In last year’s White Paper, the HR committee proposed the adoption of laws/regulations to govern the notice period prior to a labor strike for specific industries, render supplemental rulings for issues related to dispatched employees, and adjust the reward and punishment for hiring people with disabilities. Regarding the labor-strike notice period, the Ministry of Labor (MOL) has started procedures to introduce legislation. The issues concerning dispatched labor and recruitment of disabled employees were also resolved in the course of meetings with the authorities. We deeply appreciate the government’s willingness to accept the White Paper recommendations.
As new issues have arisen in the labor/management relationship, we offer the following proposals 2020:
Suggestion 1: Clarify what types of high-salary personnel are eligible for more flexible working conditions.
On May 23, 2019, MOL issued a ruling that employers may apply for release from restrictions on working hours, regular leave, rest days, and night and holiday work by female employees in the case of supervisory or administrative personnel with monthly salaries of NT$150,000.
According to Article 50-1 of the Enforcement Rules of the Labor Standards Act (LSA), “supervisory or administrative personnel” refers to those responsible for the operation and management of the business and possessing the decision-making authority over employee recruitment and termination or working conditions. In general, only a few mandated managers in a company, such as the chairman, general manager, chief HR officer, and other designated positions, might fall under the strict definition stated in the Enforcement Rules. But in these cases, there is no need for a company to apply for release from the work restrictions if no employment relationship exists.
To our knowledge, no company or institution has yet successfully obtained approval for such release from the Taipei City Department of Labor. It is quite likely that the requirement concerning “supervisory or administrative personnel” could be an important factor in the failure to obtain such approval. We therefore suggest MOL consider relaxing the requirements stated in the ruling or changing the definition in the Enforcement Rules so as to provide employers with more flexibility to adjust the working conditions for higher-salary employees.
Suggestion 2: Consider the factors in the MOL checklist in their totality when determining whether an employment or independent contractor relationship exists.
Various types of agreements exist under Taiwan law for the provision of labor service, including employment agreements, contracts for work, and mandate agreements, and the obligation of the parties varies for each type of agreement. To clarify the definition of an employment relationship, on November 19, 2019, MOL announced the “Directions for Classifying an Employment Agreement” and a checklist that includes four major items and 25 minor ones as criteria for determining the type of employment relationship.
We urge MOL, when reviewing the checklist factors, to consider controlling court precedent, primarily the Constitutional Court’s Interpretation No. 740 which held that the degree of the employee’s subordination should be taken into account – and that partial subordination is insufficient to establish an employment relationship. In addition, the authorities should recognize that certain criteria in the checklist are not dispositive of an employment relationship and may exist in a mandate or contractor relationship. These factors should be relegated to secondary consideration when reviewing an employment relationship, while the core characteristics are given more weight in the analysis.
Regarding several of the checklist items, the Committee offers the following comments:
The business entity applies fo labor insurance or contributes pension reserve for the service provider: Court precedent holds that the entity’s provision of labor insurance or labor pension to a mandate manager is not a legal ground to recognize the existence of an employment relationship between the two parties.
The service provider cannot decide the working hours, rest hours and premises, and route or area of providing services at his/her discretion: The existence of mutually agreed upon working hours and premises should be viewed as secondary and non-core factors. As such, they should not be viewed as necessarily dispositive of a subordinate employment relationship. There may still be cases in contracts for work or mandate agreements where, given the nature of the work and business, the individual should provide services at certain times in certain locations or premises.
The service provider is obligated to register attendance, accept the work assigned by the business entity, accept assessments of that work, comply with internal rules, and provide services in person, with private transactions prohibited: To maintain internal order and smooth business operations, entities commonly implement certain measures to manage and supervise mandate managers, including keeping attendance records, assigning specific operation plans or projects, and assessing the manager’s leadership and professional performance to decide whether to extend the agreement with the mandate manager. In addition, the mandate manager is normally bound by non-competition obligations during the engagement term to protect the employer’s interest – the same as for employees under employment terms. According to court precedents, the legal relationship between the two parties will not be changed from a mandate to an employment relationship even if the entity adopts the measures mentioned above.
Regarding Item I 5.1 (the service provider is obligated to accept the business entity’s review of his/her work performance), I 7.1 (the service provider has to perform the work personally), and III 1.2 (the service provider is unable to complete job assignments alone and needs to collaborate with other colleagues to complete the work), these three items exist concurrently in employment, contractor, and mandate relationships and are not necessarily indicators of an employment relationship.
