[Legal Life] Ch25 Where Did My Salary Go?!

After graduation, Chieh-Yun worked at a weekly magazine for a while, but recently noticed that there seemed to be something wrong with her salary. Although the company did enroll Chieh-Yun in labor insurance and additionally contributed 6% of her total salary under the new labor pension system, it listed both the 6% labor pension and the employer's share of the labor insurance as deduction items on her payslip, effectively making Chieh-Yun pay for them herself.

Recalling the elderly woman from years ago (EP1), Chieh-Yun found that the traffic accident and the resulting litigation (EP5, 8, 10, 11, 15) had not dampened her sense of justice. Instead, the series of legal issues made her legal intuition even keener. Frowning, Chieh-Yun realized the situation was more complicated than it seemed, and that the company was definitely in the wrong...

Old Labor Pension System vs. New Labor Pension System

The labor pension system was previously stipulated in the Labor Standards Act (commonly known as the old labor pension system). Pursuant to Articles 53 and 57 of the Labor Standards Act, an employee's years of service had to accumulate under the same employer for at least ten years before they were eligible to claim a pension. However, the average lifespan of small and medium-sized enterprises in Taiwan is not long, and unscrupulous employers would often find excuses to fire workers just as they neared the threshold, making it practically difficult for employees to accumulate years of service. Consequently, protection for their retirement life was clearly inadequate.

Therefore, on July 1, 2005, the Labor Pension Act (commonly known as the new labor pension system) came into effect, adopting a personal account system. Every worker who chose to apply the new system would have a personal labor pension account at the Bureau of Labor Insurance. Employers are required to make monthly contributions of no less than 6% of the employee's monthly wages into these personal labor pension accounts. These accounts remain unaffected by a worker changing jobs, or by a business entity shutting down or closing its business. Ownership of the account belongs to the worker, resolving the shortcomings of the old system where it was difficult to meet the qualifying years of service for a pension.

Scope of Application for the New Labor Pension System

According to Paragraph 1, Article 7 of the Labor Pension Act, except for those who allocate pension preparation funds in accordance with the Private School Act, all R.O.C. national workers subject to the Labor Standards Act, or foreign workers legally permitted to reside and work in Taiwan, are subject to the mandatory application of the new labor pension system.

However, it should be noted that pursuant to Paragraph 2 of the same article, employers who actually engage in labor, self-employed workers, commissioned workers, and workers not subject to the Labor Standards Act may also voluntarily contribute to the labor pension to secure their retirement life.

According to Paragraph 1, Article 14 of the Labor Pension Act, employers shall bear the pension contributions for workers, and this amount shall not be less than six percent of the worker's monthly wages. Workers may also voluntarily make additional pension contributions within 6% of their monthly wages. The portion voluntarily contributed by the individual worker may be fully deducted from their total personal comprehensive income for the current year.

Claiming Pensions - Third Reading and Passage of New Amendments to the Labor Pension Act

Originally, Article 24 of the Labor Pension Act stipulated that workers who reached the age of sixty and had fifteen years or more of service could claim a monthly pension; those with less than fifteen years of service had to claim a lump-sum pension. The new labor pension system passed in the third reading by the Legislative Yuan on November 1, 2016, allows workers who reach the age of sixty and have fifteen years or more of service in the future to choose between a monthly pension or a lump-sum pension, increasing the flexibility of claiming labor pensions. As of now, the new law has not yet been implemented, and it may apply as early as 2017.

How Can Workers Seek Relief When Employers Violate Regulations on Contributing Their Self-Borne Share?

If an employer violates the mandatory regulations for contributing to the labor pension, such as failing to make monthly contributions at all or failing to contribute the full amount, pursuant to Article 31 of the Labor Pension Act, the worker may claim damages from the employer for the losses incurred thereby. In addition, special attention must be paid to the statute of limitations: this right of claim shall be extinguished if not exercised within five years from the time the worker leaves their job. Workers must not overlook their own rights and interests.

Aside from demanding compensation, workers can also report the employer. If an employer fails to make monthly contributions or under-contributes, the competent authority may additionally impose a delinquent charge on the employer of up to one times the amount that should have been contributed, in accordance with Paragraph 1, Article 53 of the Labor Pension Act.

Employers Have the Obligation to Insure Workers

Because labor insurance is a social insurance and possesses a certain mandatory nature to achieve the purpose of dispersing social risks, Article 6 of the Labor Insurance Act enumerates the subjects of mandatory insurance. Labor pensions and labor insurance are two different systems. As mentioned above, a labor pension is a system that compels employers to pay a pension to workers, whereas labor insurance is a social insurance. When an insured person encounters an insurance accident, they may claim insurance benefits in accordance with the provisions of the Labor Insurance Act. The two systems are mutually independent.

