August 2017
Wage negotiation should include the social security cost which should be assumed by the enterprise owner, and unless such cost is specifically excluded by contract, the contract construction principle that such payment is also covered by wages should be followed(Taiwan)
2016.12.15
Melanie Lo
The Supreme Administrative Court rendered the 105-Pan-678 Decision of December 15, 2016 (hereinafter, the "Decision"), holding that wage negotiation should include the social security cost which should be assumed by the enterprise owner, and unless such cost is specifically excluded by contract, the contract construction principle that such payment is also covered by wages should be followed.
According to the facts underlying this Decision, Appellee Far Easton Electronic Toll Collection Co. and Taiwan Area National Freeway Bureau under the Ministry of Transportation and Communications (hereinafter, the "TANFB") entered into the Agreement on the Project for Private Participation in the Construction and Operation of the Freeway Electronic Toll Collection System (hereinafter, the "Construction and Operation Agreement at Issue"), in which it was agreed and promised that the annual wages of previous freeway toll collectors who accepted the employment switch arrangements will not be lower than the annual wages of such personnel one year prior to the employment switch for five years beginning with the date of employment switch. To avoid the disputes of "same job with different pay" or "double standards for compensation management," such personnel were still governed by the compensation standards of the companies to which they switched with the differences of the guaranteed annual wages separately paid by the Appellee on a monthly basis (hereinafter, the "Employment Switch Guarantee Payment"). The Appellant Labor Insurance Bureau under the Ministry of Labor held that the Employment Switch Guarantee Payment should also be included in the monthly insurance wages for the purposes of labor insurance and employment insurance, and their labor insurance and employment insurance wages were directly adjusted on December 1, 2014 pursuant to the original disposition. Dissatisfied, the Appellee brought administrative action.
According to the Decision, when wages are negotiated between a business owner and an employee, the wages include, in a broad sense, the wages indicated in the labor contract as well as the cost of social security corresponding to the wage amount which should be assumed by the business owner. However, such cost is usually not specified in a labor contract, since such cost is not derived from the agreement between the employer and the employee but rather from law and is a legal obligation of the business owner.
It was further pointed out in the Decision that when the central government conducts a public infrastructure project participated by the private sector, in case of transition for the original construction workforce of the procuring agency, such employment switch is necessary. Therefore, a certain degree of protection to the original wages and salaries enjoyed by the workers under the switch as well as institutional safeguards should be provided during the transitional period. This is the consensus between the procuring agency of a public infrastructure project and the business owner participating in such project in a welfare state. Therefore, whether a business owner participating in a public infrastructure project is offering the original wages and institutional safeguards to a certain extent within a certain period to workers whose employment will be switched is certainly a basic consideration for the procuring agency in determining if such business owner is to be rated as the best tenderer during the evaluation stage and if contract will be awarded to such business owner during the contract negotiation stage. However, with respect to the wage protection arrangements proposed by the business owner, because of the above-mentioned practice that institutional safeguards do not have to be specified in the labor contract, unless such arrangements specifically exclude institutional safegaurds, the "wage protection" perceived by the counterparty to the contract (the procuring agency) is the same as that by workers under a labor contract. Therefore, it should be deemed that the social security cost corresponding to the protected wages should still be assumed by the business owner. A contract for private participation in a public infrastructure project is awarded based on such understanding to allow a business owner to engage in a major public infrastructure project.
It was further determined in this Decision that the original disposition was legally correct when including the Employment Switch Guarantee Payment in the monthly insurance wages of the personnel indicated in Attachment 1 and adjusting the insurance wages for labor insurance and employment insurance which were declared by the Appellant. Based on the fact that the Construction and Operation Agreement at Issue existed as affirmed by the original trial court, this Court explored the true intent of the parties regarding the wording "wage protection" in such agreement and the requirement that the employer should assume the social security cost corresponding to wages according to logical rules. Therefore, the original decision was reversed and this Decision was rendered against the Appellee.
Melanie Lo
The Supreme Administrative Court rendered the 105-Pan-678 Decision of December 15, 2016 (hereinafter, the "Decision"), holding that wage negotiation should include the social security cost which should be assumed by the enterprise owner, and unless such cost is specifically excluded by contract, the contract construction principle that such payment is also covered by wages should be followed.
According to the facts underlying this Decision, Appellee Far Easton Electronic Toll Collection Co. and Taiwan Area National Freeway Bureau under the Ministry of Transportation and Communications (hereinafter, the "TANFB") entered into the Agreement on the Project for Private Participation in the Construction and Operation of the Freeway Electronic Toll Collection System (hereinafter, the "Construction and Operation Agreement at Issue"), in which it was agreed and promised that the annual wages of previous freeway toll collectors who accepted the employment switch arrangements will not be lower than the annual wages of such personnel one year prior to the employment switch for five years beginning with the date of employment switch. To avoid the disputes of "same job with different pay" or "double standards for compensation management," such personnel were still governed by the compensation standards of the companies to which they switched with the differences of the guaranteed annual wages separately paid by the Appellee on a monthly basis (hereinafter, the "Employment Switch Guarantee Payment"). The Appellant Labor Insurance Bureau under the Ministry of Labor held that the Employment Switch Guarantee Payment should also be included in the monthly insurance wages for the purposes of labor insurance and employment insurance, and their labor insurance and employment insurance wages were directly adjusted on December 1, 2014 pursuant to the original disposition. Dissatisfied, the Appellee brought administrative action.
According to the Decision, when wages are negotiated between a business owner and an employee, the wages include, in a broad sense, the wages indicated in the labor contract as well as the cost of social security corresponding to the wage amount which should be assumed by the business owner. However, such cost is usually not specified in a labor contract, since such cost is not derived from the agreement between the employer and the employee but rather from law and is a legal obligation of the business owner.
It was further pointed out in the Decision that when the central government conducts a public infrastructure project participated by the private sector, in case of transition for the original construction workforce of the procuring agency, such employment switch is necessary. Therefore, a certain degree of protection to the original wages and salaries enjoyed by the workers under the switch as well as institutional safeguards should be provided during the transitional period. This is the consensus between the procuring agency of a public infrastructure project and the business owner participating in such project in a welfare state. Therefore, whether a business owner participating in a public infrastructure project is offering the original wages and institutional safeguards to a certain extent within a certain period to workers whose employment will be switched is certainly a basic consideration for the procuring agency in determining if such business owner is to be rated as the best tenderer during the evaluation stage and if contract will be awarded to such business owner during the contract negotiation stage. However, with respect to the wage protection arrangements proposed by the business owner, because of the above-mentioned practice that institutional safeguards do not have to be specified in the labor contract, unless such arrangements specifically exclude institutional safegaurds, the "wage protection" perceived by the counterparty to the contract (the procuring agency) is the same as that by workers under a labor contract. Therefore, it should be deemed that the social security cost corresponding to the protected wages should still be assumed by the business owner. A contract for private participation in a public infrastructure project is awarded based on such understanding to allow a business owner to engage in a major public infrastructure project.
It was further determined in this Decision that the original disposition was legally correct when including the Employment Switch Guarantee Payment in the monthly insurance wages of the personnel indicated in Attachment 1 and adjusting the insurance wages for labor insurance and employment insurance which were declared by the Appellant. Based on the fact that the Construction and Operation Agreement at Issue existed as affirmed by the original trial court, this Court explored the true intent of the parties regarding the wording "wage protection" in such agreement and the requirement that the employer should assume the social security cost corresponding to wages according to logical rules. Therefore, the original decision was reversed and this Decision was rendered against the Appellee.
