The "One Mandatory Holiday and One Non-Mandatory Holiday" Policy in Taiwan

News 2018/09/10
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The newly enacted Labor Standard Act in Taiwan is confusing every employer with regard to its "one mandatory holiday and one non-mandatory holiday policy".

To put it simply, any employer is not allowed to let employees work overtime on mandatory holidays in Taiwan. On the contrary, working overtime on non-mandatory holidays is allowed under the newly enacted law but the employer must pay higher compensation. Here, the newly amended Labor Standards Act after 23 December 2016, provides that any employee shall have one mandatory holiday and one non-mandatory holiday every 7 days. Although the employers may request the employees to work on non-mandatory holidays in Taiwan, the employees' consent will be required.

On the other hand, working overtime on mandatory holiday is not permitted, in principle, except that an act of God, an accident, or an unexpected event occurs. However, the employer shall notify the local competent authority for record, within 24 hours after the beginning of the overtime.

1. Overtime wages on non-mandatory holidays

Comparing the Taiwanese Labor Standards Act before and after 23 December 2016:

(1)Rate of overtime wages:

Before 23 December 2016: For the first two hours, an employee is entitled to an additional one-third of the regular hourly rate per hour; from the third hour and further, an employee is entitled to an additional two-thirds of the regular hourly rate per hour.
After 23 December 2016: For the first two hours, an employee is entitled to an additional one and one-third of the regular hourly rate per hour; from the third hour and further, an employee is entitled to an additional one and two-thirds of the regular hourly rate per hour.

(2)Hours of overtime:

Before 23 December 2016: Computed according to actual hours of overtime work.
After 23 December 2016: When the overtime work does not exceed four hours, it shall be computed as four hours; when the overtime is in excess of four hours and within eight hours, it shall be computed as eight hours; when the overtime is in excess of eight hours and within twelve hours, it shall be computed as twelve hours.

2. Five‐day workweek system

Before 23 December 2016: Any employee shall have one mandatory holiday every seven days.
After 23 December 2016: Any employee shall have one mandatory holiday and one non-mandatory holiday every seven days.

3. Rest on shifts

Before 23 December 2016: Proper rest
After 23 December 2016: At least continuous 11 hours of rest

4. Annual paid leaves

Before 23 December 2016: It was based on years of service.

→6 months to 1 year: Zero days
→1 year to 2 years: 7 days
→2 year to 3 years: 7 days
→3 year to 5 years: 10 days
→5 year to 10 years: 14 days
→Over 10 years: 1 additional day for each year, but maximum: 30 days.
☆Unused annual paid leaves: No special rules.

After 23 December 2016: It will be based on years of service.

→6 months to 1 year: 3 days
→1 year to 2 years: 7 days
→2 year to 3 years: 10 days
→3 year to 5 years: 14 days
→5 year to 10 years: 15 days
→Over 10 years: 1 additional day for each year, but maximum: 30 days.
☆Unused annual paid leaves: Shall be converted into day wages.

5. Right to file complaint

Before 23 December 2016: An employer may not terminate, transfer, or take any unfavorable measures against the employee who files a complaint.
After 23 December 2016: An employer may not terminate, transfer, reduce the wages of, or take any unfavorable measures against the employee who files a complaint. The competent authority or the inspection agency shall keep the identity of the complainant confidential.

6. Penalties (that may be imposed upon employer)

Before 23 December 2016: NTD 20,000 to NTD 300,000
After 23 December 2016: NTD 20,000 to NTD 1,000,000, may be increased to NTD 1,500,000 according to the circumstances of violations.

For example, presuming that an employee’s
Calculation of overtime wages: hour rate is NTD 300 and he has done overtime for 4 hours on workdays and overtime for 8 hours on non-mandatory holidays and mandatory holidays.

1. Overtime on workdays:

Before 23 December 2016: 300*1.33*2+300*1.67*2=1800
After 23 December 2016: Same as above

2. Overtime on non-mandatory holidays:

Before 23 December 2016: 300*0.33*2+300*0.67*6=1404
After 23 December 2016: 300*1.33*2+300*1.67*6=3804

3. Overtime on national holidays:

Before 23 December 2016: 300*8=2400
After 23 December 2016: Same as above

4. Overtime on mandatory holidays:

Before 23 December 2016: 300*8=2400, plus one day of compensatory leave
After 23 December 2016: Same as above

Time Schedule of Enforcement

Starting Date of Effectiveness: 23 December 2016

Period of Publicity: From 23 December 2016 to 1 April 2017, the Ministry of Labor provided calculation system and Q&A in its official website.
Period of Guidance: From 1 April 2017 to 1 July 2017, Taiwanese government agencies would monitor and assist in the compliance of the new amendment and in the improvement of compliance.
Period of Inspection: After 1 July 2017, the relevant Taiwanese government agencies will conduct labor inspection and deal with violations, targeting complained or high-risk business entities at first, like passenger carrier industry and security guard companies which require long working hours or industries which have dangerous working conditions.

ABOUT THE AUTHOR: Hung Ou Yang

Hung Ou Yang, Esq. is the Managing Attorney of Brain Trust International Law Firm and specializes in handling transnational legal disputes, business and white collar crime, business litigation, and the negotiation and drafting of international agreements. Hung has successfully resolved many high-profile civil, criminal, and transnational disputes, including a complaint concerning pesticide-contaminated land leased by RT-Mart, anti-dumping investigation in connection with CSC's carbon steel plate, and transnational property litigation concerning an internationally-renowned scholar.

Copyright Brain Trust International Law Firm

Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.