Abstract
This chapter investigates the institutionalization of the status and function of the severance payment system in Taiwan for the dismissal protection through comparative labor law. The severance payment system in Taiwan had been overburdened with the role of pension protection by legislation of Labor Standard Act in 1984. As a result, the dismissal protection was negatively impacted. Following the differentiation reform of this institution in the first decade of twenty-first century, the severance payment system in Taiwan has embodied the dismissal protection through the separation of labor pension and unemployment insurance.
Taiwan’s severance payment had transplanted originally from European countries in 1920s. The European model of rigid job security, however, has not been followed by Taiwan in 1950s. In the meantime, clearly defined requirements of just causes for fair dismissal help to reduce the litigations of labor disputes. The severance payment system in Taiwan has become a weight for the equitable remedy in the dismissal protection.
Keywords
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- 1.
The legal language of Taiwan’s LSA has not used dismissal or resignation in its formal wording, but rather is a more neutral term, which is, the termination of the labor contract. This situation is not the same as that of the European countries or even Japan, that take dismissal protection as a core concept. To reflect the characteristics of this legal arrangement, the “dismissal” by an employer and the “resignation” by an employee in the table will be treated as the same weight. (Hwang, 2000, p. 219)
- 2.
See: Article 12(1) of the LSA specifies six requirements: (1) Where a worker misrepresents any fact at the time of signing of a labor contract in a manner which might mislead his/her employer and thus caused him/her to sustain damage therefrom; (2) Where a worker commits a violent act against or grossly insults the employer, his/her family member or agent of the employer, or a fellow worker; (3) Where a worker has been sentenced to temporary imprisonment in a final and conclusive judgment, and is not granted a suspended sentence or permitted to commute the sentence to payment of a fine; (4) Where a worker is in serious breach of the labor contract or in serious violation of work rules; (5)Where a worker deliberately damages or abuses any machinery, tool, raw materials, product or other property of the employer or deliberately discloses any technical or confidential information of the employer thereby causing damage to the employer; or (6) Where a worker is, without good cause, absent from work for three consecutive days, or for a total 6 days in any month.
- 3.
Art. 11 of the LSA.
- 4.
The proviso of Art. 13 of the LSA.
- 5.
Art. 20 of the LSA.
- 6.
Art. 2(1) of the Act for Worker Protection of Mass Redundancy .
- 7.
The just causes specified in Art. 17 of the Act of Gender Equality in Employment are the same as the first four causes specified in Art. 11 of the LSA.
- 8.
Art. 14(1) of the LSA.
- 9.
Art. 25(1) of the Act for Protecting Worker of Occupational Accidents.
- 10.
Most of the employees who are subject to the LSA have participated in the New Labor Pension Scheme. According to the statistics by the Bureau of Labor Insurance, more than six million employees participate in the New Labor Pension Scheme. See: http://www.bli.gov.tw/reportY.aspx?y=103&f=h850
- 11.
Art. 12(1) of the Labor Pension Act.
- 12.
Art. 8 and 11 of the Labor Pension Act.
- 13.
Art. 17(1) of the LSA.
- 14.
Art. 28 of the LSA. Please refer to the Appendix 3 in this chapter for the Guarantee of Severance Payment.
- 15.
Art. 29 of the Factory Act: “A factory terminating a contract with advance notice pursuant to Article 27 shall pay half of the wage for the advance notice period on top of such worker’s entitled wages. A factory terminating a contract without the Article 27 advance notice shall pay full wage for the advance notice period stipulated by such Article.”
- 16.
Including: Act for Settlement of Labor-Management Disputes (1928), Labor Union Act and Factory Act (1929), Collective Agreement Act (1930), Factory Inspection Act (1931), Labor Contract Act (1936).
- 17.
There were some clauses related to severance payment in the German 1920 Works Council Act and the Austrian 1921 Severance Payment Act. But Austrian Act then applied just to white-collar workers. The German package of severance payment in the early time was the compensation for unjust dismissal only. I thought the severance payment in the Factory Act of Nanjing Government should be transplanted from Austrian and extended the application to all factory workers.
- 18.
See: Constitution of the Republic of China(Taiwan), Art. 15: ‘The right of existence, the right of work, and the right of property shall be guaranteed to the people.’ And Art.152: ‘The State shall provide suitable opportunity for work to people who are able to work.’
- 19.
Art. 3 of the Order concerning the Hire and Fire Workers in the Factories and Mines.
