Draft amendments to Labor Standards Act to benefit both workers and employers

  • Date: 2017-11-21

I. Background

On December 6, 2016, the Legislative Yuan passed an amended Labor Standards Act to implement a flexible five-day workweek and improve conditions for workers. After almost a year under the system established by the revised law, however, voices on all sides suggest that greater flexibility is needed. After consideration of opinions and reactions from all sectors of society, the Executive Yuan on November 9, 2017, approved new revisions to portions of the act, with the expectation that the changes will create a safe and flexible labor system that fulfills President Tsai Ing-wen’s instruction to protect the rights and interests of workers while providing operational flexibility for employers.

II. Key points of the draft amendments to the Labor Standards Act

Two major points characterize this round of revisions to the law: the first is four unchanging principles to preserve the rights and interests of workers, and the second is four points of flexibility to provide appropriate leeway for employees and employers.
 
A. Four unchanging principles

1. The standard workweek will not change in principle from the current eight hours per day and 40 hours per week.

2. The principle of two days off per week—one mandatory day off and one flexible rest day—will not change.

3. The overall amount of permitted overtime will not change in principle from the current 46 hours per month.

4. The pay rate for overtime work will not change, with an overtime premium to apply equally for overtime work done on both regular workdays and flexible rest days.

B. Four points of flexibility

1. The draft amendments will provide flexibility for permitted overtime. Although overall overtime will not change in principle from the current 46 hours allowed per month, with union approval or mutual agreement between employees and employer, this 46 hours can be apportioned flexibly such that total overtime over a three-month period does not exceed 138 hours. However, total overtime per single-month period is limited to 54 hours. Companies employing 30 or more workers must also submit plans to the local supervisory agency for review.

2. Workday scheduling will also gain flexibility. The principle of one mandatory day off every week will not change, but designated businesses meeting the conditions below will have the leeway to schedule the mandatory day off on any day over a given seven-day period:

a. Companies must first receive approval from the relevant central government supervisory organization (e.g., the Ministry of Transportation and Communications for tour guides, or the Ministry of the Interior for the construction industry) and then submit to review by the Ministry of Labor.

b. Companies that wish to apply this exception must receive union approval or a mutual agreement between employees and employer. Firms employing 30 or more workers must also submit plans to the local supervisory agency for review.

3. Scheduling of time off between shifts will see added flexibility. The current requirement is at least 11 hours of rest between shifts, but exceptions will be allowed if management receives union approval or the assent of employees. Any exception, however, must still allow no less than eight hours off between shifts. Companies employing 30 or more workers must also submit plans to the local supervisory agency for review.

4. Workers will gain flexibility in the use of annual leave. Unused annual leave may, with the consent of management and labor, be carried over to the next year. Any annual leave still unused by the end of the second year or at the time of contract termination should be converted into pay.

III. Conclusion

These new amendments to the Labor Standards Act are aimed squarely at expanding protections for workers while at the same time providing even greater operational flexibility for businesses, ultimately benefitting the industrial transformation of Taiwan and improving the nation’s overall economic environment.