Solving severance disputes | 1 formula to calculate severance under the old and new systems, legal severance process

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How are severance pay under the old and new system calculated? How to appeal for owed wages and severance pay? In this article, lawyers teach the calculation of wages, severance pay and pensions, and how to solve the problem of illegal and arrears of wages by the company. Whether you are a worker or an employer, be sure to read along with us!

1. 5 steps of the legal severance process

When an employer dismisses a worker, what procedures must be followed to be considered legal? Under normal circumstances, the legal severance process must go through the following 5 steps:

  1. Comply with statutory severance conditions
  2. Notification of layoffs to workers
  3. Notification of expulsion to competent authority
  4. Issuance of Involuntary Separation Certificate
  5. pay severance

(1) What are the legitimate reasons for dismissal?

According to Article 11 of the Labor Standards Act, employers are not allowed to dismiss workers arbitrarily in principle, unless one of the following conditions is met:

  1. When going out of business or transferring.
  2. Loss or business crunch.
  3. When force majeure suspends work for more than one month.
  4. When the nature of the business changes, it is necessary to reduce the labor force, and there is no suitable job for placement.
  5. When the worker is truly incompetent for the job he is doing.

Reminder for lawyers: the principle of last resort for dismissal

Dismissal of workers on the grounds of "incompetence" must comply with the principle of last resort for dismissal. It means that when the employer thinks that the worker is not qualified for the job, he needs to provide appropriate education and training first, or provide counseling to change jobs. Only then can the last resort of "dismissal" be legally used.

(2) How long is the severance notice period?

When an employer dismisses a worker, it needs to give a certain notice period based on the worker's seniority. The longer the worker's seniority, the longer the notice period for dismissal.

  • Seniority less than 3 months: no notice period.
  • Those with more than 3 months but less than 1 year of seniority: 10 days.
  • Those with more than 1 year of seniority but less than 3 years: 20 days.
  • Those with more than one year of experience: 30 days.

If the severance does not meet the notice period requirements, the employer must pay the worker the lost notice period wages.

(3) How to handle the notice of dismissal?

According to Article 33 of the Employment Service Law, when an employer dismisses an employee, it shall provide the dismissed employee's name, gender, age, address, telephone number, job held, reason for dismissal, and whether employment counseling is required 10 days before the employee leaves the company. and other matters, they shall be listed and reported to the local competent authority and public employment service agencies. However, if the dismissal is caused by natural disasters, accidents or other force majeure circumstances, it shall be done within 3 days from the day the dismissed employee leaves the job.

If the employer fails to file a severance notification within the time limit, he may be fined NT$30,000 to NT$150,000.

1. For workers who have been laid off and have worked for less than 3 months, do they still need to report their dismissal 10 days before?

Although workers who have been laid off for less than 3 months do not need to be given a notice period, they still need to report their layoffs to the competent authority within 10 days. Therefore, if an employer temporarily decides to dismiss an employee, it must at least postpone the resignation date to 10 days later, but there is no need to notify the employee in advance.

2. Will the notice of dismissal let workers know in advance that they are dismissed?

After receiving the notification of dismissal, the competent authority will actively contact the worker after the "resignation effective date" to ask if there is any need for employment counseling and other assistance, and will not let the worker know in advance that he will be dismissed soon.

(4) Labor rights and employer obligations

In addition to following the legal dismissal procedures, employers also need to fulfill the following obligations, which are also rights that dismissed workers can claim.

1. Grant job-seeking leave

During the retrenchment notice period, the employer should give a maximum of 2 working days of job-seeking leave per week, and the wages will be paid accordingly, so that the retrenched workers have the opportunity to take leave to seek jobs during the working period.

2. Issue a certificate of involuntary resignation

The certificate of involuntary resignation is an important document that workers must attach when they apply for labor insurance unemployment benefits, vocational training living allowances, or early employment incentive subsidies.

Usually the employer will take the initiative to issue an involuntary resignation certificate to the employee. If it is not issued, the employee has the right to ask the employer for it. The employer's refusal to issue a certificate of involuntary resignation may violate Article 19 of the Labor Standards Act, and the worker may file a complaint with the competent authority.

3. Issue service certificate

The service certificate will record the position, job description, tenure period and salary of the laborer during the employment period, which can be used as evidence of job seeking resume.

