By Teresa Pan and Jia-Wei Chao, Partner and Associate of Formosan Brothers, Attorneys-at-Law

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Lately, under the impact of several infection clusters such as the “Novatel,” “Lion King,” “Wanhua Tea Parlor,” and the “Grape Mama Wedding Banquet” clusters, COVID-19 infections in Taiwan has entered a stage of continuous/extensive community spread, bringing grave challenges to the nation. At the same time, the Central Epidemic Command Center (“CECC”) has ordered the temporary closing of recreational businesses and required other businesses to implement the “Guidelines for Continuous Operation in Response to the COVID-19 Pandemic for Businesses” in an effort to lower the impact of the pandemic.

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Among the businesses, some have their employees take leave due to the CECC’s order of closure, some have their employees work regular hours due to the nature of their business, some asked their employees to work from home to reduce the risk of infection, and some even asked their employees to take unpaid leave temporarily due to loss of business. The different ways of coping described above will surely impact the compensation an employee receives. How businesses adjust their employees’ compensation to avoid an even bigger impact caused by the pandemic is indeed an important issue.On the first scenario where a business asks its employee to take leaves due to the CCEC’s order to temporarily close the business, the competent authority has indicated lately: although the business closure by order of the CCEC is not attributable to either the employer or the employee and the business is not obliged to pay the employee, the employer shall still negotiate on whether to pay the employee during business closure. However, for those who are paid monthly salary, since regular days off and holidays are still paid as part of the monthly salary, such employees should still be paid for their regular days off and holidays even if the business is ordered to close by the CCEC. In addition, it is worth noting that if a business asks its employees to provide labor such as conducting internal disinfection or inventory during the time it is closed, since the employee still provides labor as usual, the business shall pay the employees.

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On the second scenario where a business asks its employees to work from home due to the pandemic, since it only changes work location without changing other work conditions, such as work time and work content, the business shall still pay its employees as originally stipulated. However, the fact that employees who work from home are not under physical supervision of the employer will definitely bring about issues in terms of management.

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Pursuant to labor laws and regulations, businesses have the obligation to keep their employees’ attendance records on file. Such obligation should not be waived simply because the employees now work from home. To reduce the employer’s risk of penalty imposed by the competent authority, we suggest employers to reach agreements with the employees clearly stating how to record their working time and overtime by referring to the “Guidelines Governing Employees’ Working Time Outside of the Employer’s Premises” published by the Ministry of Labor. In addition, if businesses find it necessary to adjust salary structure, confidential information management or measures related to disease prevention, they shall re-negotiate such terms with the employees.

On the third scenario where a business asked its employees to take unpaid leaves due to business loss, the employees’ loss of compensation is attributable to the employer, and the employer has the obligation to pay the employees according to their employment contracts. If the employer fails to pay or refuse to pay the compensation in full, it runs the risk of being penalized by the competent authority. However, to avoid triggering businesses’ reduction of employees, current practices allow the employer  to negotiate with individual employee to reduce working hours and compensation thereof proportionally (that is, the so called unpaid leave). But if the employee is paid a monthly salary, the employer shall still pay attention to meeting the minimum wage requirement. In addition, businesses implementing unpaid leaves shall in principle limit such leaves to a maximum of three months and shall report to the competent authority in advance and provide relevant documentation. It shall also comply with the Directions Governing the Reduction of Working Hours by Negotiation between the Employer and the Employee in Response to Economic Impact.”

Facing the impact an ever-changing pandemic has on business operations, businesses should adopt appropriate coping measures as soon as possible. By careful examination of their operations and negotiating with their employees, businesses can adjust working models and compensation for the employees and prevent employment disputes, which might further jeopardize business operations. Only then can businesses navigate their way through the bad waters of the current pandemic and create a win-win situation for themselves and their employees.

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(This article was published in the Expert’s Commentary Column of the Commercial Times. https://view.ctee.com.tw/human/29584.html）