- 20.
Art. 4 and 5 of the Order concerning the Hire and Fire Workers in the Factories and Mines.
- 21.
Art. 4 of the Order concerning the Hire and Fire Workers in the Factories and Mines.
- 22.
Juridification is the process of increasing legal intervention in the employment relationship. See: ‘Juridification’. A Dictionary of Human Resource Management, Oxford University Press. (2008).
http://www.oxfordreference.com/view/10.1093/acref/9780199298761.001.0001/acref-9780199298761-e-674
- 23.
Please refer to Legislative Yuan’s general meeting minutes, The Legislative Yuan Gazette, Vol. 73, No. 54, pp. 14–19. Vol. 73, No. 58, pp. 47–48.
- 24.
Before the commencement of employment insurance, the dispute cases for severance payment constituted at least 30% of the total labor dispute cases. Please refer to the Ministry of Labor’s statistics data website: http://www.mol.gov.tw/statistics/
- 25.
According to statistics, since the pension and severance payment were added into the scope of the Wage Arrears Payment Fund, 24 persons have been paid for severance pay under the previous scheme (over NTD 570,000), 297 persons have been paid for severance pay under the new scheme (over NTD 8,280,000). After the payment of the severance pay arrears of Chi Mei Lighting Technology Corp. in February, 2016, a total of 969 persons have been paid (total amount: over NTD 56,380,000) (25 persons being paid under the previous scheme (over NTD 1,060,000), 944 persons being paid under the new scheme (over NTD 55,310,000)). The Bureau of Labor Insurance will demand the employer, liquidator or bankruptcy trustee to repay the advanced payments according to law. Please refer to Ministry of Labor website data: http://www.mol.gov.tw/announcement/2099/24550/
- 26.
Three consensuses had reached in the Employment Session of the National Economic Development Conference: a. labor pension scheme should be portable to safeguard the rights and interests of the retirement; b. the employer contributions rate defined and adjusted from 2% to 6% gradually; c. individual account scheme, supplementary pension scheme, and other portable pension scheme were adopted parallel and could be chosen by workers themselves, neither approach will increase the government’s financial burden. Employees can contribute relatively in the individual ac-count scheme. If the contribution rate of the supplementary pension scheme is more than 6%, workers shall be taken the additional burden mandatorily. The contributions from workers’ side will be considered tax-free.
- 27.
See: para. 1 and 2, Art. 9 of Labor Pension Act: ‘Within the period from the promulgation of the Act to 1 day prior to the enforcement of the Act, employers shall inquire in writing their employees about their options between the pension system of the Act or retirement mechanism in the Labor Standards Act ; employees who have not made a firm option after the expiration of prescribed period shall continuously be applicable to the retirement mechanism in the Labor Standards Act on the date of enforcement of the Act. Employees, who continuously choose to be applicable to the retirement mechanism in the Labor Standards Act on the date of enforcement of the Act, may within 5 years choose to be applicable to the pension system in the Act.’
Art. 10 of Labor Pension Act: ‘When employees are applicable to the pension system in the Act, they shall no longer choose to be applicable to the retirement mechanism in the Labor Standards Act.’
- 28.
See: para. 1 and 2, Art. 11 of Labor Pension Act: ‘Employees, who were covered by the Labor Standards Act prior to the enforcement of the Act, still work for the same business entity after the enforcement of the Act and choose to be applicable to the pension system in the Act, their seniority prior to their application to the Act shall be reserved.
When the labor contract is terminated in accordance with Article 11, the proviso of Article 13, Article 14, Article 20, Article 53 and Article 54 of the Labor Standards Act or Article 23 and Article 24 of the Protection for workers Incurring Occupational Accidents Act, an employer shall in accordance with the foresaid statutes use the average wage at the time of terminating labor contract to calculate the severance or retirement payment for the reserved seniority referred to in the preceding paragraph, and the severance or retirement payment shall be paid within 30 days after the termination of labor contract. During the continuing period of a labor contract, when an employer and an employee mutually agree to pay off the employee’s reserved seniority referred to in Paragraph 1 with a criterion no less than the payment criteria prescribed by Article 55 or Article 84-2 of the Labor Standards Act, and such an agreement shall be complied.’
- 29.
