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Introduction to the new amendment of article 17-1 of the LSA – Prohibitions in transferring a dispatched worker

 
Lawyer Lee, Boyi
Wei Qianfeng Law Firm


I. Preface
 
       In the first half of 2019, a third reading of the amendment to Labor Standards Act (LSA) has been passed by our Legislative Yuan. The aim of the amendment focuses on dispatched employment. This is its second time being amended.

       The first amendment was in April when the dispatched employment was initially legislated. From subparagraph 7 to subparagraph 10 of the amended article 2, the dispatching entity, dispatch-requiring entity, dispatched worker and dispatch-requiring contract are defined. In paragraph 1 of article 9, it stipulates that the labor contract between a dispatching entity and a dispatched worker shall make a non-fixed term contract. In article 22-1, it stipulates that if the dispatching entity fails to settle the outstanding wages with the dispatched worker and the competent authority has determined a fine or orders them to pay by a deadline, then the dispatch-requiring entity is supposed to make the payment in advance, which can be requested with the dispatching entity later.

       The second amendment was made in May, when an additional article, article 17-1, was enacted. It stipulates that the conduct of “transferring an employee” between a dispatch-requiring entity and a dispatching entity is prohibited. Also in the second amendment, article 63-1 was added. The article states that the dispatch-requiring entity and the dispatching entity shall be jointly and severally liable for the dispatched worker, who has been in an occupational accident.  

Chart: legal relations for dispatched employment. It is self- apparent that the “employment” and “utilization” can be separated.
Chart: legal relations for dispatched employment
It is self- apparent that the “employment” and “utilization”can be separated.

II. Guidance on reading article 17-1 of the LSA
 
       The amendment of article 17-1 is quite substantial and is very complicated. The following is a brief explanation.
  1. Prohibition of transferring an employee
       Paragraph 1 of article 17-1 of the LSA regulates that before the dispatching entity signs a labor contract with the dispatched worker, the dispatch-requiring entity is not permitted to make any moves to interview the dispatched worker or to appoint and reserve a specific dispatched worker.
 
       What does the law prohibit? The legislative explanation of article 17-1, paragraph 1, is to avoid the conduct of “transferring an employee”.

       Obviously the aim of this regulation is to prohibit the dispatch-requiring entity from transferring a worker, especially to a designated post through an interview or other recruiting methods, to the dispatching entity for their employment and then assign the worker to work for a dispatch-requiring entity and to be supervised by the dispatch-requiring entity. For example, after recruiting a dispatched worker or deciding on a candidate worker, the dispatch-requiring entity is prohibited by law to demand the dispatching entity to employ the dispatched worker; or when the dispatched contract is expired the dispatch-requiring entity is prohibited by law to demand of a new dispatching entity to hire the original dispatched worker. (referring to Ministry of Labor No. 1080127136 dated July 26, 2019)
 
  1. The legal effect of being in violation of transferring an employee: The dispatched worker is eligible to request of the dispatch-requiring entity to sign a labor contract.
       What is the legal effect when the dispatch-requiring entity is in violation of the regulation of paragraph 1 of article 17-1 of the LSA, about having the conduct of interviewing or other specifically designating a worker?
 
       According to paragraph 2 of article 17-1 of the LSA, if the dispatch-requiring entity is in violation of the preceding regulation, and they have received the service of the dispatched worker, the dispatched worker can deliver a written declaration of his intent to request a labor contract with the dispatch-requiring entity, within 90 days after he has offered a service with the dispatch-requiring entity.

       In other words, if the dispatch-requiring entity is in violation of transferring the dispatched worker to the dispatching entity, and they genuinely have let the dispatched worker work for the dispatching entity, the dispatched worker can send the dispatch-requiring entity a written request, e.g. a legal verified letter, and demand a labor contract, which means the dispatched worker will be changed to a full time post.
 
  1. The dispatch-requiring entity’s obligation for negotiations, and a labor contract that is considered to be established.

       Maybe the dispatch-requiring entity is not willing to accept the dispatched worker’s written request for being changed to a full time employee, but since the dispatch-requiring entity has first violated the rule prohibiting the transferring of an employee, the law specifically stipulates that the dispatch-requiring entity is obliged to negotiate with the dispatched worker within 10 days after receiving the written request of the dispatched worker.

       In the first part of paragraph 3 of article 17-1 of the LSA, the regulation stipulates that the dispatch-requiring entity is supposed to discuss the issue of making a labor contract with the dispatched worker within 10 days after receiving the above said written declaration of intent from the dispatched worker. The dispatch-requiring entity has to immediately talk to the dispatched worker after receiving the legal verified letter from the dispatched worker.

