Pacific Bridge, Inc. - Asian HR eNewsletter

Volume 10, Number 2 (February 4, 2010)

NEW LEGISLATION IN TAIWAN PROHIBITS LAYOFFS AFTER MERGERS AND ACQUISITIONS

On January 11, 2010, Taiwan’s Council of Labor Affairs (CLA) released information on its website regarding draft revisions to the country’s Labor Standards Law. Under the new revisions, both foreign and domestic companies in Taiwan that merge with or acquire local Taiwanese companies through the help of financial institutions will be prohibited from laying off employees from the local company involved in the transaction. Furthermore, the labor contracts of the local employees should remain unchanged unless these employees agree to alternate contracts.

The new revisions also state that if employees of the local Taiwanese company decide to leave the company as a result of the merger/acquisition, they should be given severance pay as required by Taiwanese law and should be given leave while searching for new employment.

The CLA’s announcement of these proposed changes last month brought about a significant pushback from businesses and financial institutions in Taiwan. Taiwan’s Financial Supervisory Commission (FSC) also publically criticized the proposal, saying that it will severely damage the profitability of many M&A deals in the country. It is still unclear when the proposed legislation will become effective and whether there will be any changes to its provisions.



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