See: para. 1, Art. 12 of Labor Pension Act: ‘Workers who are applicable to the pension system of this Act, and whose seniority that is applicable after this Act is terminated by labor contract in accordance with Article 11, the proviso of Article 13, Article 14 and Article 20 of the Labor Standards Act or Article 23 and Article 24 of Protection of Workers Suffering from Occupational Injuries and Diseases Act, shall have their severance pay paid by the employer based on their seniority: an equivalence of half a month of average wage for every full year of employment, and in proportion for employment less than one full year; the foresaid severance shall not exceed more than six months of average wage, and is not applicable to Article 17 of the Labor Standards Act.’
- 30.
See: para. 2, Art. 23 of Labor Pension Act: ‘The return rate generated from the utilization of employees’ pension contributed in accordance with the Act shall not be less than the interest rate of a two-year fixed term deposit by local banks; in the event of any deficiency, the Treasury shall make up the shortfall.’
- 31.
See: Ministry of Labor, Search engine of Labor Statistics, http://statfy.mol.gov.tw/statistic_DB.aspx.
- 32.
In definition of Labor Statistics, the disputes on employment contract include: nature of contract and restored employment relationship.
- 33.
See: Employment Insurance Act, Art. 23: ‘If there is a labor-management dispute between the applicant and former employer due to the applicant leaving work, unemployment benefit may still be claimed.
If the ruling on the preceding paragraph finds the applicant ineligible to claim unemployment benefit , then the applicant must return already claimed unemployment benefit within 15 days of the judgment. If the amount has not been returned before the appointed time, the case may be referred to court for compulsory execution.’
- 34.
The rate of Labor participation for Middle and Old age is lower than that of other countries for the long term. In 2015, labor participation rate in 55–59 is 55.1% and 60–64 is 35.8%. Both numbers are lower than Korea, Japan, and the USA whose rates are over 70% and 55%. See: Ministry of Labor, 2015 labor Statistics on the Middle and old age, http://www.mol.gov.tw/statistics/2462/2466/
- 35.
See: para. 3, Art. 11 of Employment Insurance Act: ‘The so-called involuntarily separation from employment prescribed in this Act refers to separation from employment because the insured unit has closed down, relocated, suspended business, dissolved, or filed bankruptcy, or separation from employment due to one of the causes prescribed in Article 11, the proviso of Article 13, Article 14 and Article 20 of the Labor Standards Act .’
- 36.
See: Wang Shu-fen and Lilian Wu, TransAsia Airways to be dissolved, Taipei, Nov. 22 (CNA).
- 37.
See: Chen Wei-ting and Evelyn Kao, TransAsia Airways unveils employees’ severance pay plan, Taipei, Nov. 22 (CNA).
- 38.
So called ‘16 + 1’ refers to average wage of 16 months plus 1 month wage for the lieu of notice period. See: Lin SueHuei, ChungHwa Telcom lay off preferentially 2500 employees by 4 billions NTD, China Times 2006-03-02. http://www.ctwu.org.tw/content/news/news04a.asp?sn=638&cyy=2006.
- 39.
Of course and first, prohibited discrimination and retaliation for dismissal in the USA . Where employees are represented by a union, their collective agreement nearly always contains a provision that requires ‘just cause ’ for termination. Such provisions often contain provisions in regard to severance payment and are enforceable through the grievance and arbitration process set forth in nearly all collective agreements. But the coverage of collective agreements is limited by the low rate of union representation (10.7% of the American workforce unionized as of 2016 in both public and private sectors, 6.4% in the private sector). See: https://www.bls.gov/news.release/union2.nr0.htm.
- 40.
Only in special cases, employers have the duty of severance payment according to: Sec. 1a of Protection against Dismissal Act (Kündigungsschutzgesetz): ‘an employee dismissed on the basis of urgent operational requirement is entitled to severance pay, the amount of which equal 0.5 months’ pay for each year of employment, provided he has not challenged the dismissal within 3 weeks following the notice of termination’(ILO 2000, p. 159).
- 41.
Just causes in Germany include three categories: (1) person-related; (2) conduct-related; (3) economic-related (Weiss and Schmidt, 2008, p. 106).
- 42.
The English severance payment is applicable to layoffs due to economic reasons and employees who have worked for the same employer for over 2 years are qualified to apply. The amount of severance payment varied by age: for every year of service, half a week wage paid for those under the age 22; 1 week age for age 22–41 and one and half week age for those over the age 41. Currently the maximum service year for calculating severance payment is 20 years. The maxim weekly wage is capped at £489, the maximum statutory severance payment is £14,670. Severance payments under £30,000 are tax free. See: https://www.gov.uk/staff-redundant/redundancy-pay
- 43.
