Labor Dispute Act: Scope of Application, Mediation Procedures, and Burden of Proof

[2019/05/29]

On 9 November 2018 the Legislative Yuan gave its third and final reading to the Labor Dispute Act (LDA). The date on which the Act will take effect remains to be set by the Judicial Yuan.

The LDA is a special act under the Code of Civil Procedure, for the handling of civil-law disputes between labor and enterprise management. Because workers and management are in a close relationship in which workers are at an economic disadvantage, the LDA provides numerous mechanisms to give labor and management the opportunity to autonomously resolve their disputes by mutual agreement, and to help workers more easily utilize legal procedures to assert their rights. These mechanisms include a procedural design that provides for mediation prior to litigation, the involvement of professional practitioners, and the lowering of barriers to workers’ participation.

Broadly speaking, the LDA has the following three major characteristics:

1. Broad scope of application

(1) All categories of labor–management civil disputes are covered

The types of civil-law labor–management disputes (“labor disputes”) that are to be dealt with under the LDA include not only those arising out of labor employment contracts and other labor employment relationships, but also disputes arising out of cooperative education relationships. Furthermore, wrongful acts arising between labor and management or occurring at workplaces also fall within the purview of the LDA, such as breaches of gender equality in employment, discriminatory hiring practices, occupational accidents, labor union activities, actions undertaken in pursuit of industrial disputes (such as strike action) and wrongful acts arising out of non-compete clauses.

The LDA will naturally apply to dispute resolution in labor disputes that arise after the Act takes effect. However, based on the principle that new procedural law immediately supersedes old procedural law, all unresolved disputes arising before the LDA takes effect will also become subject to the Act, regardless of whether or not dispute resolution procedures have already begun.

(2) Broader definitions of workers and employers than in Labor Standards Act

In view of the broad range of disputes covered by the LDA, the parties to which the Act applies are also correspondingly diverse. “Workers” and “employers” as referred to in the LDA are not limited to those who are in an employer–employee relationship as referred to in the Labor Standards Act (LSA). For example, “workers” under the LDA also include persons such as student trainees and jobseekers, while “employers” also include organizations taking on student trainees or seeking to recruit jobseekers.

It is worth noting that in the three-way relationship of agency staffing, while those personnel of a hiring organization who direct, supervise and manage agency workers in practice are not considered employers under the LSA, they are treated as employers under the LDA. Thus if a civil-law dispute arises out of the labor relationship between an agency worker and a hiring organization, the LDA is applicable to the dispute.

2. Mediation aims to promote dispute resolution by autonomous mutual agreement

In the past, mediation in labor disputes has included mediation undertaken by local government labor affairs agencies according to the Act for Settlement of Labor–Management Disputes, as well as mediation undertaken by the courts according to the Code of Civil Procedure. The labor dispute mediation procedures provided for by the LDA replace the Code of Civil Procedure’s mediation procedures with special provisions intended to better facilitate dispute resolution by the parties to a dispute.

(1) “Mediation first” principle

The purpose of labor dispute mediation is to rapidly settle labor–management disputes by encouraging the parties to resolve their disputes autonomously, by mutual agreement. Accordingly, the LDA requires the court to conduct mediation according to the procedures provided for by the Act before moving on to litigation procedures.

(2) Mediated settlements and their legal effect

If the parties reach agreement during mediation, the mediation is deemed successful. If the parties are willing to engage in mediation but are unable to immediately achieve a specific consensus, the court may appoint a labor dispute mediation committee to define mediation terms in order to reach a mediated settlement. If the parties are unable to reach mutual agreement through mediation, the Act requires the mediation committee, acting ex officio, to propose an appropriate resolution plan to resolve the dispute. If no objection is raised to such a plan within 10 days after it is put forward, the mediation will be deemed successful.

A mediated settlement, once agreed, has the same force as a confirmed court judgment, and thus represents a final resolution of the labor–management dispute. By comparison, a mediated settlement reached under the Act for Settlement of Labor–Management Disputes has only the force of a contract or collective bargaining agreement. If either party is unable to implement its terms, the other party will still need to resort to litigation to resolve the dispute.

