[2020/02/10]
Legislative Yuan amended the Labor Standards Act (hereinafter referred to as the Act) on May 15 and June 19, 2019 in order to have labor dispatch included in and governed by the Act to enhance the protection of the rights of dispatched workers.
In a typical labor relationship, as the employer is the one that actually directs, supervises and manages the labor, relevant laws and regulations impose many obligations and responsibilities on the employer to protect labor rights. Among the many modern and diversified labor services, labor dispatch is a flexible way of human resources mobilization. After a company that requires workers (i.e. a dispatch-requiring entity) makes such request to a labor dispatching company (i.e. a dispatching entity), the latter will dispatch the labor that it has employed (i.e. dispatched workers) to provide services at the dispatch-requiring entity, and the dispatched workers will be under the direction, supervision and management of the dispatch-requiring entity. However, in practice, there are often cases of improper use of labor dispatch. When a labor dispute occurs between the employer and a dispatched worker, the dispatched worker, when striving for his/her rights, is often more disadvantaged than an ordinary worker as his/her legal employer and the entity that actually directs, supervises and manages during the employment are different.
The competent labor authority originally protected the dispatched labor with several written interpretations and administrative rules such as the “Guiding Principles of Labor Dispatching Rights and Interests,” “Matters That Should Be Arranged in the Dispatched Labor Contract.” With this amendment to the Act, labor dispatch-related matters are further governed within certain legal hierarchical norms, focusing on key points of the amendment as follows:
I. The Labor Contract between the Dispatching Entity and a Dispatched Worker Shall be a Non-fixed Term Contract.
Labor contracts that most dispatching entities made with dispatched workers in the past were one-year fixed term contracts. When the dispatch-requiring entity had no further demand for workers or requested reassignment of the dispatched worker, the dispatching entity would not renew the labor contract upon its expiration and so the labor relationship with respect to the dispatched worker was in an unstable state over a long period, and even when the labor relationship was terminated, the dispatched worker was not eligible for severance pay.
Therefore, the Ministry of Labor published a written memorandum in 1998, stating that labor dispatch was a recurring business matter of a dispatching entity, and therefore a contract made with a dispatched worker should not be a fixed-term type to fit the demand of the dispatch-requiring entity. This amendment to the Act further provides that the labor contract between a dispatching entity and a dispatched worker shall be a non-fixed term contract. Thus, a dispatching entity cannot dismiss a dispatched worker unless there is a legal cause for dismissal. In the event that the legal cause for dismissal is not attributable to the worker, severance pay shall be paid to the worker according to the law.
II. The Dispatching Entity is Prohibited From Signing a Labor Contract with the Dispatched Worker Who Has Been Interviewed and Selected by the Dispatch-requiring Entity.
For labor dispatch, the entity for which a dispatched worker works and the entity with which the dispatched worker signs a labor contract are often different in practice. In other words, the company requiring workers does not employ workers by itself, but requests the dispatching entity to employ the workers that it has designated or selected through interview in order to evade the responsibilities to be assumed as an employer. From a legal perspective, the workers who satisfy the company’s specific demand for workers are actually the dispatched workers employed by a third party. That is why dispatched workers are often helpless when a labor dispute occurs.
To eliminate fake labor dispatch for evasion of legal responsibility, this amendment to the Act expressly prohibits the dispatching entity from signing a labor contract with the dispatched worker who has been interviewed and selected by the dispatch-requiring entity. It provides that before the dispatching entity and the dispatched worker sign a labor contract, a dispatch-requiring entity shall not interview the dispatched worker or undertake any other conduct related to appointing a specific dispatched worker. In the event of any violation, the dispatch-requiring entity shall pay an administrative fine, and the dispatched worker who has provided service for the dispatch-requiring entity may request the dispatch-requiring entity to employ him/her directly and negotiate with him/her for the employment. If the negotiation does not take place within a specified period or if the negotiation fails, a labor contract between both parties shall be deemed to have been established, and the labor contract originally made between the dispatched worker and the dispatching entity shall be simultaneously deemed to have been terminated.
III. The Dispatch-requiring Entity has the Supplementary Responsibility to Pay the Wages that the Dispatching Entity Owes to the Dispatched Worker.
Though the dispatch-requiring entity receives the service provided by the dispatched worker, the dispatch-requiring entity is not under obligation to pay wages to the dispatched worker because the dispatch-requiring entity is not the legal employer of the dispatched worker. When the legal employer of the dispatched worker, i.e. the dispatching entity, owes wages to the dispatched worker, the risk of non-payment of owed wages is usually borne by the dispatched worker.
This amendment to the Act reasonably reallocates the aforementioned risk by requiring that the dispatch-requiring entity shall assume the supplementary responsibility for paying the dispatched worker the wages that the dispatch-requiring entity owes. If the dispatch-requiring entity fails to pay owed wages, it shall be subject to payment of fines and be under order to pay owed wages by a specified deadline. The dispatched worker is entitled to request the dispatch-requiring entity to make payment directly so that the dispatched worker is able to get his/her wages earlier. To prevent the dispatching entity from shifting the wage payment obligation to the dispatch-requiring entity through the aforementioned supplementary responsibility mechanism, it is also provided in the Act that the dispatch-requiring entity may, after paying the wages to the dispatched worker, ask the dispatching entity for reimbursement or deduct the amount of the wages paid from the expenses payable to the dispatching entity.
IV. The Dispatch-requiring Entity and the Dispatching Entity are Jointly and Severally Liable for Occupational Accident Compensation to Dispatched Workers.
For the purpose of taking care of workers, the employer is required by the Act to provide corresponding compensation for the workers injured or killed in an occupational accident. For the labor dispatch relationship and to further secure the rights of workers to receive compensation and have the dispatch-requiring entity value the occupational safety of dispatched workers, this amendment to the Act requires the dispatch-requiring entity and the dispatching entity to be jointly and severally liable for occupational accident compensation to dispatched workers.
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