See: Sec. 98, ERA. The six types of fair dismissal as follows: (1) the employee’s capability or qualifications for performing work of the kind he or she was employed to do; (2) the employee’s conduct; (3) the employee’s retirement; (4) the employee’s redundancy; (5) the employee could not continue to work in the position which he or she held without contravention (either on his or her part or that of the employer) of a statutory duty or restriction; (6) “some other substantial reason” justifying the dismissal of an employee holding the position that he or she held.
- 44.
Official Gazette of the Republic of France, 4 Jan 1975 (Despax et al. 2011, p. 157).
- 45.
Severance payment for layoffs due to economic reasons are calculated according to year of service. For the ones between 2 to 10 years, an additional 1/5 of monthly average wage will be added each year. For 10 years of service or more, an additional 2/15 of monthly average wage will be added each year. See: Art. L 1234-9 Labor Code: ‘right to severance pay after a tenure of at least 1 year without interruption, except in case of serious misconduct.’
- 46.
Whereas an employer and employee may agree to an amicable termination, a common-consent termination requires that certain steps be followed for the agreement to be enforceable: (1) meeting between the employer and employee to negotiate termination conditions; (2) signing of the agreement by both parties with terms and conditions of termination specially stated, including amount of termination payment, which must be no less than the dismissal indemnity; and (3) homologation of the agreement by the department director of employment and vocational training. Such an agreement cannot include a waiver of claims by the employee regarding his or her termination (Swartz 2006).
- 47.
‘A recent Organization for Economic Co-operation and Development (OECD) study observes that employee protection legislation has contributed to high unemployment levels in France. Under the Labor Code regulations that ensure that employment contracts are not terminable at will, firing an employee, even an unproductive employee, is extremely costly for the employer. With the exception of “serious fault,” even terminations for economic reasons or just cause , which are permissible under the Code, impose on the employer procedural costs and severance payments. A 1995 study shows that employers lose 74% of litigated wrongful termination cases in France (compared with 48% in Canada, 51% in Italy , and 38% in the United Kingdom). One economic study estimates the marginal cost of terminating one worker at 14 months’ wages for a median wage worker. As a result, employers rarely create new jobs in France, leaving very few positions open to young people attempting to enter the labor market. Throughout the 1990s, 50% of the unemployed were young people between the ages of twenty-one and thirty.’…’ The increased costs of termination affect the ways in which employers exercise their discretion in hiring. An employer knowing how costly it will be to fire a full-time employee is less likely to hire candidates whom they consider risky hires. This leads to both “rational” and racially biased failures to hire racial minorities’ (Suk 2007).
- 48.
Under the previous scheme, the minimum year of service qualified for severance payment is 3 years, and the payment will be 2 months wage for the ones between 3 to 5 years; 3 months wage for 5–10 years; 4 months wage for 10–15 years; 6 months wage for 15–20 years; 9 months wage for 20–25 years and 12 months wage for over 25 years of service.
- 49.
Under the new scheme (Abfertigung Neu), employers will contribute 1.53% of the monthly wage to the individual account in the public fund (MVK), those whose are over 3 years of service are qualified for the options to withdraw all the payment at once when leaving his/her job; to keep the payment in the old employer’s public fund; to transfer the payment to the new employer’s public fund or to switch to occupational pension scheme. Those whose year of service is less than 3 years can only choose to continue to save.
- 50.
See: sec. 1162 Civil Code: ‘Are considered as “important reasons” those reasons relating to the worker’s conduct or capacity’.
- 51.
M. Tiraboschi, ‘Labour Law, Training Contracts and the Problem of Youth Unemployment,’ in Blanpain (2014, pp. 489-516).
- 52.
Please refer to the appendix in this chapter for the analysis of the ILO database.
- 53.
After Taiwan enacted the employment insurance law in 2002, the system of severance payment can relieve the pressure of unemployed workers as a temporary income support source. However, 2004 Labor Pension Act required the employer to contribute 6% of monthly wage into the individual worker’s pension account, and meanwhile, as a trade-off, the amount of severance payment was reduced to the maximum no exceeding 6 months of the average monthly wage. The functions of income maintenance for unemployment and retirement therefore kick out to social security.
- 54.
