March 2023
Elizabeth Pai and Jiselle Ong
In practice, there are oftentimes cases where the payroll calculation period is from the first of the month to the end of the month, but the employer delays wage payment until the 20th or 25th of the following month, which affects the livelihood of employees. In order to address the issue of late wage payment by employers, the Ministry of Labor released the Guidelines for Agreement on Payday and Wage Payment Between the Employer and the Employee (hereinafter, the “Guidelines”) on February 9, 2023, which are highlighted below:
I. At least one wage payment shall be made each month (Point 2 of the Guidelines):
An employer is required by law to make at least two wage payments each month. If both parties have a special agreement or payment is made by month in advance, at least one payment still should be made each month. (See Article 23, Paragraph 1 of the Labor Standards Act).
II. The “payday” shall not be later than 15 days after the “payroll calculation period” (Point 3 of the Guidelines):
Both the employer and employee should specify the “payroll calculation period” and “payday” in the labor contract. If the wages are not paid until 15 days after the payroll calculation period, the local authority should immediately provide guidance to the business to adjust the payday. The Ministry of Labor has also planned in the Guidelines to achieve the goal of paying wages within 7 days after the payroll calculation period for companies with 99 or less employees and within 5 days for the rest of the companies by the end of 2026.
If the payday agreed upon before the effective date of the Guidelines is earlier than the 15-day period following the payroll calculation period, such agreement should still govern, and the employer shall not change or delay it unilaterally. For example, if the employer and the employee have agreed to pay wages five days after the expiration of the payroll calculation period, the employer shall not unilaterally change it to pay wages ten days after the expiration of the payroll calculation period after the Guidelines go into effect.
III. If the payday of “overtime pay” and “double pay for working on holidays” has not been separately agreed upon, wages shall be paid on the nearest payday or together with the wage for the current month (Point 4 of the Guidelines):
For these types of wages, if there is no other agreement on the payday between the employer and the employee, the employer shall pay the wages on the nearest payday after the fact of work occurs, or together with the monthly wages. If there is a separate agreement on the payday or another payroll calculation period, the number of payments shall still not be less than once a month, and the payment shall be made within 15 days after the end of the calculation period at the latest.
IV. For those who have agreed to settle and pay specific bonuses on a quarterly, semi-annual, or annual basis, there should still be a reasonable agreement on the payday (Point 5 of the Guidelines):
If the employer has allowed the employee to periodically receive wages in accordance with Article 23, Paragraph 1 of the Labor Standards Act, if both parties separately agree to settle the wages and pay specific bonuses and allowances on a quarterly, semi-annual, or annual basis, the payday of such partial wages, bonuses, and allowances may be agreed by both parties, provided that a reasonable agreement is made.
V. If the payday falls on a holiday, the employer may pay in advance, but the payment should be made no later than the previously agreed-upon payday at the latest, and the employer shall not delay the payment unilaterally (Point 6 of the Guidelines):
If the payday falls on a holiday, the employer may arrange for payroll bank transfers in advance, so that the wages can be credited to the employee’s account on the scheduled date. If wages are paid in cash, the employer may pay in advance; however, if the payment cannot be made in advance, the payment should still be made no later than the originally agreed-upon payday at the latest, and the payment shall not be unilaterally delayed by the employer.
According to the Ministry of Labor, the Guidelines are not mandatory legal requirements and have no penalties. Through ways of administrative guidance and local competent authorities’ flexible facilitation, they are intended to encourage business organizations to achieve the objective of paying wages within specific period as scheduled pursuant to the Guidelines. Businesses are recommended to gradually accommodate and adjust their payroll operation procedures and financial conditions and work together to protect the rights and interests of employees to receive wages.
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