(3) Mediation failure and its effects

If mediation fails to produce an agreement, then a labor–management dispute will proceed to litigation, unless the mediation applicant indicates to the court within 10 days that they oppose initiating litigation. Litigation will be heard by the judge who took part in the mediation procedure.

3. Burden of proof adjusted to reduce barriers for workers

The Code of Civil Procedure presents rather high barriers to workers who wish to pursue their rights through litigation, such that procedural barriers may impinge upon a worker’s ability to enjoy their inherent rights. In view of this, the LDA includes numerous provisions that reduce the barriers to litigation for workers. The most important of these are reasonable adjustments to the burden of proof.

The basic premise underlying the allocation of burden of proof under the Code of Civil Procedure is that the burden of proof lies with the party that is asserting facts to its own advantage. Accordingly, in most cases the claimant, as the party that is petitioning the court to assert its rights, is required to produce supporting facts and evidence. But in labor disputes, workers’ ability to produce evidence is relatively weak, and important items of evidence tend to be in the hands of the employer. In order to promote substantive equality in litigation, the LDA includes the following provisions regarding burden of proof:

(1) Employer’s duty to produce statutory records

Various pieces of legislation require employees to prepare or retain specific documents. For example, the Labor Standards Act (LSA) mandates the keeping of worker record cards (Article 7), a payroll roster (Article 23), and worker attendance records (Article 30 Paragraph 5), while the Occupational Safety and Health Act requires records to be kept of worker health examinations (Article 20).

In a labor dispute in which a worker brings a claim against an employer, such as a claim for payment of wages, severance pay, or retirement pay, or for compensation or damages for an occupational accident, the determination and proof of wages and working hours generally involve the aforementioned documents. Therefore the LDA places the employer under a duty to produce such documents to the court.

If an employer fails to produce such documents without legitimate grounds, not only may the court make a ruling to penalize the employer and force it to produce the documents in question, but the court also has the discretion to find that the facts asserted by the worker, to be evidenced by the said documents, are true.

(2) Presumption that payments made by employers are wages

Payments that workers receive from employers in the course of labor relationships can be divided into “wages” and “non-wage payments.” Because overtime payments, severance payments, retirement payments, and occupational accident compensation are calculated on the basis of wages, the question of whether a particular item of payment should or should not be counted as wages is often a key issue in civil disputes. However, payments that employers make to workers go by many different names, such as bonus, commission, allowance, supplement, subsidy, festival bonus, overtime meal allowance, and so on; this creates difficulties for workers in producing evidence.

In current legal practice, when a worker seeks to assert that a payment should be categorized as wages, the worker must prove that the payment concerned was “paid by the employer on the basis of the worker’s giving labor service” (valuable consideration for labor service), and was “received regularly over time, or could routinely be received under the remuneration regime in force” (routine nature of payment). For workers, the need to prove these two points increases the difficulty of winning their case. By contrast, the employer is the party that made the payment, and the employer holds the payroll roster; this means that the employer is more able to produce evidence regarding the determination and calculation of wages.

Accordingly, the LDA greatly reduces the burden of proof for workers: a worker need only prove that an item of payment was received from the employer within a labor relationship; such payment will then be presumed to constitute wages, without the need for the worker to produce further evidence. If the employer asserts that the payment concerned should not be counted as wages, but should be considered an ex-gratia payment, the employer must produce counterevidence showing that such payment was not consideration for labor service, or was not routine in nature.

(3) Presumption that attendance records represent working time

Besides wages, working hours are also a key issue in labor–management disputes, because the determination of the number of hours worked directly affects the amount of wages payable.

The types of working hours disputes commonly seen in practice often revolve around the issues of whether waiting or standby time should be counted as working hours, and of how the working hours of workers who do not work at a fixed location should be determined. Because the employer is the party that manages workers’ work activities, the employer is more able to produce evidence as to the time periods in which a worker provided labor service under the employer’s direction and supervision.

Accordingly, the LDA provides that the attendance times recorded in a worker’s attendance record are presumed to be the worker’s working hours, without the need for the worker to produce further evidence. If the employer asserts otherwise, such as claiming that the worker was loitering in the workplace without permission, or that the recorded hours include rest periods, the employer must produce rebuttal evidence to that effect.