June 2022
Elizabeth Pai and Jiselle Ong
Pursuant to Article 38 of the Labor Standards Act of Taiwan (hereinafter, the “LSA”), employees shall enjoy a certain number of annul leave days with full pay based on their years in service and may schedule the annual leave on their own. However, employers who have “pressing business operation needs” may negotiate with the employees to adjust the annual leave dates. In practice, some employers stipulate in their work rules or employment contracts that the employers have the right to approve or reject annual leave and may reject annual leave applications from employees. Are such arrangements allowable under the labor laws and regulations? If an employee is unwilling to adjust the annual leave dates, may the employer reject the annual leave application and cite the leave-taking employee (who does not show up for work) for absenteeism? This article summarizes relevant practical views for the reference of employers and employees.
The Ministry of Labor held in 2019 that, for the statutory annual leave entitlement, employees may schedule when to take such leave according to their will. The employer may adjust them out of pressing business operation needs by reaching an agreement with the employees through negotiation. Nevertheless, if the employees are not willing to accept the adjustment, the employer does not have the “right to reject the annual leave.”
Some courts adopt similar views,[1] holding that employers have no right to deny annual leave applications, and that an employee’s right to schedule annual leave is a right of formation where the employer may adjust it only out of work needs and with the consent of the employees. If the employees are not willing to adjust it, they may take the leave if they meet the statutory requirements for annual leave. A court mentioned[2] that even if the annual leave dates scheduled by employees indeed will affect the operation of the employer, the employer may only negotiate with them or suspend the employees’ annual leave in accordance with Article 40 of the LSA for “the sudden outbreak of an incident where the employer believes continued work is necessary.” If the employees refuse to negotiate, the negotiation fails, or the facts of the case do not meet the criteria for the “sudden outbreak of an incident where the employer believes continued work is necessary” under Article 40 of the LSA, the annual leave shall take place on the dates designated by the employees pursuant to the gist of the LSA.
Nonetheless, a number of recent high court and district court decisions had different views,[3] holding that although employers do not have the right of “unilateral denial,” still if employers have legitimate reasons (e.g.: pressing business operation needs or application for annul leave by employees do not meet the requirements of the work rules[4]), the employers may reject the annual leave application after unsuccessfully negotiating with the employees. Some courts also mentioned[5] that if employees insist on scheduling annual leave at dates that will seriously undermine the employer’s operation to the extent of causing significant damage to the employer or any third party, and the leave dates still cannot be adjusted after the negotiation between the employer and the employees, the schedule set by the employees shall be deemed invalid. If the employees still subjectively enjoy the annual leave, the employer may cite them for absenteeism. As for the circumstances where employers do not have legitimate reasons, the courts held that as long as the leave taking arrangement will not undermine the normal operation of the company, the employees should be able to schedule the dates for the annual leave, and the employer shall not cite the leave-taking employees for absenteeism.
In conclusion, the Ministry of Labor and some courts hold that employers do not have the right to approve or reject annual leave under any circumstances, and employees should be granted leave if no adjustment can be made through employer-employee negotiations. However, most high courts believe that employers may reject an annual leave application for legitimate reasons when the employers’ negotiation fails. In addition, if the employees still insist on taking the leave, they may be penalized for absenteeism.
[1]The (109) Su-Zi-1449 Decision of the Taipei High Administrative Court, the (109) Lao-Su-Zi-275 Decision of the Taipei District Court of Taiwan, the (109) Lao-Su-Zi-205 of the New Taipei District Court of Taiwan, and the (109) Lao-Chien-Zi-70 Decision of the New Taipei District Court of Taiwan
[2]The (109) Lao-Chien-Zi-70 Decision of the New Taipei District Court of Taiwan
[3]The (110) Lao-Shang-Yi-Zi-9 Decision of the Tainan Branch of the Taiwan High Court, the (108) Lao-Shang-Zi-35 Decision of the Taiwan High Court, the (108) Chung-Lao-Shang-Zi-8 Decision of the Taiwan High Court, the (109) Shang-Zi-111 Decision of the Supreme Administrative Court, the (109) Su-Zi-1496 Decision of the Taipei High Administrative Court, the (109) Su-Zi-562 Decision of the Taipei High Administrative Court, the (108) Su-Zi-1656 Decision of the Taipei High Administrative Court, and the (109) Lao-Su-Zi-34 Decision of the Kaohsiung District Court of Taiwan
[4]The (108) Chung-Lao-Shang-Zi-8 Decision of the Taiwan High Court
[5]The (109) Shang-Zi-111 Decision of the Supreme Administrative Court and the (109) Su-Zi-1496 Decision of the Taipei High Administrative Court