The dismissal protection of the Taiwan’s LSA, in essence, listed precisely the requirements of both the fair dismissal and the forced resignation to achieve the effect of administrative and legislative discretion to substitute judicial discretion.
References
(in Chinese)
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Huang, S. H. (2005). Comments and analyses on the legislative process of new labor pension act. In Comparative labor pension scheme (pp. 375–426). Taipei: Taiwan International Labor and Employer Foundation.
Hwang, Y. C. (2000). The new theory of labor law. Taipei: Hanlu.
Kuo, M. C. (2007). Enterprise social benefits: Function and limitation. Social Security Studies, 2, 105–118.
Ma, C. C. (1984). History of the labor movement in China. Taipei: TungFeng.
Peng, N. S., & Rao, S. L. (2006). A relief study on the “Factory Law” in 1929. Historiography Anhui, 04, 81–87.
Wu, T. H. (2005). An examination on the severance pay system in Taiwan. CYCU Economic & Financial Law Journal, 15, 1–72.
(in English)
Blanpain, R., et al. (2012). The global workplace: International and comparative employment law (2nd ed.). New York: Wolters Kluwer.
Blanpain, R. (Ed.). (2014). Labour law and industrial relations in industrialized market economies. Alphen aan den Rijn: Kluwer Law International.
Chang, C. H., & Bain, T. (2006). Employment relations across the Taiwan Strait: Globalization and state corporatism. Journal of Industrial Relations, 48(1), 99–115.
Despax, M., et al. (2011). Labour law in France. Alphen aan den Rijn: Kluwer Law International.
Edward, M. (2007). Dismissal law: A practical guide for management. London: Kogan Page.
Helmut Hofer, H. (2007). The severance pay reform in Austria. CESifo DICE Report 4.
Holzmann, R., et al. (2011). Severance pay programs around the world: History, rationale, status, and reforms. Washington, DC: World Bank.
ILO. (2000). Termination of employment digest: A legislative review. Geneva: International Labour Office.
Magotsch, M., & Kremp, P. R. (2010). Termination of employment. In Key aspects of German employment and labour law (pp. 135–155). Heidelberg: Springer.
Pao, H. W., et al. (2008). The road to liberalization: Policy design and implementation of Taiwan’s privatization. International Economics and Economic Policy, 5, 323–344.
Suk, J. C. (2007). Discrimination at Will: Job security protections and equal employment opportunity in conflict. Stanford Law Review, 60, 73–114.
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Traxler, F. (2001). Reform of severance pay under discussion. EurWORK, Source URL (modified on 2001-06-27 22:00). https://www.eurofound.europa.eu/de/observatories/eurwork/articles/reform-of-severance-pay-under-discussion
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Appendices
Appendices
1.1 Appendix 1: Chronology of Severance Payment System in Taiwan and Related European Countries
-
1920 (Germany ) Works Councils Act provided severance payment for dismissal compensation.
-
1921 (Austria) Severance Payment Act applied to white collar workers.
-
1929 (Taiwan, National Government in Nanjing of China) Factory Act provided severance payment that was transplanted from Europe.
-
1947 (Taiwan, National Government in Nanjing of China) The Constitution provided the symmetric rights of work and property, and employment security as national fundamental policy.
-
1951 (Germany ) Dismissal Protection Act canceled severance payment.
-
1960 (Taiwan) Order concerning the Hire and Fire Workers in the Factories and Mines raised amount of severance payment.
-
1965 (UK) Redundancy Payments Act as one of three pillars for dismissal protection.
-
1967 (France) severance payment system has been adopted in Labor Code.
-
1979 (Austria) Amended Severance Payment Act extended to all workers.
-
1984 (Taiwan) Labor Standards Act clearly defined requirements of just causes and provided handsome severance payment to prevent employers from evading pension obligation.
-
2002 (Taiwan) Employment Insurance Act provided unemployment benefits as income maintenance for involuntary unemployment workers.
-
2002 (Austria) New Severance Payment System combined into occupational pension.
-
2004 (Germany ) Amended Dismissal Protection Act allowing compensation to replace reinstatement .
-
2004 (Taiwan) Labor Pension Act merged handsome severance payment into new labor pension system and caped the ceiling of severance payment.
-
2015 (Taiwan) Amended Labor Standards Act extended the coverage of Arrear Wage Payment Fund to include severance payment .
1.2 Appendix 2: Severance Pay and Redundancy Payment in Advanced Countries
-
Compiled by Chang, Chyi-Herng @National Chengchi University, TAIWAN.
