authorities that aspects of the new law are out of step with modern practices, too inflexible for the modern service economy and risk putting Taiwan at a disadvantage to other countries in the Asia Pacific region, which would deter further foreign investors who might choose other countries with more flexible labour rules.

One of the major criticisms of LSL has been the so-called "one flexible day off, one fixed day off" per week provision. This is seen by most employers as too rigid because it does not allow for flexibility when employees have to take overseas trips, work at trade shows or other activities that require working for more than six consecutive days in a row or if the employee needs or wants to have an alternative fixed day off. On this subject, the deputy minister said that employees can work on their fixed day off at double their normal wage plus an additional day off. If employees work on their flexible day off, they should be given extra pay.

Another criticism is that under the new rules, overtime payment on rest days are not calculated according to actual overtime hours. This is complicated and unreasonable and has resulted in disputes between employers and employees. Deputy Minister Kuo explained that there are different formulas for calculating overtime pay based on extended work hours, working on rest days, working on national holidays and special days off given by the employer. He went on to give several examples of how overtime pay is calculated. According to the MoL's calculations, if an employee works on two of his or her rest days per month, it should only add about 3-4% to an average employee's salary. He also offered examples of how to arrange employee's schedules in order to comply with the new rules.

According to Kuo, the government's rationale for promoting its new policy is to promote the protection of workers' rights to be compensated for additional work and to take sufficient rest in between shifts as well as enough days off. In so doing they hope to reduce the high turnover rate in industry. He noted that many of Taiwan's small and medium-sized firms do not survive long and one reason is a high turnover rate where fewer than 50% of workers stay in the same firm for more than five years.

A new provision has been inserted in the rules to protect whistle-blowers. The provision prevents employers from firing, demoting or decreasing the salaries of employees who lodge complaints against them. After having received a complaint authorities or inspection agencies are required, within 60 days, to advise the worker in writing of the measure taken and keep the complainant's identity data in strict confidence. Authorities may also increase the fine for a violation of the regulations on wage and working hours, commensurate with the business scale, number of violators or extent of the violation.

In terms of compliance, companies need to keep evidence of records of employees' working hours using timesheets, access cards, bio-registration systems or other tools.

For any days of annual leave not taken during the year, employees are entitled to claim compensation in lieu of leave, which should be paid at the end of the year or, for departing employees, on their last day of work. Employees should be notified of how many days off they have outstanding (untaken). This provision has given rise to the common problem of employees foregoing their annual leave in order to receive compensation. The deputy minister admitted that this is an unintended consequence of the new law, which is intended to get employees to take enough time off, not to increase their earnings. He urged employers to encourage their employees to take all their leave.

Another issue that has arisen is in cases where employees claim that it is not possible for them to finish their work within normal working hours and therefore need to work overtime. While some employers are not willing to pay overtime, this is much less an issue for most ECCT members than the lack of flexibility in the number of consecutive days employees may work.

While Deputy Minister Kuo admitted that there are still some problematic areas that need to be worked out, he noted that there is currently a three month grace period in effect during which companies may request labour ministry officials to offer advice on specific cases and clarify how to demonstrate compliance with the law.