       What should the dispatched worker do if the consensus on the salary terms and conditions can’t be reached, or the dispatch-requiring entity fails in negotiating with the dispatched worker? In order to not allow the dispatch-requiring entity to refuse negotiations or to delay negotiations, the latter part of paragraph 3 of article 17-1 of the LSA stipulates that if the negotiation is delayed or the negotiation has failed, the labor contract will be regarded as established for both sides from the following day from the expiration of the written request. And the content of the labor contract will be based on the labor conditions during the period when the dispatched worker works for the dispatch-requiring entity.

       If the dispatch-requiring entity is in violation of transferring an employee and ignores the written request from the dispatched worker for making a labor contract or fails in negotiating with the dispatched worker, the law directly stipulates that a labor contract based on the original labor conditions will automatically be made for both sides from the 11th day after the written declaration from the dispatched worker to the dispatch-requiring entity. The dispatch-requiring entity is obligated under law to employ the dispatched worker.

The chart shows that the dispatched worker
 
       The chart shows that the dispatched worker, who is illegally transferred, delivers to the dispatch-requiring entity the legal verified letter within 90 days, on Dec. 1, after working for the dispatch-requiring entity and demands to be changed to a full-time post. And the dispatch-requiring entity is supposed to negotiate with the dispatched worker within 10 days after receiving the legal verified letter from the dispatched worker, which is by Dec. 10. Should the negotiations fail by Dec.10, the labor contract based on the original labor conditions will be regarded as established from the following day, Dec. 11,
by law.
 
  1. Prohibition of settling a score, retaliation at a later date
 
       The dispatched worker who files a written request to be changed to a full-time post could be concerned that the dispatching entity or dispatch-requiring entity would retaliate with him later by dismissing him, relegating him to a lower post, deducting his salary or treating him with unfair disadvantages.

       Actually it is not necessary for the dispatched worker to panic. According to paragraph 4 of article 17-1 of the LSA, the conduct of retaliating later with the dispatched worker is prohibited. When the dispatched worker presents his intent based on paragraph 2, the dispatching entity and the dispatch-requiring entity can neither move to dismiss, relegate the dispatched worker, reduce his salary, deprive him of his rights and interests by law, by contract or by social customs, nor act in any disposition which disadvantages him. Moreover, the conduct of retaliating later has no legal bases, according to paragraph 5 of article 17-1 of the LSA. As long as being transferred illegally, the dispatched worker is eligible to pursue their rights under paragraph 2 or article 17-1 of the LSA.
 
  1. The relationship between the dispatched worker and dispatching entity, after the dispatched worker changed to a full-time post
 
       After the dispatch-requiring entity accepts the written request of the dispatched worker for being changed to a full-time post, how should the original labor contract with the dispatching entity be handled?

       According to paragraph 6 of article 17-1 of the LSA, after the dispatched worker takes advantages of paragraph 2 and paragraph 3 to demand of making a labor contract with the dispatch-requiring entity, his original labor contract with the dispatching entity will be regarded as terminated, and the dispatched worker neither needs to be responsible for violating the agreement of the minimum service years nor needs to return the training fees. Since the original labor contract between the dispatched worker and the dispatching entity is regarded as terminated, it means that the worker is considered as resigned from his position from the dispatching entity.

       For example, initially the dispatched worker has signed a contract which contains a minimum term of several years of service; otherwise he is obligated to pay compensation for breaching the contract. But in this case, the dispatched worker by law has resigned from his job, so he doesn’t need to pay compensation to the entity.

       In addition, the dispatched worker’s job tenure with the dispatching entity can be counted into the retirement, according to paragraph 7 of article 17-1 of the LSA. It stipulates that the dispatching entity is supposed to pay the dispatched worker retirement pay or severance. The dispatching entity shall, in accordance with the payment standard and the expiration date mentioned in the LSA or the Labor pension act, pay the dispatched worker the retirement pay or severance.
 
  1. Terms of Penalties
       This amendment has already been regulated with the relevant penalty, so as not to allow the management side from ignoring the regulations.

       Those who are in violation of paragraph 1, transferring an employee, or paragraph 4, retaliating later, of article 17-1, will be imposed a penalty from NT$ 90,000 to NT$ 450,000 in accordance with paragraph 2 of article 78 of the LSA.

       A dispatching entity, who is not in accordance with paragraph 7 of article 17-1 of the LSA in paying retirement pay or severance, will be imposed a fine from NT$ 300,000 to NT$1,500,000 based on paragraph 1 of article 78 of the LSA. The above said fine can be regulated to be paid over a limited period of time; otherwise a compounded penalty will arise over time.
 
III. Conclusion
 
       The amendment of article 17-1 of the LSA may bring a significant impact to the practical operations of labor dispatch in Taiwan. Both management side and labor side are supposed to understand the regulations of this article, so that the management side will not be in violation of the law or the labor side will not lose the rights and interests. The fewer the violations are, the more stable the management-labor relations are.