Collective bargaining explained – Taiwan Focus

An individual employee does not stand on equal footing with his/her employer, although this would allow the employee to negotiate for better employment conditions with the employer. The labour laws, therefore, provide employees with certain collective bargaining powers to help them reach an agreement between all, or a group of, employees and employers, to improve working conditions. Under Taiwan law, the employees' collective bargaining power can be exercised through a labour union or, in the absence of one, a labour-management conference/committee.

Labour union

A labour union should be organised by 30 employees or more as promoters. The promoters organise a preparatory committee for recruiting members, drafting the articles of incorporation of the labour union and convening the inaugural general meeting.

The preparatory committee should, within thirty days following the convention of the inaugural general meeting, submit the articles of incorporation of the labour union, the list of its members and the lists of directors and supervisors to the labour bureau to apply for a certificate of registration. The list of members is not publicly available. It is up to the labour union whether it wants to provide the list for the company's reference.

The law only allows one labour union within a company (i.e. the enterprise union).

Membership, directors and supervisors

Any employee can enrol in a company's labour union. However, employees who represent the employer in exercising the right of management (managerial officers) should not join the labour union, except where the union's articles of incorporation prescribe otherwise. The current law is silent on the definition of a managerial officer, although, in general, an employee who has the responsibility to evaluate other employees' performance may be considered a managerial officer.

If the number of members reaches 100, the union may elect member representatives in accordance with its articles of incorporation.

Organisation structure

The labour union is an organisation incorporated and operated by and for the interest of a group of employees. It is independent of the company. Therefore, unless the company agrees, the labour union cannot use the company's office or facilities (such as telephones, computers and printers) to carry out the union's affairs. However, to build up a harmonious relationship with the labour union, some companies do allow their labour unions to use their offices and facilities, even though they are not required by law to do so.

A labour union has directors and supervisors. If the number of members is 500 or below, it will have five to nine directors. The number of supervisors will not exceed one-third of its directors.

The officers of the labour union should not do anything with or contact the employees regarding the union's matters during office hours. Nevertheless, pursuant to Article 36 of the Labour Union Act, a managing director of a labour union may apply for a half or one day's leave to handle the union's affairs. According to a ruling issued by the Council of Labour Affairs (renamed as the Ministry of Labour in February 2014) dated October 4 1990, a managing director of a labour union cannot take this leave everyday if there are no union affairs to handle.

According to Article 36 of the Labour Union Act, the other officers of the labour union may also apply for a leave of up to 50 hours per month to handle the union's affairs.

Matters to handle

Pursuant to Article 5 of the Labour Union Act, the union has the right to carry out all matters for the purpose of promoting the employment conditions of its members, including but not limited to:

(i) negotiating and executing a collective agreement with the company;
(ii) mediating disputes between its member(s) and the company;
(iii) proposing plans with respect to the implementation or modification of the company's employment related policies; and
(iv) urging the company to improve employment conditions and employee welfare matters.

The acts of the labour union are subject to the requirements under the Labour Union Act as well as to the supervision of the labour affairs authorities. In addition, as the union is a juristic person, it has the same obligation to comply with all other laws and regulations as an individual and a company.

Obtaining union approval

According to the Labour Standards Act (LSA), the company needs to obtain approval from the labour union with respect to the following matters (identified employment conditions):

(i) allocation of the normal working hours within a certain period of time (e.g. two weeks or four weeks);
(ii) employees' overtime work; or
(iii) female employees' work shifts between 10pm and 6am.

In addition, one Council of Labour Affairs ruling stated that if a company intends to amend its Work Rules (or Employee Handbook) and the amendments would adversely affect employment conditions, they should be approved by the labour union.

Other than the identified employment conditions and the employment conditions stated in the company's Work Rules, if the company wishes to reduce any employee benefits, it may only discuss and negotiate the matter with the employees who would be affected. These employees can then seek assistance from the labour union to negotiate the employment conditions with the company on their behalf.

Protections to union members

According to Article 35 of the Labour Union Act, an employer must not take the following actions:

(i) refusing to hire, dismiss, demote, reduce the wage of or render other unfair treatment to an employee who organises or joins a labour union, participates in activities held by a labour union or assumes the office of a labour union;
(ii) requiring an employee or job applicant not to join a labour union or assume the office of a labour union as a condition of hiring;
(iii) refusing to hire, dismiss, demote, reduce the wage of or render other unfair treatment to an employee who requests collective bargaining or participates in related activities;
(iv) dismiss, demote, reduce the wage of or render other unfair treatment to an employee who participates in or supports a dispute action, or
(v) improperly influence, impede or restrict the establishment, organisation or activities of a labour union.