For Item I 5.1, the performance of an independent contractor or agent also needs to be reviewed by the proprietor or principal so that the proprietor or principal can decide whether the work has been satisfactorily completed and should be paid for in full. For Item I 7.1, it is also common for the proprietor or principal to require the contractor or agent to personally perform the work entrusted to them. For Item III 1.2, it is also common for a proprietor to retain multiple contractors to work on a single project (such as a construction project) by assigning discrete parts to each.
In sum, these three items are not useful indicators for defining employment relationships.
Suggestion 3: Revise the requirement for large-sized enterprises to hire nurses in order to make the most effective use of nursing personnel in Taiwan.
Article 22 of the Occupational Safety and Health Act stipulates that “Business entities employing 50 or more laborers shall employ or contract medical personnel” and that medical personnel responsible for providing labor health services shall be subject to Article 3 of the Labor Health Protection Regulations. The requirement to hire or contract medical personnel applies to organizations with more than 300 employees, those having more than 100 employees and engaged in hazardous work, and those with a total number of more than 3,000 employees in various locations. The purpose of the legislation is to ensure that workers enjoy the right to a safe and healthy working environment.
However, the labor environment has changed, and workers do not necessarily provide their services in fixed workplaces. Employing medical personnel in the office may not be the best way to provide workers with adequate health protection. In addition, due to the current shortage of medical personnel in Taiwan, the requirement for employers of a certain size to hire medical personnel may result in inadequate manpower allocation. It is appropriate to consider how to properly balance labor protection and the deployment of medical resources across the country.
The Committee urges revision of Article 3 of the Labor Health Protection Regulations along the following lines:
Base the requirement to hire healthcare professionals on the average number of employees going to the workplace in a given month, rather than the total number of employees. The Committee believes that a more appropriate system is needed to reflect changes in Taiwan’s work environment. The current regulation assumes that everyone employed by an enterprise is based at one fixed location, and fails to take into account the growing trend of telecommuting (including remote working, working from home, etc.). Therefore, we recommend basing the requirement on the average number of employees going to the workplace in any given month. The government could also take into account the different situations across industries and determine which industries are better suited to having permanent healthcare professionals hired as employees.
Encourage businesses to offer health and wellness support to employees on a contractual basis. For those enterprises with a large number of employees but with only a small number working from one location, we recommend that they cooperate with local healthcare providers such as clinics or hospitals to continue offering health and wellness support to their employees on a contractual basis.
Maintain a public database of qualified healthcare professionals available by location. Such a database could be managed by the occupational health and safety division of the labor department at the local government level. We encourage the Ministries of Labor and Health and Welfare to discuss how this database should be set up and maintained.
Suggestion 4: Recognize the value of independent and flexible work arrangements under the digital economy and refrain from applying rigid labor classification or regulations to app-based work.
The Committee acknowledges the government’s efforts to upgrade Taiwan’s industry by identifying “innovation” as one of the key themes for overall national development. Taiwan is well-positioned to embrace a digitized platform economy, a concept that has been growing rapidly around the globe. As this emerging economy introduces innovative and sometimes disruptive business models, the Committee urges the government to acknowledge that the definition of “work” and “employment” in a digital world needs to be subject to re-evaluation.
While standard full-time employment still dominates the labor market, it should not constitute an absolute benchmarking norm against other alternatives. Rather than viewing independent, app-based and knowledge-based work as a problem and pushing workers into more traditional forms of employment, the government should pursue reforms that democratize access to genuinely flexible forms of work with low entry barriers. Such reforms would help many people for whom traditional employment is ill-suited or simply not possible. They would also help Taiwan ride the global wave of development of a platform economy and create new opportunities for future generations.
Traditionally, the labor law only fully regulates employment relationships. It is difficult to provide adequate rights to “non-employee” categories of workers. In order to encourage the provision of basic rights to these workers, the regulations should first allow these non-traditional but consensual work arrangements to flourish. Fair conditions and protection for app-based workers should be put into place – in consultation with such stakeholders as workers, app and platform providers, academia, industry associations, and other experts – prior to creating regulations intended to address the unique needs of a digital labor market.
In the interest of making Taiwan a center of innovation in the region, the Committee requests that government allow independent workers a considerable level of flexibility in the type of contract of their choosing. Businesses operating digital platforms often find themselves in a dilemma when implementing rules that aim at enhancing the safety and protection of consumers and independent app-based workers, since the authorities sometimes construe the attempts by businesses to extend benefits and protection as evidence of the control and subordination typical of an employment relationship. The Committee therefore urges the government to codify “safe harbors” for businesses to develop their own policies to protect the well-being of independent workers and ensure consumer rights.