The Supreme Administrative Court rendered the 108-Su-253 Decision of June 11, 2020 (hereinafter, the “Decision”), holding that an employer would be at fault if it unilaterally restricts an employee from exercising his/her right to annual paid leaves even though the restriction is not intentional.
According to the facts underlying this Decision, the Defendant (the Labor Affairs Bureau of Kaohsiung City Government) sent personnel to the Plaintiff’s business location to conduct labor inspection and found that since the Plaintiff only granted three-day annual paid leaves every year to employees regardless of their years in service, the Plaintiff restricted annual paid leaves of its employees. In addition, Employee A of the Plaintiff worked for eight years and the Plaintiff should have granted 15-day annual paid leaves. However, until the Plaintiff terminated the labor contract with A, A had only taken annual paid leaves for two days in that year. Therefore, the Plaintiff should have paid the wages for 13 days of untaken annual paid leaves to A when the contract was terminated. But there was no record showing the Plaintiff’s payment. The Defendant exposed this and granted an opportunity to the Plaintiff to state its opinions, but the Plaintiff failed to do so. After examining and considering the facts and evidence as a result of its investigation, the Defendant concluded that the facts concerning the Plaintiff’s violation of Article 38 of the Labor Standards Act (hereinafter, the “Act”) were clear and imposed a fine and announced the name of the Plaintiff in accordance with Article 79, Paragraph 1, Subparagraph 1 and Article 80-1 of the same Act. Dissatisfied, the Plaintiff filed an administrative appeal, which was rejected. Therefore, the Plaintiff brought an administrative action.
According to the Decision, Article 38 of the Act provides that annual paid leaves shall be granted to employees who have worked continuously for a certain period of time. The annual paid leaves s shall be arranged by the employees. However, the employer may negotiate with employees for adjustment out of its urgent business operation needs or due to the personal factors of the employees. For annual paid leaves of employees which are not taken at the end of annual or upon termination of the contract, the employer shall pay the wages. Therefore, annual paid leaves are basically arranged based on the will of the employees. If the employer needs to ask its employees to work on scheduled paid leaves due to emergency situations at work, the employees’ consent is required, and for annual paid leaves not taken by the employees at the end of annual or upon termination of the contract, the employer shall pay the wages for the untaken leaves. In addition, Article 79, Paragraph 1, Subparagraph 1 of the Act provides that a fine will be imposed for violation of Article 34 thereof. Pursuant to Article 80-1, Paragraph 1 of the Act, if a fine is imposed pursuant to this Act, the competent authority shall announce the name of the business unit or business owner and the name of its legal representative and demand rectification within a stated period. If rectification is not made within the period, a penalty shall be imposed for each instance.
In addition, according to this Decision, the Plaintiff restricted its employees from exercising their right to the annual paidl leaves without their consent during the term of their employment relationship. Although the Plaintiff asserted that it would pay cash for the untaken annual paid leaves to the employees, still the annual paid leaves wage table submitted by the Plaintiff shows that such cash amount also includes other bonuses, and the wage table only indicates the aggregate amounts without any breakdown. Therefore, there is no way to confirm if wages for the untaken annual paid leaves were calculated and paid, and the Plaintiff’s statement that wages for the untaken annual paid leaves were paid to the employees is unacceptable. Therefore, the Plaintiff also violated Article 38, Paragraphs 3 and 4 of the Act for failing to pay wages for the untaken leaves upon termination of its labor relationship with A. Even though some leeway may be required for the arrangement of annual paid leaves for the employees due to the characteristics of the Plaintiff’s industry, still if an enterprise has dire needs, it should still negotiate with the employees in order to carry out employees’ rest right. If the Plaintiff unilaterally restricts its employees’ exercise of their right to annual paid leaves unintentionally, the Plaintiff is still at fault for failing to pay attention to certain matters as it should have. Therefore, the Plaintiff should be penalized in accordance with Article 7, Paragraph 1 of the Administrative Penalty Law.