November 2025
Interpretation of “Employee” in Corporate Criminal Liability (Taiwan)
I. Introduction
According to the general principles of criminal law, the subject of a crime should be identical to the subject of punishment; that is, only the perpetrator of the criminal act bears criminal liability. This is the principle of individualized criminal responsibility, under which criminal liability is limited to the offender alone. [1] However, to accommodate socio-economic needs, special criminal statutes in Taiwan provide penalties for crimes related to corporate enterprises or business activities. The forms of liability can be roughly divided into three types: (1) dual liability: both the perpetrator and the corporation bear responsibility; (2) self-responsibility: the actual perpetrator alone bears responsibility; and (3) shifted responsibility: responsibility is shifted to another party.
Among these, Taiwan’s supplementary criminal statutes widely adopt the “dual-punishment system,” meaning that where a responsible person of the juridical person, representative of the juridical person, employee or other operational personnel commits a crime in the course of business, not only is the perpetrator punished, but the corporation is also fined. Such provisions can be found throughout various special statutes, such as Article 47 of the Waste Disposal Act, Article 57 of the Air Pollution Control Act, Article 101 of the Copyright Act, and Article 13-4 of the Trade Secrets Act. The legislative purpose of the dual-punishment system is to impose a supervisory duty on corporations regarding their personnel and to induce corporations to establish sound internal control and compliance mechanisms. In this situation, the staff member is responsible for his or her own unlawful conduct, while the corporation bears criminal liability due to inadequate supervision. The two are independent subjects of punishment.
The above provisions all use the commission of a crime by an “employee” in the performance of his duties as one of the elements of corporate liability. But what constitutes an “employee”? How should its scope be defined? Should it be interpreted the same way as the “employee” under Civil Code Article 188, under which an employer bears joint liability for damage caused by an employee in the performance of duties? For a long time, there has been no clear judicial precedent. The Supreme Court’s 2024 Judgment 113 Tai-Shang-Tzu 1513 is the first in Taiwanese judicial practice to engage in systematic reasoning on the concept of “employee” under the dual-punishment provisions of supplementary criminal law. It clearly delineates the conceptual boundary between civil tort liability and corporate criminal liability, and it establishes the interpretive standard for “employee” under criminal law. This provides an important reference point for future cases and for determining corporate criminal liability.
II. Summary of Facts
The facts of this case are that two freight companies (Company A and Company B) allowed drivers to operate under the companies’ names by attaching license plates registered to the companies. Among them, Driver X and another person, Y, were commissioned by someone to transport construction waste to Yunlin and illegally dump it. As a result, Company A and Company B were indicted by the prosecutor under the corporate penalty provisions of Article 47 of the Waste Disposal Act.
III. Opinions of the Courts in Each Instance
A. First Instance (Yunlin District Court)
The first-instance court held that Driver X operated under Company A and Company B, and that the rights and obligations agreed upon between the parties were largely the same as those in typical attached-operation arrangements. X bore his own profits and losses and possessed significant economic and organizational independence, and therefore was not subordinate to Company A or Company B. Accordingly, it was difficult to find that Company A or Company B had substantive supervisory or managerial authority over X’s independent business activities. Therefore, it was difficult to conclude that Company A or Company B had a duty to “exercise due care” or the ability to “be able to exercise such care” to prevent X’s commission of the offense in this case. As a result, they could not be held liable for negligence in supervision. Accordingly, X could not be regarded as an employee or other staff member of Company A or Company B, and thus no corporate offense under Article 47 of the Waste Disposal Act could be established against the two companies. The prosecutor, dissatisfied with this judgment, therefore filed an appeal.
B. Second Instance (Tainan Branch of the Taiwan High Court)
The second-instance court held that although Driver X, operating under an attached-operation arrangement, was not formally an employee of Companies A and B, he was substantively an “employee” of the companies. The companies therefore had a duty to supervise him. However, the companies had not established adequate compliance or training systems, and thus should bear responsibility for inadequate supervision. Accordingly, the court, applying the dual-punishment system under Article 47 of the Waste Disposal Act, imposed a fine of NT$100,000 on each of Companies A and B, with a two-year suspension of execution.