-
Source: Employment protection legislation database – EPLex, ILO http://www.ilo.org/dyn/eplex/termmain.home?p_lang=en
-
Total advanced country number in EPLex: 21.
-
Number of no any statutory severance pay: 9#.
-
Number of no statutory severance pay for individual dismissal: 11*.
-
Number of unconventional statutory severance pay: 5@
-
1.
Australia – 2012
-
1.
Individual dismissal (non-economic): no statutory severance pay.
-
2.
Economic dismissal (individual and collective): statutory redundancy payment.
-
1.
-
2.
Austria – 2012@
-
1.
Old severance pay (no specific provision for economic dismissal ) are only relevant to worker under an employment contracts concluded before 1 January 2003.
-
2.
New scheme which applies to all employment contracts concluded after 1 January 2003, the employer pays pre-defined contributions (1.53% of the monthly gross wages) to an employee income provision fund. Upon termination of employment (except in case of summary dismissal), any employee in respect of which at least 36 monthly contributions were made (by one or more employers) can chose between receiving severance payment from the fund or saving the entitlement towards a future pension.
If the employee quits or if job tenure is shorter than 3 years, no severance payment will be made but the balance of the account is carried over to the next employer.
-
1.
-
3.
Belgium – 2017*
-
1.
Individual dismissals (including for economic reasons ): no statutory severance pay.
-
2.
Collective dismissal: redundancy payment established by a national collective agreement (N°10 of 1973).
-
1.
-
4.
Canada (Federal Only) – 2012@
Upon termination of employment by the employer, except in the event of dismissal for just cause (summary dismissal), an employee who has completed 12 months of continuous employment is entitled to severance pay which shall amount to the greater of:
-
1.
two days’ wages (at the regular rate for regular hours of work) for each completed year of service; or.
-
2.
five days’ wages (at the regular rate for regular hours of work).
-
1.
-
5.
Denmark – 2010@
-
1.
White-Collar workers:
Sec. 2a ESEA:
-
In case of dismissal of a salaried employee having worked continuously in the same enterprise for 12, 15, 18 years, the employer shall pay a sum corresponding to, respectively, 1, 2 or 3 months’ salary unless the employee is entitled to old-age pension.
-
2.
Blue-collar workers: no statutory severance pay. Severance pay is regulated by collective agreements.
-
1.
-
6.
Finland – 2012*#
No statutory severance pay or redundancy payment.
-
7.
France – 2012
Art. L 1234-9 LC (last amended by Act No 2008-596 of 25 June 2008): right to severance pay after a tenure of at least 1 year without interruption, except in case of serious misconduct.
The calculation modalities are determined by art. R 1234-2 LC:
-
The statutory minimum is 1/5 of monthly wages per year of service.
-
For employees with more than 10 years of service, 2/15 of the monthly wages multiplied by the number of years of service beyond 10 years should be added.
Ex:
-
Tenure of 1 year: 1/5 × 1 = 0.2.
-
Tenure of 20 years: (1/5 × 20) + (2/15 × 10) = 5.33
-
-
8.
Germany – 2012
-
1.
Individual dismissals based on the worker’s conduct or capacity: no severance pay.
-
2.
Economic (individual or collective) dismissals: redundancy payment.
-
1.
-
9.
Italy – 2014*@
No severance pay as such. However, there is an end-of-employment contract indemnity (TFR: Trattamento di fine rapporto: sec. 2120 CC) constituted by a certain amount of salary set aside each month to be paid to each employee upon termination of the employment contract .
It is calculated according to the formula of a year’s overall salary divided by 13.5, plus 1.5% for each year of service plus compensation for inflation. It is payable whenever an employment contract ends for whatever reason, and is based on length of service with the company.
The TFR payment scheme has been reformed. Since 2007, the employer’s contributions for the TFR have been transferred to either a state pension fund or private complementary pension funds.
-
10.
Japan – 2010*#
No statutory severance pay or redundancy payment.
Collective agreements can provide for severance pay in case of dismissals.
-
11.
Korea, Republic of – 2012*#
No statutory severance pay as such or redundancy payment.
-
12.
Luxembourg – 2012
Art. L 124-7 LC: except in case of serious misconduct, a dismissed employee (under a contract of indeterminate duration) is entitled to severance pay (“indemnité de départ”) provided he or she have been continuously employed for at least 5 years with the same employer and is not eligible to an old-age pension.
