In December 2016, Taiwan’s Legislative Yuan made controversial amendments to the Labor Standards Act (the “LSA”) in order to implement a five-day work week and protect employees’ annual leave rights. In order to further clarify how employers can comply with these new laws in practice and to deal with some commonly raised concerns, the Ministry of Labor made various amendments to the Enforcement Rules of the LSA (the “Rules”) which were announced and put into effect in June 2017.

Five of these key amendments most pertinent to employers are:

(1) Working hours on flexible rest days are expressly treated as overtime

In line with recent amendments to the LSA regarding flexible rest days, working hours on rest days are expressly treated as overtime.

(2) Itemization of pay slips and ways of providing pay slips to employees

Employers must provide a detailed itemization of employees’ pay slips, including the employee’s total base salary as agreed upon between the employer and employee, the amount of each item which makes up the employee’s total base salary, any deductions which are required by law or by mutual agreement between the employer and employee, and the actual payment amount. When employers are required to provide employees’ pay slips, they can choose to provide hard copies, send the information electronically, or provide some other means for employees to access and print the information at any time.

(3) Acceptable methods of recording employee work attendance

In order to clarify how employers can record employees’ work attendance and comply with relevant laws, the amendments to the Rules now list the following as acceptable methods of recording employee attendance for both employers and employees to follow:  attendance books, attendance cards, swipe card machines, entry access cards, biometric identification systems, and computer attendance record systems.

(4) Relaxation of the period within which annual leave must be used

While employees’ annual leave is provided based on years of service and calculated from each employee’s on-board date, the period within which accumulated annual leave must be used has now been relaxed. The period must be mutually agreed upon between the employer and employee, and can be based on service years, calendar years, school years, fiscal years, or any other kind of annual system agreed upon between the employer and employee. Furthermore, employers must inform employees that they can arrange their annual leave and their annual leave entitlements within 30 days of the employee being eligible for annual leave.

(5) Calculation and payment of wages in respect of unused annual leave

Where an employee’s service year ends (if applicable) or where their employment contract is terminated, one day’s regular wages must be paid for each day of unused annual leave remaining. An employee’s “daily wage” is based on their regular working hours and wage at the time one day prior to the end of their service year or termination of their employment contract. Where an employee is paid monthly, “daily wage” is based on their regular working hours and wage at the time one month prior to the end of their service year or termination of their employment contract, divided by 30.

Employers can pay this amount either on the employee’s regular pay day, or within 30 days of the end of the employee’s service year. In the case of termination, the amount should be paid to the employee immediately.

Employers should notify their employees of their annual leave entitlements and the total amount to be paid in respect of unused annual leave on an annual basis, and should record this information in each employee’s salary roll. Employees should be notified in writing, electronically, or be provided with some means to access and print out the information, prior to the period when wages are usually paid each year.

For more information on Taiwan employment matters, please contact Christine Chen at cchen@winklerpartners.com or on +886 (0) 2 2311 8307.