New era of labour dispute cases in Taiwan

By Samrong Hwang, Albert Kao and Pang-Heng Hung, Formosa Transnational
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Taiwan is considered as having relatively better protection for employees than employers in terms of legal and practical settings. Taiwan’s Labour Standards Act has been amended 16 times in the past 10 years, and the amendments give more protection to employees. While the Code of Civil Procedure governs litigation and civil court procedure, the Labour Incident Act that applies only to labour dispute cases took effect on 1 January 2020, opening a new era of labour dispute cases in Taiwan.

Mediation is commonly used in Taiwan, where a judge sits as an executive member of the mediation committee to ensure reliable and efficient procedures for concerned parties. Under the judge’s supervision, certain evidence shall be disclosed, so even if the mediation is unsuccessful, the same judge will take over and continue the case to the trial proceedings. Therefore, early conclusions could be expected for litigations after the failure of mediation.

Samrong Hwang, New era of labour dispute cases in Taiwan
Samrong Hwang
Senior Partner
Formosa Transnational in Taipei
Email: samrong.hwang@taiwanlaw. com

In litigation proceedings, the legislative design rests the burden of proof of salary and working hours on the employee, which could greatly impact the employer’s labour management. The Labour Incident Act sets a special provisional remedy dedicated to labour dispute cases, which requires lower costs for labour dispute cases compared to general cases, In the event the judge recognised that “there is a chance of winning the case, and it is not difficult for the employer to continue employing the worker” in an appeal to confirm the existence of employment relations, the special provisional remedy will be ordered. The burden that both parties must meet in a special provisional remedy is lower than that in a general provisional remedy, and improving the chance of success higher in special provisional remedy.

The article below focuses on mediation procedures under the Labour Incident Act.

LABOUR DISPUTE MEDIATION

As employees are economically more vulnerable in a labour dispute, the case shall be resolved promptly and appropriately due to the impact on the employees’ household. By actively involving experts with specialised knowledge and experience in labour incidents, and fact-finding, disclosure and judgment of legal effects will be made during mediation, enabling both parties to understand the possibility of a trial. Accordingly, an alternative dispute resolution (ADR) framework was established to introduce a mediation agreement at an early stage by having both parties understand in advance the possibility of winning or losing.

Under article 16 of the act, labour cases should be mediated before litigation, for which the principle of prior mediation is adopted, except where some circumstances apply. It is said that this labour mediation system was based on the Labour Tribunal Law of Japan. However, Taiwan’s mediation system has its own characteristics based on local circumstances, customs and related law. Such distinctive characteristics are as follows:

Strengthening the participation of experts. Unlike the conventional approach, Taiwan’s framework has a labour court judge as a member of the mediation committee and two others from the employee and employer groups. The court carefully assigns these members after evaluating their professional education and experience, as well as the appropriate composition of the committee (articles 20 and 21 of the act). The mediation committee members will discuss the issues intensively to understand the nature of the dispute and the characteristics of the concerned parties to obtain satisfactory mediation.

Albert Kao, New era of labour dispute cases in Taiwan
Albert Kao
Partner
Formosa Transnational in Taipei
Email: albert.kao@taiwanlaw.com

Early conclusion of the mediation procedure. In principle, the judge shall designate the date for the first mediation within 30 days after the motion is filed (article 23). Although it seems easy, finding an agreed time for the judge, other committee members, the plaintiff and the defendant could be tough. While written notice is common in conventional litigation proceedings, the court flexibly schedules the parties by telephone or other means in mediation.

The mediation procedure shall conclude within three sessions in three months. Efficient completion in such a short period requires the co-operation of both parties, in addition to the judge’s direction and the experience of the mediation committee members.

The act aims for an early conclusion to sort out issues and examine the evidence as soon as possible. It establishes the principle that each party’s submission should be completed before the end of the second session of mediation (article 24). While examining the evidence, the mediation committee will disclose in a timely manner the possible outcome of the litigation so it can recommend a mediation agreement based on certain fact-finding and legal views.

Multiple mediation conclusion methods. It is ideal to conclude a mediation with an agreement, but if the parties are unable to reach a mutual understanding, multiple methods have been granted to the mediation committee. With the consent of both parties, the mediation committee drafts terms of mediation (article 27). This cannot be made without a considerable level of trust.

Suppose the parties cannot reach an agreement. In that case, the committee shall prepare a suggested mediation path on its own initiative by taking all things into consideration and presenting a proposal (the possible appropriate plan) based on the premise of balanced interests for both parties. If the parties do not file an objection within 10 days after the submission, the mediation is deemed successful (article 28).

DISTRICT COURT LABOUR MEDIATION DATA

Year Number of
concluded cases
(A)
Successful
mediations
(B)
Unsuccessful
mediations
(C)
(B/B+C)×100%) (B/A×100%)
2017 2,237 527 1,159 31.26% 23.56%
2018 2,116 514 1,258 29.01% 24,29%
2019 2,005 537 1,160 31,64% 26.78%
2020 2,595 999 913 52,25% 38.50%
2021 3,337 1,171 1,236 48.65% 36.29%

Source: Taiwan Judicial Yuan Statistics

POSITIVE IMPACTS

With the above two types of conclusion methods, about 40 cases were completed in the first year after the enforcement of the act, and in the second year, the number doubled to 78 cases. Comparing the figures before and after enforcement of the act, the positive result achieved by reliable and efficient mediation procedures is obvious.

At first, regarding the number of concluded cases (A) and successful mediations (B), the number of concluded cases has clearly increased since the act took effect in 2020 and is a watershed. The number of successful mediations has also risen more than double since then.

Pang-Heng Hung, New era of labour dispute cases in Taiwan
Pang-Heng Hung
Partner
Formosa Transnational in Taipei
Email: pang-heng.hung@taiwanlaw.com

The rate of successful mediations, compared with the unsuccessful ones, has improved from the previous 30% in 2017 to around 50% in 2020 and 2021, and the ratio of mediation ending successfully has a favourable result with the ratio increasing from around 25% to more than 35% in the same period.

Analysing these figures, one might argue that while the legal framework drives the number of labour mediations, the number of concluded cases inevitably rises. The court has shown a dramatic increase in successful mediations by conducting labour court proceedings, assigning judges and actively participating in mediation procedures without increasing the number of staff. The improved rate of success to around 50% means, the mediations conducted by the mediation committee are highly trusted.

Following the enforcement of the Labour Incident Act, disputes have been resolved more efficiently than before, which show that reliable solutions can be expected with the participation of experts and judges. From the perspective of corporate legal affairs, labour dispute cases can be prevented and the structure of an appropriate internal framework in line with Taiwan’s Labour Standards Act has become equally important.

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