The Supreme Administrative Court rendered the 107-Pan-708 Decision of November 29, 2018 (hereinafter, the “Decision”), holding that in case of any dispute over the type of labor contract, a determination should be made based on the main performance obligation under the contract and its actual performance status as well as the characteristics of the type it constitutes without being constrained by the name of the contract used by the parties.
According to the facts underlying this Decision, the Appellant was a public enterprise that operated postal services in an industry subject to the Labor Standards Act (hereinafter, the “Act”). Appellee Labor Affairs Bureau of Kaohsiung City Government imposed a fine of NT$90,000 on the Appellant for failure to set up attendance records for outsourced postmen who conduct postal delivery and announced the names of the business organization and its representative. Dissatisfied, the Appellant brought an administrative litigation pursuant to applicable procedures. After the administrative litigation claim was dismissed by the original decision, this appeal was filed.
According to this Decision, the freedom of contract is the basis of private law autonomy and a vital mechanism for independent personal development and self-realization. When both parties have any dispute over the type of the contract they have chosen, administrative agencies and courts shall make a determination based on details about the major performance obligation under the contract and its actual performance status as well as the characteristics of the type the contract constitutes without being constrained by the name of the contract used by the parties and shall not elect to dictate the type of the contract based on an administrative agency’s interpretation or court judgment without any legal basis.
It was further pointed out in this Decision that the major performance obligation under a labor contract is primarily reflected in the mandatory provisions under Chapter 3 (concerning wages) and Chapter 4 (concerning work hours, rest and leave) of the Act. As for the determination of whether a contract is a labor contract, the emphasis is on the significance of the freedom to decide the work hours in the development of personal freedom, from the perspective of personal subordination, or on enterprise risk assumption without partially stressing the guidance and supervision of workers, from the perspective of economic subordination.
It was further pointed out in this Decision that a postman is only required to complete the contracted work, i.e., the daily delivery and sorting of mail, without being constrained by the working time. If the delivery of mail violates the Postal Law or the Regulations Governing the Handling of Mails or the contract at issue, the Appellant could not penalize or sanction the postman other than refuse to pay, calculate a default penalty or terminate the contract pursuant to the contract. The personal subordination is obviously lacking. In addition, the two outsourced postmen were required to prepare their own motorcycles, assume all costs associated with their vehicles and equipment, and bear the business risk of poor work quality. Since they were economically independent, the contract was certainly not a labor contract under the Act. Therefore, it was further concluded that under the principle of private law autonomy, the contract whose contents should be freely decided by the people is not governed by the Law. Since the original disposition which imposed a penalty for violation of Article 30, Paragraph 5 of the Act was unlawful, and the court held that it could render a decision on its own, the original decision was reversed and the decision on administrative appeal and the original disposition were set aside.