Labor: The amendments to the Labor Standards Act of Taiwan have taken effectiveness on 4 February 2015.

[2015/02/24]

The amendments to the Labor Standards Act of Taiwan have taken effect on 4 February 2015 (the “Amendments”) except that the amended provision regarding the priority of labor claims will take effect on 3 October 2015. The main Amendments include the following:

1. The Amendments make improvement on the priority of labor claims in case of an employer's winding up or liquidating his/ her business or being adjudicated bankrupt. After the Amendments, the labor’s claims for (1) the unpaid wages less than to six (6) months arrears which are payable under the labor contract, (2) the retirement payment under the Labor Standards Act (the “Act”) and (3) the severance pay under the Act and the Labor Pension Act are all in the same order as the claims secured by first mortgage, pledge or lien and shall be paid on a pro rata basis with the other secured claims. Any said labor claims remain unpaid, if any, are entitled to be paid prior to the other unsecured claims.

2. The Amendment also requires the “arrear wage payment fund” to extend its coverage to the retirement payment under the Act and the severance pay under the Act and the Labor Pension Act, the aggregate amount of which is limited to the sum of average wage for six (6) months. So that labors are now able to receive the due pension and severance from the said fund when they cannot get paid from their employers. Meanwhile, the rate at which the Ministry of Labor may determine that the employer shall monthly make the contribution to the fund will be lifted from 0.1% to 0.15% of the monthly sum of the insured wages for all of the labors employed.

3. The employer will be required to review its special account of the pension reserves fund before the end of each year. In the event that the balance of such account is not sufficient to pay up the pension payments to the labors who will be qualified for retirement in the next year, the employer shall supplement the insufficient amount to such account before the end of March of the next year, the details shall be sent to the supervisory committee of labor pension reserves fund for review; otherwise the employer may be punished with a fine from NT$90,000 to NT$450,000.

4. While evaluating the loan application made by an employer, the financial institutions may inquire with the local competent authority for the necessary information in relation to the deposits in the pension reserves funds. The necessity and content of information inquired, the procedures of application and other guidance will be further stipulated by the Ministry of Labor.

5. The fine that an employer may be punished against its violation of the relevant requirements to pay the severance pay or retirement payment will be increased from the range of NT$90,000 to NT$450,000 to that of NT$300,000 to NT$1,500,000.