HR WORKSHOP

COMPANIES & HR BASICSHiring and Firing the Wise Way

Speakers: - Lloyd G. Roberts III: Manager – Eiger - Gianna Abegg: Swiss attorney-at-law – Eiger

Who We Are

● Full-service firm● Offices in Taipei and Shanghai● Ranked in Tier 1 for Employment in Legal 500 2015

Introduction / Overview

● Employment law in Taiwan comparable to Europe

● Hiring and firing: stumbling blocks

● Q&A at the end

Hiring

Picture: http://www.thedailyenglishshow.com/

Employment Law in Taiwan

Taiwan’s legal system: ● Civil code system (like Germany)

Legislation:

● Labor Standards Act (LSA)● Labor Pension Act● National Health Insurance Act● Labor Insurance Act● Additional regulations, acts and decrees

Employment VS Mandate Agreements

General overview:

LSA: “worker” = “a person hired by an employer for wages”

The employers and courts distinguish between:● mandate● employment

Majority: Employment Agreements

● Must follow LSA/LPA/other laws’ standards

● Advantageous for employee

Exception: Mandate Agreements

● For top-level managers

● Can be fired immediately (w/ or w/o cause)

● No severance owed unless in the contract

Mandate Relationship Pitfalls:

● Most Managers are still in Employment Agreements

● Courts: Employment Agreements

● What happens to employer if he signs a mandate agreement but an employment agreement would be relevant?

Anatomy of a Work Contract

Written contracts required?

● In general: No written contracts required

● The terms and conditions may be stated orally or in writing

But: Written contract highly recommended

● However, certain rules for foreigners

○ Employment Services Act (ESA): Certain areas of work require written contracts

○ A written contract for work permit application

Language requirements?

● There are no regulations re: language

● Application work permit: No Chinese document required

● But: In case of disputes before the courts, documents must be presented in Chinese

Employment of Foreigners w/o APRC

Employment agreement must follow LSA/ESA/other laws’ standards.

● Categories of employment open to foreign nationals (Article 46 of the ESA).

● University degree.● At least two-year of work experience required (not

required if holder of master’s degree or above or government listed emerging strategic industry).

● No university degree: 5 years work experience.● Work permit and Alien Resident certificate (ARC)

required.APRC holders: Open work permits.

Employment Contract Template

● Do not use a template you found online ● Do not use a template from your foreign HQ● Check with legal counsel before you sign● Update contracts

→ Different situations require different solutions!

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT („Agreement“) is made and entered into as of this __ day of _______, 201_ by and between

1. [English name of company] (Chinese name of Company 有限公司 ) (“the Company”), address and2. [English name] (Chinese name) (“the Employee”), address

Whereby it is mutually agreed as follows:

ARTICLE 1: POSITION OF EMPLOYMENT● Specify [Position]

ARTICLE 2: CONTRACT TERM AND NOTICE PERIOD ● Unlimited period of time, starting date shall be mm, dd, 2015.● Limited period of time ● Termination in accordance to the Taiwanese Labor Standards Act

ARTICLE 3: RESPONSIBILITIES1. ...act at all times in accordance with the instructions of the Company.2. ...act at all times in a civil manner and shall be punctual. 3. ...not engage in any fraud, dishonest or criminal act.4. ...not use for personal purposes any office machines, equipment or other property of the

Company.

Non-fixed-term agreement: continuous work

Fixed-term agreements:- temporary; - short-term; - seasonal; - specified work.

ARTICLE 4: SALARY● Salary of TWD XXX per month for 12 months a year, ● With the wage payable at the end of each month. ● Company withholds income tax / mandatory social security payments on salary

and bonuses.

ARTICLE 5: ANNUAL BONUS● Bonus of one month's salary, payable before Chinese New Year. ● Alternative: For each year the Company has sole discretion to provide a bonus.

General working hours ( per day):

General working hours (every 2 weeks):

8 hours no more than 84 hours

Overtime (per day): Overtime (per hour):

< 2 hours 133% of regular hourly wage

2 hours < O < 4 hours 166% of regular hourly wage

ARTICLE 6: INSURANCE● Taiwanese government's National Health Insurance and Labor Insurance Plans.

ARTICLE 7: ANNUAL LEAVE 1. Annual leave in accordance to employment law.

[Alternative: XXX days of annual leave during the first year. Afterwards one additional day leave per year, up to 30 days annual leave in total.]

2. Timing by mutual agreement.

Years of Service Annual Paid Vacation

More than 1 but less than 3 7 days

More than 3 but less than 5 10 days

More than 5 but less than 10 14 days

More than 10 1 additional day for each year of service over 10 years up to a maximum of 30 days

+ 11 additional public holidays

ARTICLE 8: SICK LEAVE / ADDITIONAL LEAVE ENTITLEMENT / PUBLIC HOLIDAYS1. Sick Leave in accordance with Labor Standards Act. 2. Additional paid and unpaid leave in accordance with Labor Standards Act.3. Statutory holidays.

ARTICLE 9: COVENANTS, INDEMNIFICATION AND INTELLECTUAL PROPERTY1. Covenant Not To Compete.2. Indemnification and Holding Harmless.3. Covenant Not To Divulge Confidential Information.4. Intellectual Property.

ARTICLE 10: GOVERNING LAW, JURISDICTION

ARTICLE 11: PERSONAL DATACollection and use of personal data by company.

ARTICLE 12: SEVERABILITY

__________________________Place / Date

_______________________________ _________________________________Employee (Name) Company Ltd

Representative’s nameDirector

Termination Matters

Termination Tips

● Decide carefully● Meet w/ employee● Be respectful and discreet● Meet Taiwan’s legal requirements

Termination Checklist:

☑ Reason

☑ Notice

☑ Severance

☑ Termination Agreement

A Note on Advance Notice:

Seniority Level Notice

3 months-1 year 10 days

1-3 years 20 days

Over 3 years 30 days

Termination w/ Severance and Notice

● Company is shutting down● Ownership of company is transferred● Suffering of economic losses/curtails

operations● Operations affected by “force majeure”● Change in business nature ● Incompetent employee

Immediate Termination (No Notice, No Severance)

● Misrepresentation of facts at contract signing

● Breach of contract or work rules● Damage or abuse of company equipment● Intentional disclosure of trade secrets● Jail sentence● Absence for 3 days, or 6 days in a month

(w/o justifiable reason)

Severance - How Much?

Depends on:

● When employee hired● Taiwan or Non-Taiwan employee● Average pay during last six

months

Calculations:

● Employees hired before July 1, 2005 (when LPA came into force) and non-Taiwan employees, are subject to the LSA provisions' calculation of 1 month's severance pay per year of service.

● Taiwan employees hired on/after July 1, 2005, are subject to the calculation of 1/2 month's severance pay per year of service, up to a maximum of 6 months' severance*.

● Taiwanese employees hired before July 1, 2005 who opted-into the provisions of the LPA will get a pro-rata blend of the two rates.

Termination Agreements

7 Important Elements:

1. Acknowledgement of notice/basis2. Date of termination3. Return of company’s property4. Amount to be paid5. Acknowledgement of payments6. Acknowledgement of surviving obligations7. Acknowledgement of final obligations

(full and final settlement)

Termination Agreement

6. Acknowledgement of surviving obligations

7. Acknowledgement of final obligations

Non-competition clauses will not be enforceable beyond 2 years/some industries less

Courts have set out criteria for non-competition clauses

Termination Pitfalls to Avoid:

● You’re Fired ‒ Just Kidding! (Decide carefully)

● Not giving paid notice● Not giving severance● Making a severance deal● Physical contact