Collective agreement

In addition to the Labour Union Act, Taiwan has a Collective Agreement Act governing a collective agreement entered into between the employer and union that regulates the employment terms and conditions of the labour union's members (but not all of the employees). The provisions of a collective agreement usually cover the terms and conditions which are not offered by law and are more favourable than the statutory ones (e.g. a favourable severance package or retirement benefits).

If a labour union demands to negotiate a collective agreement with the company, the company must negotiate a collective agreement with the labour union, and negotiation should not be conducted in bad faith. The following are deemed as acts of bad faith:

(i) refusing to proceed any negotiations while the labour union has proposed reasonable and justifiable contents, time and method of negotiation;
(ii) failing to offer counter-proposals within sixty days after receiving a written notice of negotiation from the labour union and proceed to negotiate; or
(iii) refusing to offer necessary information for proceeding the negotiation.

If any of the above occur, the company may be subject to an administrative fine between NT$100,000 to NT$500,000.

Any employment related terms and conditions may be incorporated into a collective agreement, such as

(i) salary, work hours and other employment benefits;
(ii) outplacement services; mediation and arbitration of labour disputes;
(iii) negotiation procedures for a collective agreement;
(iv) union operations;
(v) employee participation of company operations;
(vi) procedures for handling issues regarding health, safety and complaints; and
(vii) other mutually agreed terms and conditions.

The collective agreement is only binding on the members of the subject labour union. To prevent the employer from offering better employment conditions to non-union members in the hope of causing members to withdraw their union memberships, the collective agreement may include a provision prohibiting the employer from adjusting non-union members' employment conditions.

Conditions that are agreed upon in a collective agreement are the contents of an employment contract between employers and union members. If certain working conditions in an employment contract differ from the arrangements agreed upon in a collective agreement, these portions will become ineffective and will be replaced by arrangements agreed upon in a collective agreement. However, they shall remain effective if the arrangements that differ from the collective agreement are allowed by that agreement or if they are made to change the working conditions and benefits of union members, and they are not forbidden by the collective agreement.

Labour-management conference

A company is not legally required to have a labour union but is required by the LSA to have a labour-management conference. The purpose of the conference is to enhance the relationship between the workforce and management, promote labour-management cooperation and increase work efficiency. The LSA, however, imposes no punishment on business entities which have yet to convene a conference.

A labour-management conference is somewhat similar to a European works council, but has far less influence.

Organisation structure

The labour-management conference must have an equal number of representatives from the employees as well as the employer. There must be two to 15 representatives from each side depending on the size of the business entity. Where a business entity has 100 or more employees, the number of representatives from each side must not be less than five. Management representatives are appointed by an employer from those who are experienced in the business and the labour affairs of the business entity (usually including the general manager and HR manager). If there is a labour union, the election of labour representatives are conducted by the union representatives meeting.

A regular conference convenes at least once every three months, and special meetings whenever necessary. The company sends resolutions of the labour-management conference to the labour union and its relevant departments for further handling. Any resolutions deemed infeasible may be submitted to the next conference for reconsideration.

Obtaining conference approval

The LSA imposes no punishment on employers which have not convened a conference. Hence, despite the promulgation of the LSA since 1984, the requirement to convene labour-management conferences has hardly ever been enforced. In order to emphasise the importance of the conference, the December 2002 amendment to the LSA requires employers to obtain the consent of the labour-management conference (in the absence of a labour union) before adopting the system of (i) flexible working hours; (ii) extending the working hours; or (iii) having female employees working at night (10 pm to 6 am). An employer is subject to a fine ranging from NT$20,000 (approx. US$670) to NT$300,000 (approx. US$10,000) if it fails to obtain consent.


Lawrence Yu, Lee and Li, Taiwan

Lawrence Yu is a partner of Lee and Li's corporate department and a member of the firm's labour and employment practice group. He specialises in employment issues (including wrongful termination, discrimination claims, claims for severance pays, retirement benefits and occupational accidents) as well as mediation, arbitration, administrative proceeding and collective bargaining.

Lawrence also advises on employment policies and practices, including hiring, termination, employee handbook, employee welfare, early retirement, mass redundancy and negotiations with labour unions.

He has been named by Asia Law & Practice as one of the most recommended Asian lawyers in labour and employment since 2007. He has also been recognised as a leading lawyer by Chambers Asia since 2009.

Lawrence holds a bachelor of law degree from the National Chengchi University. In 1991, he passed the Advanced Legal Civil Servant Examination with the first rank and passed the ROC Bar Examination in 1992. He was further admitted by King's College of the University of London for a masters of law degree in 1997.