Since amendments to Taiwan’s Labor Standards Act (the “LSA”) came into force in December 2016, both employees and employers have often found themselves unsure of how the changes apply in the workplace. In order to clarify how employers can in practice comply with these amendments regarding flexible rest days and avoid potential disputes with their employees, the Ministry of Labor (the “MOL”) has subsequently issued two interpretative letters. Below is a summary of these two letters, and what they mean for employers.

Make-up leave on flexible rest days

Previously under the LSA, employees who consent to work on flexible rest days could only choose to be provided with overtime payment in respect of their hours worked. The MOL has now clarified that such employees can choose either make-up/compensatory leave or overtime payment after the fact (i.e. after their overtime work has been completed). There must be some written agreement between employers and employees stating clearly the relevant standards for make-up leave, the period within which the make-up leave should be taken, and how any outstanding make-up leave is dealt with at the end of this period. Employers cannot force their employees to choose make-up leave.

This written agreement can be in the form of email correspondence, or a simple consent letter which is signed by the employee each time they complete overtime work on a flexible rest day. In the event of a dispute arising, the burden of proof falls on the employer.

Inability to work on flexible rest days/overtime

A second and related interpretative letter issued by the MOL deals with the situation where an employee agrees to work on a flexible rest day, however due to some personal reason (e.g. sickness) is either (a) unable to come to work at all, or (b) comes to work but is unable to complete the agreed hours of work. Previously, in such a situation, the employee would have to take personal or sick leave and the employer would still have to pay the full overtime pay amount in line with the recent flexible rest day overtime rules (please see our previous update here). This lead to many employment disputes, and was perceived as being unfair to employers. As such, the MOL has clarified that the employees’ consent to work on flexible rest days can be effectively rescinded where they are unable to work due to personal reasons.

In situation (a), this means that the employee will need to inform their employer of their inability to work, and the employer can negotiate with the employee to rescind the employees’ overtime obligation so that they do not need to take leave and overtime pay does not need to be provided.

In situation (b), in respect of the time when the employee is absent, the employer can negotiate with the employee to rescind the employees’ overtime obligation so that they do not need to take leave and overtime pay does not need to be provided. The employee’s overtime period can be dealt with as make-up leave. The details of how the employee’s absence from work in both situations (a) and (b) is dealt with can be mutually agreed upon in writing in a separate agreement, such as work rules, collective agreements (where there is a labor union) or employment contracts.
The MOL has further stated that only the amount of actual overtime hours worked will count towards the total amount of overtime (which cannot exceed 12 hours in one day or 46 hours in one month, under Article 32 of the LSA). This differs from the calculation of overtime payment.

Further developments

As the MOL releases further clarifications on the LSA amendments, employers must ensure that employees are made aware of the rules governing working on flexible rest days, overtime, and annual leave. This will ensure that disputes are minimized or avoided all together, and will prevent administrative penalties being levied on employers.

For more information on Taiwan employment matters, please contact Christine Chen at cchen@winklerpartners.com.