Taiwan - If A Worker On Leave Without Pay Applies For Reinstatement, The Employer Should Not Arbitrarily Reject The Application.

Legal News & Analysis - Asia Pacific - Taiwan - Dispute Resolution - Labour & Employment

3 February 2021

The Supreme Court rendered the 109-Tai-Shang-1753 Decision of August 31, 2020 (hereinafter, the “Decision”), holding that if a worker “on leave without pay” applies for reinstatement, the employer should not arbitrarily reject the application under the principle of good faith and is obligated to inform the employee of the vacancy information for him/her to decide whether to be reinstated, and if the responsibility of the reinstated employee is increased by contract, the contract will be obviously unfair and invalid under Article 247-1 of the Civil Code.

According to the facts underlying this Decision, the Appellee asserted that he had been hired by the Appellant as a systems engineer before being promoted to the position of the Manager of Channel Business Development of the Information Technology Business Unit.  President A of the Appellant’s software department invited the Appellee to be transferred to his department and the transfer procedure was conducted after both of them agreed. However, the Appellant suddenly terminated the transfer procedure on the ground of personnel freeze of the software department, and the Appellee’s previous position had also been filled by another person.  The Appellant was required and implicitly coerced by the Appellant to cooperate or to lose his work right immediately, and President A and Assistant Vice President B promised that they would help him with his reinstatement before the period of leave without pay expired. Therefore, the Appellee cooperated by signing a document concerning the leave without pay. However, the Appellant delayed the arrangement for the Appellee’s reinstatement time and again, and the Appellee was compelled to apply for an extension of leave without pay.  During the period, the Appellee applied for the transfer to fill the positions released by various departments, but the applications were all rejected.

When the period of leave without pay was expiring, the Appellant unexpectedly notified the Appellant to handle the departure formalities, since the document concerning the leave without pay as signed by the Appellee indicated: “When the period of leave without pay expires, the company does not guarantee a job opportunity, and if there is no suitable vacancy, the employee will be deemed to voluntarily leave the employment and will cooperate with the exit procedure,” and the Appellant’s Rules for Leave without Pay provide: “If the employee does not find a suitable position when the period of leave without pay expires, the company will handle this matter as voluntary departure, the date of departure shall be the expiration date of the leave without pay and there shall be no severance pay.” However, since the Appellant’s Rules for Leave without Pay at issue was a contract of adhesion unilaterally prepared by the Appellant, violated Articles 11 and 12 of the Labor Standards Law concerning the statutory reasons for termination of employment, and evade the payment of severance pay, they are invalid under Articles 71, 148 and 247-1 of the Civil Code.  Even if they are deemed valid, the Appellant was still obligated to provide specific vacancies and help look for specific positions. However, the Appellant maliciously failed to arrange a position and to provide reasonable assistance, resulting in the Appellee’s inability to be reinstated. The Appellant obviously caused the satisfaction of the conditions by improper means. Under Article 101, Paragraph 2 of the Civil Code, the conditions shall be deemed not satisfied, and the employment relationship should still exist.

According to this Decision, the so-called “leave without pay” means that an employee is temporarily exempt from services and the employer temporarily suspends wage payment during the subsistence of the contract. To wit, the primary payment obligation under the employment relationship is temporarily suspended.  Although the primary payment obligation under a labor contract is temporarily suspended, the labor contract is not extinguished. The employer and the employee shall still perform other contractual obligations under the principle of good faith. When the employee applies for reinstatement, the employer cannot arbitrarily refuse without justification. In addition, since the employer controls information about its internal vacancies, it is obligated to provide the information to the employee for selection and decision as to whether to seek reinstatement.

It was further indicated in this Decision that the Appellant’s Rules for Leave without Pay and the document concerning the leave without pay stipulated that the Appellee should find a position on his own in order to be reinstated.  The original trial court held that the above agreements sought to reduce the Appellant’s obligations under the labor contract and increase the responsibility of the Appellee.  In addition, it is obviously unfair that if the Appellee failed, as a result, to find an appropriate position for reinstatement before the period of leave without pay expired, he would be treated as if he voluntarily left the employment.  The Appellant’s Rules for Leave without Pay should be invalid under Article 247-1, Subparagraphs 1 and 2 of the Civil Code.  Since the original trial court did not violate the law or logical and evidentiary rules, the gist of the appeal was not valid.


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Sally Yang, Lee Tsai & Partners

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