Regulating Dispatch Labor

The aim is to protect workers’ rights without disrupting economic growth.

Amendments to the Labor Standards Law passed in April this year included long-discussed provisions to further protect Taiwan’s approximately 150,000 dispatch workers. For the most part, the changes were also welcomed by employers, who see the need for a stable dispatch labor system. 

Hiring dispatch workers has become an increasingly common practice in Taiwan. Particularly in the fast-paced ICT sector, companies need to be able to hire specialized labor quickly and flexibly to carry out short-term projects, meet urgent client requests, and cope with other situations where standard hiring practices would prevent a company from pursuing business opportunities.

One of the two key provisions in the new amendments is to stipulate that contracts entered into between dispatch companies and dispatch workers must be for an indefinite duration rather than fixed-term. The rationale was that fixed terms may allow dispatch companies to dodge benefits like severance payments upon termination of employment services.

A second major change specified that employees who do not receive payment due to them from the dispatch company may seek compensation from the client company they were contracted to.

In AmCham Taipei’s 2019 Taiwan White Paper published in June, the Human Resources Committee suggested some additional steps to strengthen the system. It recommended adoption of a special insurance mechanism for dispatched employees in addition to the current unemployment benefits. And to raise industry standards, the Committee proposed creation of a licensing system for dispatch agencies to ensure that they are qualified to manage dispatched workers. 

At the same time, industry has had several concerns related to dispatch labor. The main worry is whether the government may impose a ceiling on the number of dispatched workers that a company may be allowed to hire. If the cap is set too low, small companies with limited manpower and budget, including startups, will be unable to take advantage of the benefits of dispatched labor. A rule that is too restrictive would also encourage larger companies to increase the use of automation instead of hiring more workers.

The HR Committee proposes that a reasonable cap would be at least 20% of a company’s total workforce, reflecting the current reality of the business climate. Another concern involves the law’s stipulation that the client company may not participate in the selection of the workers to be sent to them. For companies that rely on dispatch labor for help with specific projects, which may be short-term and specialized in nature, interviewing the candidates is an important step in ensuring that the workers are the right fit.

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