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January 15, 2021

By Victor I. Chang, Jason Chao, Emily Chen and Letitia Hsiao 

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Principal drivers for legal and business activity

There are two principal drivers for legal and business activity in Taiwan in 2020. The first is the continuing U.S. China 'cold trade war', which has been observed since 2018 and continues to expand. The cold trade war has benefitted Taiwan due to the country's place in global supply chains, which has meant that both U.S. and Chinese companies are seeking out Taiwan partners to do business. The second driver is the COVID-19 pandemic. Taiwan successfully contained COVID-19's initial outbreak without the need to lock down its schools and businesses. Taiwan's GDP grew by 1.54% in the first quarter of 2020 and is expected to continue to experience more growth. Overall, Taiwan's unemployment rates have remained stable and Taiwan's current stimulus package is modest (in comparison to the rest of the world), accounting for only 5.4% of GDP.


Outbound investments

As Taiwan companies, venture capital funds, and private equity funds have reduced their domestic portfolios, outbound investments into Japan, Europe and the United States have recently picked up. Commercial banks in Taiwan are also increasingly willing to lend to Taiwanese companies and funds investing outside of Taiwan. The Taiwan National Development Fund (the main Taiwan sovereign fund investing in alternative assets) has also shown much more flexibility and willingness to co-invest in large projects that are led by Taiwanese public companies.


Relative political stability and anti-PRC sentiment

Recent world events, including the COVID-19 pandemic, have enabled the pro-independence, pan-Green coalition to consolidate power with greater support from Taiwanese voters. As a result, there is greater scrutiny of Chinese acquisitions of Taiwanese companies. With fewer deep-pocketed Chinese companies able to purchase companies in Taiwan, this creates opportunities for Japanese, U.S. and European companies to invest at a potentially cheaper cost and access cheap Taiwan credit markets.




Changes to labour dispute resolution

The Labour Procedure Act (“LPA”) was approved on 9 November 2018, and is expected to take effect in 2019. The LPA establishes a general principle that mediation proceedings shall be concluded in three oral-argument sessions within three months, and litigation proceedings shall be concluded in one oral-argument session within six months in the court of first instance.

Other key features of the LPA include:

  • a specialised tribunal or unit in every Court to handle labour disputes, with experienced Labour judges and mediators;
  • disputes arising from cooperative education are covered under the LPA;
  • enhancing access to justice for employees by removing some of the barriers to justice (e.g. providing the employees with broader choices of venue for dispute resolution with respect to labour matters) and providing them with the right to appear with an assistant during a court session; and
  • a cap on security for costs payment at no more than one-tenth of the amount of the claim. However if the employee can show such payment would seriously affect his or her livelihood, the court may discharge this requirement.


Expansion of online services for parental leave applicants

Since 12 November 2018, applicants for parental leave allowances are able to submit documents online. Applicants can also apply through their employer if their employer is registered with the online service of the Bureau of Labour Insurance of Taiwan (“BOLI”). This was previously excluded due to the requirements that certain documents were required to be certified and submitted in paper form, which led to a number of complaints.


Resident doctors under the Protection of Labor Standards Act

Ministry of Labor, Republic of China, announced on 30 November 2018 that the Labor Standards Act will apply to all resident doctors from 1 September 2019. Resident doctors will enjoy the protection of compensation for occupational injury and retirement pension.

However, given the specialty and professionalism of the work performed by resident doctors, their relevant working hours and holidays may still be agreed with the hospitals. The application will not apply to visiting staff (attending physicians) with greater autonomy or resident doctors in public hospitals.




Further Amendments to Taiwan’s Labour Standards Act

An amendment to the Taiwan’s Labor Standards Act (the “Prior Law”) will come into effect on March 1, 2018 (the “Amendment”). The key points of the Amendment are as follows:


Change in calculation of wages for working on a rest day

Under the Prior Law, when calculating overtime wages for working on a rest day, work for 4 hours or less was counted as 4 hours, and work between 4 to 8 hours was counted as 8 hours. The Amendment has amended this provision so that the overtime wage for working on a rest day shall be based on the worker’s actual working hours.


Increase in maximum permitted overtime

Under the Prior Law, the maximum overtime for a worker was no more than 46 hours per month. Under the Amendment, the maximum overtime for a worker has been increased to 54 hours with the consent of a labor union or with the approval of the labor-management conference, provided that the total overtime shall not exceed 138 hours for a period of three months. Under such circumstances, the employer may elect, with such worker’s consent, to provide such worker with wages or compensatory time off for the overtime.

In addition, the Supreme Administrative Court recently clarified the concept of “overtime” and ruled that any worker who works on non-working time or on a rest day shall be regarded as working overtime.


Decrease in minimum rest period for working shifts

Under the Prior Law, a worker was entitled to have at least 2 days off for every 7 days worked, provided that the 2 days off were divided into 1 regular day off and 1 recess day. The Amendment has changed the relevant provisions and now provides that an employer in specific industries may be entitled to adjust the regular day off and recess day during such 7-day-cycle with the consent of the competent authority in charge of the relevant enterprise. Employer may provide an 8-hour rest period as opposed to 11 under previous legislation with the consent of a labor union or with the approval of the labor-management conference.


Unused annual paid leave may be postponed for 1 year

Unused annual paid leave may now be postponed until the end of the following year, and such annual paid leave shall not be paid out as wages unless the worker does not use the leave in the following year.

With thanks to Victor I. Chang, Jason Chao, Emily Chen and Letitia Hsiao of LCS & Partners for their invaluable collaboration on this update.


Image: Suzanne Horne
Suzanne Horne
Partner, Employment Law Department

Image: Kirsty Devine
Kirsty Devine
Associate, Employment Law Department

Image: Aashna Parekh
Aashna Parekh
Associate, Employment Law Department

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