The second-instance court primarily relied on past Supreme Court interpretations of “employee” under Civil Code Article 188(1), which adopt the notion of a “de facto employment relationship,” meaning that anyone who is objectively used by another to perform labor and is subject to that person’s supervision falls within the scope (Supreme Court 57 Tai-Shang-Tzu 1663). It further noted that the attached-operation system is widespread in Taiwan’s transportation industry. Attached-operation vehicles outwardly appear to belong to the transportation company, and passengers cannot tell whether a vehicle is attached or owned directly. They usually assume that the driver serves the company. As this is a socially common business model, transportation companies should bear legal responsibility for passenger safety. Therefore, regardless of whether an attached-operation vehicle is driven by its financier or by a driver recruited by that financier, as long as the driver holds lawful driving authority, the driver is objectively regarded as performing services for the transportation company. The company must bear employer liability in order to protect transactional safety (Supreme Court 77 Tai-Shang-Tzu 665; 92 Tai-Shang-Tzu 2459).
The second-instance court further stated that the basis for imposing joint tort liability between employer and employee under civil law, and the basis for punishment under the “dual-punishment system” in Taiwan’s special and supplementary criminal statutes, both hinge on whether the corporation fulfilled its duty to supervise natural persons. Therefore, the definition and legal interpretation of “employee,” as well as the legal characterization of attached-operation contracts and the determination of whether duties were performed, should not differ between civil law and criminal law. The interpretation of “employee” should thus be consistent across both systems.
In sum, because the vehicle driven by X was attached to Companies A and B, and because Companies A and B had the authority to decide whether to accept attached-operation drivers and could profit from and control risks through such arrangements, a hiring/selection-and-supervision relationship under Civil Code Article 188 was established between the parties. The attached-operation driver thus constituted an employee of the corporations. X’s joint illegal disposal of waste while driving the attached-operation vehicle bore the outward appearance of transportation business and did not depart from the scope of the companies’ operations. Therefore, the defendant companies should bear corresponding legal liability under Article 47 of the Waste Disposal Act.
C. Third Instance (Supreme Court)
The Supreme Court held that Civil Code Article 188 adopts a relatively broad concept of a “de facto employment relationship,” which is not limited by contract, remuneration, or duration, and that its purpose is to protect the victim’s ability to seek compensation. However, the regulatory purpose, the protected legal interests, and the legal effects of this provision differ from those under criminal law. It should not be directly applied in the criminal context, nor should it be expansively interpreted; otherwise, it may risk violating the principle of legality in criminal law. In addition, even the same legal term may necessarily produce different interpretations across different—or even within the same—regulatory fields due to differences in scope. This is the relativity of legal concepts, which must not be conflated.
In this case, Article 1 of the Waste Disposal Act shows that the core legislative values of the Act are “improving environmental sanitation” and “protecting public health.” To effectively prosecute crimes related to corporate enterprises or business activities, Article 47 of the Act establishes corporate liability under the dual-punishment system to prevent corporations from improperly disposing of waste and causing severe environmental pollution. It does so by providing that when the responsible person of the juridical person, representative of the juridical person or natural person, employees or other operational personnel violate Articles 45 or 46 in the performance of their duties, the corporation may be prosecuted for inadequate supervision.
Accordingly, the term “employee” in this Act should be interpreted in light of its legislative purpose, seeking the true meaning of the regulation. Although a formal employment contract is not required, the term should still be limited to persons who provide certain labor services to the corporation, receive regular remuneration, are subject to the direction and supervision of the corporation’s responsible person, and follow such instructions. It is inappropriate to analogize or extend the “de facto employment relationship” interpretation developed under Civil Code employer tort liability to this context.
Finally, the retrial court (Taiwan High Court, Tainan Branch) rendered its judgment based on the Supreme Court’s reasoning. It held that Y was employed by X, and X operated under an attached-operation arrangement with Companies A and B. The rights and obligations agreed upon between the parties were largely the same as those in typical attached-operation arrangements, meaning that X bore his own profits and losses and possessed significant economic and organizational independence. He was therefore not subordinate to Companies A or B. It was thus difficult to find that Companies A or B had substantive supervisory or managerial authority over X—or over Y, the co-defendant—regarding their independent business activities.
