Setting Working Hours and Holidays for Taiwanese Workers

After much controversy, a revised Labor Standards Law has now been enacted in Taiwan.

After much controversy, a revised Labor Standards Law has now been enacted

 Last November 22, AmCham Taipei sent a letter to the Ministry of Labor (MOL) expressing member companies’ concern over uncertainty being experienced in the scheduling of public holidays. The letter noted that both employers and employees had been inconvenienced during previous months by announcements – on rather short notice – that certain dates had been designated as national holidays. The result was difficulty for business in setting personnel schedules, adding to operational costs, as well as hardship for employees who were unable to properly plan for their time off.

The possibility that the problem would extend into 2017 was relieved on December 6 when the Legislative Yuan–over strong protests from opposition parties and labor activists–passed a revised Labor Standards Act (LSA) that eliminated seven national holidays while at the same time instituting a five-day, 40-hour workweek for the nation’s workforce.

Of the other two days in the week, one was designated as a mandatory or “fixed” day off and the other a “flexible” day off on which employees could agree to work in exchange for overtime pay. For work on the flexible day off, employees are guaranteed a minimum of four hours of work, paid at 1.33 times the normal rate for the first two hours and 1.67 times starting from the third hour.

The revised law also increases the length of annual leave for most laborers, and bars employers from refusing to accept requested schedules for annual leave. For the first time, employers will now also be required to pay for unused annual leave.

With the change in the law, the 8.75 million laborers covered by the LSA will now have 12 national holidays a year, down from the previous 19. They will have one more day off than public functionaries (including teachers and military personnel), the extra one being Labor Day on May 1.

The seven national holidays that will no longer be available to workers are January 2 (an extension of the New Year’s Day holiday), March 29 (Youth Day), September 28 (Teachers’ Day), October 25 (Taiwan Retrocession Day), October 31 (Chiang Kai-shek’s Birthday), November 12 (Sun Yat-sen’s Birthday), and December 25 (Constitution Day). Public functionaries had already lost the seven national holidays in 2001 as part of their move to a stipulated five-day workweek.

The Ministry of Labor (MOL) notes that even with the removal of the seven national holidays, laborers will still have 123 days off a year, 13 more than the previous 110. Previously the standard working time was set at 84 hours for every two-week period, with one day off required every seven days.

For a large number of local employees, the revision in the law will have no practical impact, as their employers had already instituted a five-day workweek, including the removal of the seven national holidays. That arrangement, made through labor contracts, was permitted by an Executive Yuan administrative order issued in 2001.

In the wake of the change in government last May, however, the validity of that arrangement was challenged by labor activists who argued that workers cannot be deprived of their legal right to the seven national days on the basis of an administrative decree. Under heavy public pressure, the Executive Yuan revoked the decree, forcing employers to allow their employees to enjoy five additional national holidays in the second half of 2016.

Besides labor and some student groups, opposition political parties – including the Kuomintang (KMT), People First Party (PFP), and the New Power Party (NPP), which had been a close ally of the ruling Democratic Progressive Party (DPP) during the 2016 national election – strongly pushed for retention of the seven national holidays. In support of their cause, labor activists staged demonstrations and surrounded the legislature, and some went so far as to go on a hunger strike.

Activists representing the interest of part-time workers, notably students working on campus, were especially vehement in their opposition, as they will not be able to enjoy double pay working on those national holidays.

The episode was an uncomfortable experience for the DPP, which had long regarded itself as a champion of labor causes. In an interview with local media, President Tsai Ing-wen, who also chairs the DPP, said the LSA revision was a painful decision, but was necessary in view of Taiwan’s ongoing economic transition and the challenges being confronted by small and medium enterprises.

The prolonged dispute created a headache for businesses, which suddenly had to provide unplanned additional holidays to employees in the second half of 2016 – and then faced uncertainty about how to arrange work schedules for 2017. As a result, some major enterprises – including Taiwan Semiconductor Manufacturing Co. (TSMC), MediaTek, Asustek, and Delta Electronics – announced that they would continue to observe the seven national holidays in question, no matter how the law would be revised.

After several months of trying in vain to persuade opponents to change their mind on the number of holidays, the ruling party utilized its legislative majority to push the bill through. But the outcome appears to have left both labor and management dissatisfied – with labor unhappy about the fewer holidays and many businesses complaining that the provision for one-fixed and one-flexible day off per week was too rigid, especially for small enterprises. Some employers also cited potential problems in meeting short-term personnel needs during peak periods.

For violations of the law, employers will be subject to fines of NT$20,000-$1.5 million, compared to the previous ceiling of NT$300,000, in line with the scale and severity of the infractions. A “whistle blower” provision was added to encourage the reporting of violations by protecting those who speak out.

With implementation of the five-day, 40-hour standard workweek, the actual working hours of full-time laborers are expected to drop from average 44.28 hours a week in 2015, according to the MOL. That level was already less than the 45 hours in Japan, 47.1 in Singapore, and 47.7 in Korea.

In 2015, the average total of 2,104 working hours by Taiwanese, when compared with the 38 OECD economics, was lower only than the 2,371 in Singapore, 2,246 in Mexico, and 2,113 in Korea. Actual annual working time in Japan and the United States falls in the range of 1,700-1,800 hours. The MOL, though, points out that these figures do not tell the whole story, as they take into account both full-time and part-time laborers, whereas the latter account for only 3.6% of Taiwan’s labor force, much lower than in most other countries.

To help ensure that the new law is properly enforced, the MOL announced plans to boost the number of labor inspectors from the current 700 to 1,000 in 2017.

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