Amended Labor Standards Act promulgated, increased workers’ creditor rights protection

The amended provisions of the Labor Standards Act promulgated by Presidential Order on February 4, 2015, are intended to improve workers’ wages, ensure the creditor rights of workers on pensions and severances owed to them as having the same top priority as creditor rights of lien holders, and to also include pensions of the old system and severances of both the old and new systems under the coverage of the Arrear Wage Payment Fund. According to Minister of Labor Chen Hsiung-wen, this amendment was completed under the joint efforts of legislators of the ruling and the opposition parties, labor groups and concerned ministries and councils. The amendment will further protect workers’ rights and interests to wages, severances and pensions to which they are entitled and thus help reduce labor-management disputes. An estimated 6.7 million workers are expected to benefit from this amendment.

Key points of this amendment (to the Labor Standards Act) are as follows:

  1. Upgrading the priority of workers’ creditor rights to receive compensation: The creditor rights of workers who are owed six months of wages, pensions payable according to the old system and severances payable according to the old and new systems shall be regarded equal to the creditor rights of those with mortgage rights, pledges or liens of the top priority. Such workers shall be paid in accordance with the proportion of their creditor rights; the workers shall have top most priority for any remaining amounts owed to them.
  2. Proper extension of the coverage of the Arrear Wage Payment Fund: The coverage of the Arrear Wage Payment Fund is extended to include pensions payable according to the old system and severances payable according to both the old and new systems. The maximum amount is six months of the average wage and the statutory appropriation rate is raised from one thousandth to 1.5 thousandths.
  3. Employers are obligated to assess the status of the labor pension reserve account on a regular basis: At the end of each year, employers are required to assess the status of the labor pension reserve account. If the remaining amount is not enough to pay pensions to workers who meet retirement qualification within a year, the employer is required to make up the difference within the statutory period. A fine between NT$90,000 and NT$450,000 will be imposed on those failing to comply.
  4. A mechanism for financial institutions to inquire local labor authority about the status of the labor pension reserve account of business entities is established.
  5. Increase of fines for employers failing to pay severances or pensions as regulated: The fines are increased from between NT$90,000 and NT$450,000 to between NT$300,000 and NT$1.5 million, while offenders will also be ordered to make the payments within a given period. Those failing to make the payments within the given period will be fine consecutively.
  6. The names of business entities fined by the competent authority for violating the Labor Standards Act will be publicly announced and such employers will also be ordered to make improvements within a given period. Those failing to make improvements within the given period will be fined consecutively. The competent authority may also determine the amount of fine in accordance with the number of workers the violation involves, the accumulated number of times of violation, or the amounts not paid as required by law.
  7. Paragraph 1 of Article 28 on creditor rights of workers equal to the creditor rights of lien holders with the top priority to receive compensation will take effect eight months after promulgation; all other amended provisions enter into force on the day of promulgation.

The Ministry of Labor states that with the amendment to the Labor Standards Act in place, administrative operations for extended coverage of the Arrear Wage Payment Fund will be subsequently defined to facilitate the enforcement of the Act. The ministry will also audit business entities’ appropriation of funds for the pension reserve according to the old system, set up the mechanism for financial institutions to inquire the statue of the labor pension reserve account of business entities, and ensure that employers and workers are aware of the new regulations. Complementary measures will also be established to ensure a comprehensive protection of workers’ wages, severances and pensions.

  • News From:Department of Employment Welfare and Retirement
  • Publish Date:2015-04-21
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