IV. Conclusion
The most important aspect of this case lies in clearly delineating the conceptual boundary between civil tort liability and corporate criminal liability. In Taiwanese civil practice, the concept of a “de facto employment relationship” has long been used as the interpretive standard for “employee” under Civil Code Article 188. Anyone who is “objectively” utilized by another to perform labor and is subject to that person’s supervision falls within its scope. The purpose of this standard is to address practical needs relating to transactional security and risk allocation, thereby protecting the victim’s right to compensation. [2] In this case, the Supreme Court explicitly stated that the concept of “employee” under criminal law should return to the legislative purpose of the dual-punishment system—namely, imposing a supervisory duty on corporations to prevent crime. Thus, the proper standard is whether the individual “provides certain labor services to the corporation, receives regular remuneration, is subject to the direction and supervision of the corporation’s responsible person, and follows such instructions.” The expansive interpretation developed under civil law should not be directly imported into the criminal context. This interpretation not only accords with the requirements of the principle of legality but also correctly distinguishes the essential differences between civil and criminal liability in terms of regulatory purposes and legal effects.
This case represents the Supreme Court’s first recent attempt to systematically analyze the concept of “employee” under the dual-punishment provisions of Taiwan’s supplementary criminal statutes, thereby establishing a clear interpretive standard for corporate criminal liability. However, whether the relationship between an individual and a corporation meets the elements of “employee” must still be assessed based on the specific facts of each case. The future development of judicial practice in this area warrants continued attention.
[1] See Supreme Court Criminal Judgment 96 Tai-Shang-Tzu 5520.
[2] From our perspective, under the joint civil liability of the employer in Article 188 of the Civil Code, the employer must be jointly liable with the employee to the victim. However, after the employer compensates the victim, the employer, in principle, may still exercise the “right of internal recourse” against the employee pursuant to Article 188, paragraph 3, requesting the employee to reimburse the payment the employer has advanced to the victim. Therefore, in general, the employee who actually committed the act still bears the “ultimate liability for compensation.” The joint compensation requirement imposed on the employer under Article 188, paragraph 1 of the Civil Code merely concerns the issue of how to allocate the risk when the victim seeks compensation from the employee but the employee’s assets are insufficient to compensate the victim—whether this risk of non-payment should simply be borne by the victim, or shifted to the employer for economic reasons. In essence, it is a system for allocating the insolvency risk of the debtor (the employee) to the party best suited to bear it.
According to the general principles of criminal law, the subject of a crime should be identical to the subject of punishment; that is, only the perpetrator of the criminal act bears criminal liability. This is the principle of individualized criminal responsibility, under which criminal liability is limited to the offender alone. [1] However, to accommodate socio-economic needs, special criminal statutes in Taiwan provide penalties for crimes related to corporate enterprises or business activities. The forms of liability can be roughly divided into three types: (1) dual liability: both the perpetrator and the corporation bear responsibility; (2) self-responsibility: the actual perpetrator alone bears responsibility; and (3) shifted responsibility: responsibility is shifted to another party.
Among these, Taiwan’s supplementary criminal statutes widely adopt the “dual-punishment system,” meaning that where a responsible person of the juridical person, representative of the juridical person, employee or other operational personnel commits a crime in the course of business, not only is the perpetrator punished, but the corporation is also fined. Such provisions can be found throughout various special statutes, such as Article 47 of the Waste Disposal Act, Article 57 of the Air Pollution Control Act, Article 101 of the Copyright Act, and Article 13-4 of the Trade Secrets Act. The legislative purpose of the dual-punishment system is to impose a supervisory duty on corporations regarding their personnel and to induce corporations to establish sound internal control and compliance mechanisms. In this situation, the staff member is responsible for his or her own unlawful conduct, while the corporation bears criminal liability due to inadequate supervision. The two are independent subjects of punishment.
The above provisions all use the commission of a crime by an “employee” in the performance of his duties as one of the elements of corporate liability. But what constitutes an “employee”? How should its scope be defined? Should it be interpreted the same way as the “employee” under Civil Code Article 188, under which an employer bears joint liability for damage caused by an employee in the performance of duties? For a long time, there has been no clear judicial precedent. The Supreme Court’s 2024 Judgment 113 Tai-Shang-Tzu 1513 is the first in Taiwanese judicial practice to engage in systematic reasoning on the concept of “employee” under the dual-punishment provisions of supplementary criminal law. It clearly delineates the conceptual boundary between civil tort liability and corporate criminal liability, and it establishes the interpretive standard for “employee” under criminal law. This provides an important reference point for future cases and for determining corporate criminal liability.