-
13.
Netherlands – 2012*#
-
1.
No statutory severance pay.
-
2.
No statutory redundancy payment but generally provided in social plans.
-
3.
In case of judicial termination, the Court may award a compensation payment applying a formula contained in the 1996 Recommendations issued by the Association of Dutch Sub district Courts.
-
1.
-
14.
New Zealand – 2012*#
-
1.
There is no statutory severance pay or redundancy pay scheme in New Zealand.
-
2.
An employee is only entitled to severance pay or redundancy payment if it is so stipulated in the contract of employment or a collective agreement.
-
1.
-
15.
Norway – 2012*#
-
1.
There are no statutory provisions on severance or redundancy payment. These can be included in collective agreements.
-
2.
In addition, redundancy pay may be negotiated by the employer and the workers’ representatives during the consultation and information process preceding collective redundancies.
-
1.
-
16.
Singapore – 2013*#
-
1.
Dismissal not based on economic reasons: no statutory severance pay.
-
2.
Economic dismissal : no statutory redundancy payment.
The EA only stipulates that employees with less than 3 years of service shall not be entitled to redundancy payment (art. 45 EA).
According to the Tripartite Guidelines on Managing Excess Manpower (as updated in2009), the quantum of retrenchment payment for employees with 3 years of service is provided in the contract of work or the collective agreement, or subject to negotiation between employee and employer in the absence of such provision.
-
1.
-
17.
Spain – 2014
-
1.
Dismissal for an objective reason (including individual and collective dismissals for economic reasons ): severance pay = 20 days’ wages per year of service up to a maximum of 12 month’s wages.
-
2.
Disciplinary dismissal : no severance pay.
-
3.
Termination of a fixed-term contract (which is not concluded for training or substitution purposes): 12 days’ wages per year of service.
-
1.
-
18.
Sweden – 2012*#
No statutory severance pay or redundancy pay, but generally provided in collective agreements.
-
19.
Switzerland – 2013@
No general statutory severance pay or redundancy payment scheme.
However, upon termination of the contract by either parties, a worker is at least 50 years old and has 20 or more or more years of service with the same employer is entitled to a long service payment (“indemnité à raison de longs rapports de travail”: art. 339c CO).
As a minimum, this payment should amount to 2 months wages and shall not exceed 8 months: art. 339c (1) & (2) CO. However, it may be reduced in part or canceled if the employee terminates his contract without proper justification, if the employer summarily dismiss him for valid reasons or of if the payment of this amount would result in difficulties for the employer (art. 339c (3) CO).
-
20.
United Kingdom – 2012
-
1.
No statutory severance pay in the event of non-economic dismissals.
-
2.
The Employment Right Act 1996 only provides for a statutory termination payment in the event of redundancies. (Sec. 135, 155 and 162 ERA)
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United States – 2012*#
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There is no statutory right to severance pay or redundancy payment in the United States.
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For an employer whose employees are represented by a union, however, the collective-bargaining agreement between the union and the employer setting forth terms and conditions of employment often contains provisions in regard to severance pay.
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1.3 Appendix 3: The Guarantee of Severance Payment in Taiwan
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Priority of Wage Claim
When an employer has suspended or liquidated its business or has declared bankruptcy, the rights of employees as the creditor shall be regarded equal to the other creditors with mortgage rights, pledges or liens of the top priority, and the employees shall be paid in accordance with the proportion of their creditor rights; employees shall have top most priority to receive the remaining amounts owed to them:
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Less than 6 months of wages to be paid to the workers according to the labor contract;
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Retirement payment that the employer has failed to disburse in accordance with the Labor Standards Act ;
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Severance payment that the employer has failed to disburse in accordance with the Labor Standards Act or the Labor Pension Act.
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Arrear Wage Payment Fund
Employers are required to contribute a certain amount, no more than 1.5 thousandths of the total insured monthly wage, to the Arrear Wage Payment Fund each month. When the Arrear Wage Payment Fund has accumulated to a certain amount, the rate shall be reduced or the collection shall be suspended.
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Chang, CH. (2018). Severance Payment System in Taiwan: A Historical Perspective. In: Hatta, T., Ouchi, S. (eds) Severance Payment and Labor Mobility. Economics, Law, and Institutions in Asia Pacific. Springer, Singapore. https://doi.org/10.1007/978-981-13-2149-8_4
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