The Planning Department of the Public Construction Commission promulgated the Handling Principles for Accommodating Partial Amendments to the Labor Standards Law of December 2016 by Procuring Agencies for Projects under Construction (hereinafter, the “Handling Principles”), which came into effect on the day of their promulgation, via the Gong-Cheng-Qi-10600064480 Directive of March 7, 2017.
For construction procurement projects of procuring agencies which are still being performed, if the projects are still under construction and are not completed after the effective date of the Partial Amendments to the Labor Standards Law (hereinafter, the “Amendments”) on December 23, 2016 (not including circumstances where a project is not completed due to delays attributable to the suppliers) to the extent that the overtime payment of workers working during their rest days is increased, the number of special holidays is increased or the number of available holidays is reduced, any request to revise the contract as lodged by a contracted supplier who believes that the term or cost of performance is increased may be dealt with in accordance with the Handling Principles.
Consisting of 16 points, the Handling Principles are highlighted below.
With respect to a construction period extension by a contractor, Point 5 of the Handling Principles first specifically provides that for the remaining construction period after December 23, 2016, one-day extension will be granted for each 14-day period and no extension will be granted for a period short of 14 days. In addition, except for suppliers participating in tenders during January 1, 2016 through June 21, 2016, the following days which were off days for workers prior to the Amendments are not included in calculation beginning with January 1, 2017: The day after the Founding Day of the Republic of China (January 2), Martyrs’ Memorial Day (March 29), Teachers’ Day (September 28), Taiwan Restoration Day (October 25), Birthday of President Chiang Kai-Shek (October 31), Dr. Sun Yat-Sen’s Birthday (November 12) and Constitution Day (December 25).
Point 6 of the Handling Principles provides that since a construction contractor’s cost of managing construction sites will be increased after the construction period is extended, the management cost of the contractor will be compensated by 2.5% of the total contract price and the ratio of the number of days extended to the original construction period. The procuring agency will not make any additional payment for potential direct or indirect costs incurred by a contractor due to the extension of the construction period.
Point 7 of the Handling Principles provides that a supplier may propose the additional cost of a project whose construction period is not extended and its calculation method as a result of the new “one fixed day off and one flexible rest day” system to serve as the basis of negotiation. If payment to subcontractors is involved, a contractor is required to submit the agreements and statements executed with the subcontractors and guarantee in good faith that the amounts received will be reasonably distributed to the subcontractors.
Point 8 of the Handling Principles allows the contractual parties to negotiate between themselves a solution for a project under construction which they believe cannot be properly handled pursuant to the previous three points. In addition, Point 9 specifically provides that if a contract contains no covenant on adjustments linked to the Consumer Price Index or stipulates that the construction payment will not be adjusted based on the Consumer Price Index, the parties may additionally agree to adjustments linked to the Consumer Price Index, and the construction payment may be adjusted with respect to the portion of fluctuation over 2.5% according to the Construction Cost Index released by the Directorate-General of Budget, Accounting and Statistics after inspection is completed. In addition, the project items and amounts governed by such agreement should be specified.
Point 14 of the Handling Principles provides that the Handling Principles also apply to a construction technology service contract whose performance period covers December 23, 2016. If the technical service fees are calculated based on the percentage of construction cost method, the project’s additional performance cost calculated pursuant to the Handling Principles will not be included in the scope of construction cost calculation.