Dear friends,

On November 27, 2015, the Legislative Yuan passed its three readings of amendment to the Labor Standard Act ("Amendment"), which is subject to further official announcement by the President.  (Normally, the announcement will be soon and no further change will be made.)  

We summarize the Amendment below: 

1. Non-compete agreement

The Amendment adds a new Articles 9-1, which restricts any non-compete agreement post the termination of an employment, unless the following requirements are met:

(1) The employer has justifiable business interest to be protected by the agreement;

(2) The position or duty of the employee has assess to or use of trade secrets of the employer;

(3) The period, area, the scope of occupational activities and potential future employers of the non-compete shall not exceed the reasonable scope and shall be justifiable; and

(4) The employer shall make reasonable compensation for the loss arising from the employee's non-compete conduct.  

The compensation shall not include the payment during the employment period.  Any agreement in violation of the above is considered void.  The period of the con-compete agreement shall not exceed two (2) years.  Any term longer than two (2) years shall be shorten as two (2) years.

The Amendment specifically imposes restrictions on non-compete covenants, which confirms the courts' similar position during past years.  

2. Change of job scope

The Amendment adds a new Article 10-1, which provides that any change of the employee's job scope shall not be contrary to the employment contract and shall meet the following principles:

(1) Unless otherwise provided by laws, the change shall be necessary for the business operation, and shall not contain any improper motivation or purpose;

(2) There shall be no adverse change to the wage and other terms and conditions of the employee;

(3) The employee shall be physically and technically competent with the new job;

(4) If the new work premises are too far away from the original ones, the employer shall provide necessary assistance; and

(5) The employer shall take into consideration the living interests/benefits of the employee and his/her family.

3. Restriction to minimum service period of employment

The Amendment adds a new Articles 15-1, which restricts any agreement on the minimum service period of employment unless it falls under any of the following:

(1) The employer provides the employee with the professional technique training, and pays for such training; or

(2) The employer provides reasonable compensation for the employee to comply with the minimum service period agreed upon by both parties.

The minimum service period agreement shall take into account of the following, and shall not be beyond reasonable:

(1) The term and cost of professional technique training provided by employer.

(2) The possibility of substitutability of the employee for the same or similar position.

(3) The compensation amount and scope provided by the employer.

(4) Other reasonable matters affecting minimum service period agreement.

The agreement is void in case of any violation above.  If the agreement is terminated before the expiration of the minimum service period for the reason not attributable to the employee, the employee shall not be liable for any breach of the minimum service period agreement or training expenses.

Echo Yeh / David Tsai / Robin Huang