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Can I sign a fixed-term contract with my company?

       The main business of Company A is doing cleaning service for a government institute. Contracting to do cleaning service for a government institution, Company A employed Mr. Wang to be stationed in the government institution and to do the cleaning work over there.

       The contract duration constituted between Company A and the government institution was just a year. Therefore, Company A signed a one year contract with Wang, which explicitly specified that Wang is not able to claim either extra wages during the notice period or statutory severance payment when the contract period comes to an end. Since the cleaning service was the specific purpose work, the employment contract signed by both sides was a fixed-term labor contract. However, Wang thought that Company A’s rule had not followed the regulations of the Labor Standards Act (LSA).

       Can Company A sign a fixed-term contract with Wang, with an additional reason for Wang to be assigned work with a specified period of time?

       Firstly, we have to understand what a “fixed-term contract” is? An employment contract can be divided into a fixed-term contract and non-fixed term contract, in accordance with article 9 of the LSA and article 6, paragraph 4 of the Enforcement Rules of the Labor Standards Act. A job which is considered temporary, short-term, seasonal or specific can be regarded as a fixed-term contract. A continuous work shall be regarded as a non-fixed term contract.

       Temporary work refers to non-continuous work with an uncertain period of time, and the duration of which shall not exceed 6 months.

     Short-term work refers to non-continuous work, which is anticipated to be completed within a period of time not exceeding 6 months.

     Seasonal work refers to non-continuous work, which is anticipated to be completed within a period of time not exceeding 9 months; and which is impacted by the objective conditions such as seasonal raw materials, source of materials or sales in the market.

     Specific work refers to non-continuous work, which is anticipated to be completed at a specified period of time. If its service duration lasts more than a year, the approval of the competent authority is needed.

       Whether the contract signed between Wang and Company A is a fixed-term contract or not is determined by the nature of the work, and if it is non-continuous.

       Taking this case for instance, Company A’s main business is doing cleaning service for buildings, which means cleaning service is Company A’s most prominent economic activity, which Company A depends on for its persistent business. The work of cleaners is a derivative job for Company A to accomplish this economic activity.

       According to the Ministry of Labor (before being restructured was called Council of Labor Affairs, Executive Yuan), Interpretive Letter Tai-Lao-2-Zi Number 0011362 issued by the Council of Labor Affairs, Executive Yuan, on 11 March 2000, according to the current LSA and the normal pattern of wage employment, this Interpretive Letter explicitly defined the term of “continuous work” as “continuity as being normal and non-continuity as being the exception”.

       In the LSA, the protection of a continuous work employee and a non-continuous work employee is distinguished. Therefore, the administrative entity has taken to a strict interpretation of a fixed-term contractor, engaging in non-continuous work, to avoid an employer from misusing an employee.

       The “non-continuous work” defined in the LSA means that an employer has no intention to maintain the economic activities on a continuous basis, or any related position derived to accomplish an economic activity. As for practically being regarded, the determination of whether a work is non-continuous shall be based on the description of the work offered by a business entity, or be based on the same work engaged in by one employee with a non-fixed term contract and another with a fixed-term contract. If so, it could be considered a verification of the continuous work.

       According to the Interpretive Letter Tai-Lao-2-Zi Number 0980032202 issued on 1 September 2009, the possibility of signing a fixed-term labor contract is not just based on the standard of the work duration, the title of the project or the source of budget. On the contrary, its determination is based on the nature of the work engaged in by an employee. This is the work content of a labor contract and the work charged by an employer. If the work has the nature of being continuous, it shall be regarded as a non-fixed term contract.

       Company A had signed with the government institution a one year contract, and it had been uncertain if the contract was able to be renewed. Nevertheless, the work engaged in by Company A has the nature of being continuous work as mentioned above. And even Company A failed to renew a further contract with the government institution, Company A still needed cleaning workers for its persistent economic activity. The labor contract signed with Wang is supposed to be a non-fixed term contract, instead. The length of the work duration is not a base for a fixed-term contract.

       With the legislative purpose of the LSA, the labor contract is based on a non-fixed term employment as a principle, and a fixed-term employment as the exception. Unless the work is explicitly specified as a non-continuous work with a specified work period, an employer is prohibited from applying the period of time as a determination in deciding whether to sign a fixed-term with an employee.

       If an employee applies for, by the Act of Gender Equality in Employment, a leave without pay for the reasons of parental leave or serving in the military, an employer can sign a fixed-term contract with someone who substitutes the original work hours of an employee leaving without pay. An employer in violation of the regulation shall be punished with a fine of NT$20,000 – 30,000, and additionally the name of the company, the name of the boss and the responsible person shall be publicized. Additionally, the company’s policy shall be ordered to be changed within a fixed period of time; otherwise further penalties shall be imposed for each time the company is found to be in noncompliance.