II. Summary of Facts
The facts of this case are that two freight companies (Company A and Company B) allowed drivers to operate under the companies’ names by attaching license plates registered to the companies. Among them, Driver X and another person, Y, were commissioned by someone to transport construction waste to Yunlin and illegally dump it. As a result, Company A and Company B were indicted by the prosecutor under the corporate penalty provisions of Article 47 of the Waste Disposal Act.
III. Opinions of the Courts in Each Instance
A. First Instance (Yunlin District Court)
The first-instance court held that Driver X operated under Company A and Company B, and that the rights and obligations agreed upon between the parties were largely the same as those in typical attached-operation arrangements. X bore his own profits and losses and possessed significant economic and organizational independence, and therefore was not subordinate to Company A or Company B. Accordingly, it was difficult to find that Company A or Company B had substantive supervisory or managerial authority over X’s independent business activities. Therefore, it was difficult to conclude that Company A or Company B had a duty to “exercise due care” or the ability to “be able to exercise such care” to prevent X’s commission of the offense in this case. As a result, they could not be held liable for negligence in supervision. Accordingly, X could not be regarded as an employee or other staff member of Company A or Company B, and thus no corporate offense under Article 47 of the Waste Disposal Act could be established against the two companies. The prosecutor, dissatisfied with this judgment, therefore filed an appeal.
B. Second Instance (Tainan Branch of the Taiwan High Court)
The second-instance court held that although Driver X, operating under an attached-operation arrangement, was not formally an employee of Companies A and B, he was substantively an “employee” of the companies. The companies therefore had a duty to supervise him. However, the companies had not established adequate compliance or training systems, and thus should bear responsibility for inadequate supervision. Accordingly, the court, applying the dual-punishment system under Article 47 of the Waste Disposal Act, imposed a fine of NT$100,000 on each of Companies A and B, with a two-year suspension of execution.
The second-instance court primarily relied on past Supreme Court interpretations of “employee” under Civil Code Article 188(1), which adopt the notion of a “de facto employment relationship,” meaning that anyone who is objectively used by another to perform labor and is subject to that person’s supervision falls within the scope (Supreme Court 57 Tai-Shang-Tzu 1663). It further noted that the attached-operation system is widespread in Taiwan’s transportation industry. Attached-operation vehicles outwardly appear to belong to the transportation company, and passengers cannot tell whether a vehicle is attached or owned directly. They usually assume that the driver serves the company. As this is a socially common business model, transportation companies should bear legal responsibility for passenger safety. Therefore, regardless of whether an attached-operation vehicle is driven by its financier or by a driver recruited by that financier, as long as the driver holds lawful driving authority, the driver is objectively regarded as performing services for the transportation company. The company must bear employer liability in order to protect transactional safety (Supreme Court 77 Tai-Shang-Tzu 665; 92 Tai-Shang-Tzu 2459).
The second-instance court further stated that the basis for imposing joint tort liability between employer and employee under civil law, and the basis for punishment under the “dual-punishment system” in Taiwan’s special and supplementary criminal statutes, both hinge on whether the corporation fulfilled its duty to supervise natural persons. Therefore, the definition and legal interpretation of “employee,” as well as the legal characterization of attached-operation contracts and the determination of whether duties were performed, should not differ between civil law and criminal law. The interpretation of “employee” should thus be consistent across both systems.
In sum, because the vehicle driven by X was attached to Companies A and B, and because Companies A and B had the authority to decide whether to accept attached-operation drivers and could profit from and control risks through such arrangements, a hiring/selection-and-supervision relationship under Civil Code Article 188 was established between the parties. The attached-operation driver thus constituted an employee of the corporations. X’s joint illegal disposal of waste while driving the attached-operation vehicle bore the outward appearance of transportation business and did not depart from the scope of the companies’ operations. Therefore, the defendant companies should bear corresponding legal liability under Article 47 of the Waste Disposal Act.