Employer's Self-Borne Share of Insurance Premiums

Current labor insurance includes ordinary accident insurance and occupational accident insurance. Although grouped under labor insurance, the calculation of insurance premiums and the payment of insurance benefits are independent of each other.

Who bears the insurance premiums is stipulated in Article 15 of the Labor Insurance Act. For general workers regarding occupational accident insurance, the insurance premiums are borne in full by the employer. As for ordinary accident insurance, 70% is borne by the employer, 20% is borne by the worker independently, and the remaining amount is subsidized by the government.

What are the consequences if an employer violates the regulations regarding the self-borne share of insurance premiums?

According to Article 72 of the Labor Insurance Act, if an employer fails to bear the worker's insurance premiums as stipulated by the Labor Insurance Act and instead has them borne by the worker, a fine of twice the amount of the insurance premiums that should have been borne shall be imposed, and the employer shall also refund the said insurance premiums to the worker.

Supplement

Civil Liabilities of Employers Violating the Aforementioned Labor Pension Act and Labor Insurance Act Regulations

Regarding the private law relationship between the worker and the employer, because the employer concludes an employment contract with the worker, an ancillary obligation toward the worker arises based on the principle of good faith. The scope of ancillary obligations is extensive. Aside from the duty of protection and care to prevent harm to the worker's life and physical integrity, through the provisions of the Labor Insurance Act and the Labor Pension Act, these public law obligations are also transformed into contractual obligations of the employer toward the worker.

Some hold the view that when an employer violates these contractual obligations, it may give rise to liability for non-performance of obligations toward the worker, and the worker may additionally claim compensation for damages in accordance with Paragraph 1, Article 227 of the Civil Code concerning incomplete performance.

Others hold the view that, since both the Labor Insurance Act and the Labor Pension Act can presumably be deduced as laws protecting others, the employer will simultaneously constitute tort liability under Paragraph 2, Article 184 of the Civil Code. In the application of the law, when both tort liability and contractual liability can be asserted, the worker may choose to assert the one that is more favorable to them.

Related Legal Provisions

Paragraph 1, Article 14 of the Labor Pension Act
An employer shall bear the pension contributions for workers prescribed in Paragraph 1 of Article 7, which shall not be less than six percent of the worker's monthly wages.

Article 31 of the Labor Pension Act
If an employer fails to make monthly contributions or under-contributes labor pensions pursuant to this Act, resulting in damage to a worker, the worker may claim damages from the employer.
With respect to the claim in the preceding paragraph, the right of claim shall be extinguished if not exercised within five years from the time the worker leaves their job.

Paragraph 1, Article 53 of the Labor Pension Act
Where an employer violates Paragraph 1 of Article 14, Paragraph 1 of Article 19, or Paragraph 2 of Article 20 by failing to make timely contributions or full payments of pensions, a delinquent charge of 3 percent of the amount that should have been contributed shall be imposed for each day in arrears, starting from the day following the expiration of the time limit up to the day preceding full payment, up to a maximum of one times the amount that should have been contributed.

Subparagraph 1, Article 15 of the Labor Insurance Act
The burden of labor insurance premiums shall be calculated in accordance with the following provisions: 1. For insured persons prescribed in Subparagraphs 1 to 6, Paragraph 1, Article 6 and Subparagraphs 1 to 3, Paragraph 1, Article 8, 20 percent of the ordinary accident insurance premium shall be borne by the insured person, 70 percent by the insured unit, and the remaining 10 percent shall be subsidized by the central government; the occupational accident insurance premium shall be borne entirely by the insured unit.

Paragraph 2, Article 72 of the Labor Insurance Act
Where an insured unit fails to bear the insurance premiums of an insured person as prescribed by this Act and instead has them borne by the insured person, a fine of twice the amount of the insurance premiums that should have been borne shall be imposed. The insured unit shall also refund the said insurance premiums to the insured person.

Paragraph 1, Article 227 of the Civil Code
If a debtor renders incomplete performance due to a cause for which the debtor is responsible, the creditor may exercise their rights in accordance with the provisions governing delay in performance or impossibility of performance.

Paragraph 2, Article 184 of the Civil Code
A person who violates a statutory provision enacted for the protection of others and thereby causes damage to another shall be liable for compensation. However, this shall not apply if it can be proven that no negligence can be attributed to their conduct.