C. Third Instance (Supreme Court)
The Supreme Court held that Civil Code Article 188 adopts a relatively broad concept of a “de facto employment relationship,” which is not limited by contract, remuneration, or duration, and that its purpose is to protect the victim’s ability to seek compensation. However, the regulatory purpose, the protected legal interests, and the legal effects of this provision differ from those under criminal law. It should not be directly applied in the criminal context, nor should it be expansively interpreted; otherwise, it may risk violating the principle of legality in criminal law. In addition, even the same legal term may necessarily produce different interpretations across different—or even within the same—regulatory fields due to differences in scope. This is the relativity of legal concepts, which must not be conflated.
In this case, Article 1 of the Waste Disposal Act shows that the core legislative values of the Act are “improving environmental sanitation” and “protecting public health.” To effectively prosecute crimes related to corporate enterprises or business activities, Article 47 of the Act establishes corporate liability under the dual-punishment system to prevent corporations from improperly disposing of waste and causing severe environmental pollution. It does so by providing that when the responsible person of the juridical person, representative of the juridical person or natural person, employees or other operational personnel violate Articles 45 or 46 in the performance of their duties, the corporation may be prosecuted for inadequate supervision.
Accordingly, the term “employee” in this Act should be interpreted in light of its legislative purpose, seeking the true meaning of the regulation. Although a formal employment contract is not required, the term should still be limited to persons who provide certain labor services to the corporation, receive regular remuneration, are subject to the direction and supervision of the corporation’s responsible person, and follow such instructions. It is inappropriate to analogize or extend the “de facto employment relationship” interpretation developed under Civil Code employer tort liability to this context.
Finally, the retrial court (Taiwan High Court, Tainan Branch) rendered its judgment based on the Supreme Court’s reasoning. It held that Y was employed by X, and X operated under an attached-operation arrangement with Companies A and B. The rights and obligations agreed upon between the parties were largely the same as those in typical attached-operation arrangements, meaning that X bore his own profits and losses and possessed significant economic and organizational independence. He was therefore not subordinate to Companies A or B. It was thus difficult to find that Companies A or B had substantive supervisory or managerial authority over X—or over Y, the co-defendant—regarding their independent business activities.
IV. Conclusion
The most important aspect of this case lies in clearly delineating the conceptual boundary between civil tort liability and corporate criminal liability. In Taiwanese civil practice, the concept of a “de facto employment relationship” has long been used as the interpretive standard for “employee” under Civil Code Article 188. Anyone who is “objectively” utilized by another to perform labor and is subject to that person’s supervision falls within its scope. The purpose of this standard is to address practical needs relating to transactional security and risk allocation, thereby protecting the victim’s right to compensation. [2] In this case, the Supreme Court explicitly stated that the concept of “employee” under criminal law should return to the legislative purpose of the dual-punishment system—namely, imposing a supervisory duty on corporations to prevent crime. Thus, the proper standard is whether the individual “provides certain labor services to the corporation, receives regular remuneration, is subject to the direction and supervision of the corporation’s responsible person, and follows such instructions.” The expansive interpretation developed under civil law should not be directly imported into the criminal context. This interpretation not only accords with the requirements of the principle of legality but also correctly distinguishes the essential differences between civil and criminal liability in terms of regulatory purposes and legal effects.
This case represents the Supreme Court’s first recent attempt to systematically analyze the concept of “employee” under the dual-punishment provisions of Taiwan’s supplementary criminal statutes, thereby establishing a clear interpretive standard for corporate criminal liability. However, whether the relationship between an individual and a corporation meets the elements of “employee” must still be assessed based on the specific facts of each case. The future development of judicial practice in this area warrants continued attention.
[1] See Supreme Court Criminal Judgment 96 Tai-Shang-Tzu 5520.
[2] From our perspective, under the joint civil liability of the employer in Article 188 of the Civil Code, the employer must be jointly liable with the employee to the victim. However, after the employer compensates the victim, the employer, in principle, may still exercise the “right of internal recourse” against the employee pursuant to Article 188, paragraph 3, requesting the employee to reimburse the payment the employer has advanced to the victim. Therefore, in general, the employee who actually committed the act still bears the “ultimate liability for compensation.” The joint compensation requirement imposed on the employer under Article 188, paragraph 1 of the Civil Code merely concerns the issue of how to allocate the risk when the victim seeks compensation from the employee but the employee’s assets are insufficient to compensate the victim—whether this risk of non-payment should simply be borne by the victim, or shifted to the employer for economic reasons. In essence, it is a system for allocating the insolvency risk of the debtor (the employee) to the party best suited to bear it.