According to Article 19 of the Labor Standards Act, if a worker requests a service certificate, the employer is obliged to provide it, otherwise the worker may file a complaint with the competent authority.

(5) Exception: expulsion

The exception is that an employer can fire a worker “without notice” and “without payment of severance pay” if the worker commits any of the following actions:

  1. False declarations of intent when concluding a labor contract, misleading the employer and risking damages.
  2. Those who commit acts of brutality or serious humiliation against the employer, the employer's family, the employer's agent, or other workers who work together.
  3. A person who has been sentenced to fixed-term imprisonment or above has been confirmed, but has not received a suspended sentence or has not been granted a fine.
  4. Violation of labor contracts or work rules, if the circumstances are serious.
  5. Deliberate loss of machinery, tools, raw materials, products, or other items owned by the employer, or intentional disclosure of the employer's technical and business secrets, causing damage to the employer.
  6. Those who continue to be absent from work for three days without justifiable reasons, or absent from work for six days within a month.

In addition to the above point 5, in other cases, the employer must"Within 30 days after becoming aware of the situation"After completing the expulsion, if it exceeds this period, it still does not belong to the legal dismissal procedure. In addition, dismissal is different from dismissal, so there is no need to notify the dismissal in advance. The employer can ask the employee to resign immediately, but still needs to issue an involuntary resignation certificate and a service certificate to the employee in accordance with the law.

Further reading:What legal responsibilities do employees have for stealing and selling company assets? Companies and consumers do this!

Further reading:Illustrating the legal notification process, time limit, and violation fines for mass dismissal of workers

2. How to calculate the severance payment? Lawyer practical calculation demonstration

When many laborers encounter labor disputes, they don't know how to calculate the amount of their losses and severance pay. Knowing your own wage structure and clearly calculating wages and severance pay is the first step in self-insurance for workers!

(1) Before calculating severance pay, understand wages first!

Calculation of severance pay is based on "salary". In terms of labor laws and regulations, regardless of the title of the payment, and regardless of the payment frequency whether it is monthly salary, daily salary, hourly salary or case-based payment, as long as it is "remuneration received for work" can be recognized as wages. On the contrary, if it is not the remuneration received by the laborer in exchange for work, but the "graceful gift" issued by the employer to thank and sympathize with the laborer, it will not be recognized as part of the salary.

Further reading:4 steps to appeal wage arrears, apply for wage advances, laborers and employers teach war strategies

1. The following payments are wages:

  • Salary
  • Shift allowance
  • duty allowance
  • performance bonus
  • Attendance bonus
  • long-term bonus
  • Board and lodging, in kind (limited to those who have expressly agreed to pay wages in kind)

2. The following payments are "NO" as wages:

  • Year-end bonuses
  • three-section bonus
  • Reward dividend
  • Transport Allowance
  • Mistaken meal fee
  • Occupational Accident Compensation
  • travel expenses

(2) How to calculate severance pay under the old and new system?

The calculation of severance pay mainly needs to consider the "seniority" and "average monthly salary" of the workers. The old system and the new system are divided based on July 1, 1994. There are differences between the old and new systems of severance pay in terms of seniority identification and the final calculated amount. The following will introduce the calculation methods of the new system and the old system, and attach the actual calculation process.demonstration.

1. How do the old and new severance pay apply?

In principle, workers who resigned before July 1, 1994 will be subject to the old system for all their seniority, while workers who have been hired after July 1, 1994 will be subject to the new system for all their seniority. If your seniority just falls on July 1, 1994, you can choose to "continue to apply the old system" or "apply to the new system but retain the seniority of the old system" when calculating severance pay.


2. Calculation of severance pay under the new system: applicable to those employed after July 1, 1994

The new system of severance pay is applicable to:

  • Those who were employed by the institution on July 1, 1994
  • Employed after July 1, 1994 in units that are subject to the Labour Standards Act
  • The seniority spans the old and new system, but the seniority after July 1, 1994 is re-elected to the new system

New systemseverance pay formula:

Seniority (unit: year)x1/2x month averageSalary = severance pay
  • The definition of "monthly average salary": "average salary" x average number of days per month
  • Definition of "average salary": total salary earned in the 6 months preceding the severance period ÷ total days

New system seniority calculation method:

  • The part of the seniority less than one year: calculated according to the number of months, 1 month = 1/12 years
  • The part of seniority less than one month: 1 day = 1/30 month
  • Up to 6 months average salary

3. Calculation of severance pay under the old system: applicable to those employed before July 1, 1994

Eligibility for severance pay under the old system

  • If the period from employment to severance occurred before July 1, 1994, the old system applies to all seniority
  • Those whose seniority spans the old and new systems, but who choose to continue to apply to the old system for all their seniority
  • The seniority spans the old and new systems, but choose the seniority before July 1, 1994 to apply the old system

old systemseverance pay formula:

Seniority (unit: year) x monthly averageSalary = severance pay
  • The definition of "monthly average salary": "average salary" x average number of days per month
  • Definition of "average salary": total salary earned in the 6 months preceding the severance period ÷ total days

Old system seniority calculation method:

  • The part of the seniority less than one year: the average salary is calculated in proportion to the number of months.
  • The part of the seniority that is less than one month: the part less than one month is counted as one month.

4. Demonstration of severance pay calculation

Suppose a full-time worker is severanced on New Year's Day in a certain year, with a seniority of 5 years, 2 months and 6 days, the monthly salary for the first 6 months of the severance is 60,000 yuan, and there is a performance bonus of 8,000 yuan, and a year-end bonus of 1 month's monthly salary . The average salary, monthly average salary, seniority and severance pay under the old and new system are calculated as follows:

【Average salary, average monthly salary】
Total salary for 6 months before severance = 60,000 (salary) + 8,000 (performance bonus belongs to salary) = 368,000 yuan
*The year-end bonus is given as a favor and is not included in the salary.
Total days in 6 months before severance = 184 days
Average number of days per month 6 months prior to layoff = 184 ÷ 6=30.67 days
#average salary = 368000 ÷ 184=2000 yuan
# Average monthly salary = 2000 x 30.67 = 61,340 yuan

【New seniority】
5 years 2 months and 6 days
6 days: Every 1 day counts as 1/30 of a month, so it is equal to 1/60 of a month.
2 months and 6 days: equals (2+6/30)/12=11/60 years.
# Total seniority of the new system = 5+11/60=311/60 years

【New system of severance pay】
Average monthly salary 61,340 x 1/2 x seniority 311/60 years = 158,972.8
# new severance pay = 158,972 yuan (unconditional rounding below the angle)

[Old system seniority]
5 years 2 months and 6 days
6 days: If it is less than 1 month, it will be counted as 1 month, so it is equal to 1/12 of the year.
2 months: equal to 2/12 years.
#Total seniority in the old system=5+1/12+2/12=5.25 years

【Old system severance pay】
Average monthly salary 61,340 * seniority 5.25 years = 322,035
# old severance pay = 322,035 yuan

Reminder for lawyers: When calculating the amount of seniority and severance pay, how to round the decimal point?

Regardless of the old or new system, when calculating severance pay, you do not need to round the decimal point, you can directly use the actual base to calculate it. If you want to avoid infinite recurring decimals, you can also use 311/60 to calculate fractions, which is more convenient. When the severance pay amount is finally calculated, unconditionally round it up to an integer!

3. How to deal with illegal dismissal disputes?

Access to judicial protection is not a privilege unique to laborers, but a right enjoyed by both employers and employees. When encountering a severance dispute, whether it is failure to follow the statutory severance procedures, non-payment of severance pay, or dispute over the reasons for severance, workers and employers can resolve through the following channels.

  • Self-negotiation between labor and management
  • lodge a complaint with the competent authority
  • Non-litigation/litigation dispute resolution mechanism

(1) Self-negotiation between labor and management

If there is still a possibility for workers and employers to communicate, self-negotiation may be the fastest and easiest way, which can especially help workers save time and economic costs, obtain monetary compensation as soon as possible, and avoid life difficulties. Regardless of whether a worker or an employer starts a negotiation, they can first consult with a lawyer to analyze the facts, potential risks, and applicable legal norms in order to grasp the best bargaining chips.

(2) Appeal to the Competent Authority

If a worker believes that the employer has violated labor laws and regulations, he can prepare relevant evidence and file a complaint with the competent authority of the county or city where he is located, and let the competent authority conduct a labor inspection of the employer to find out whether there is any violation of the regulations and punish them according to law. In the face of labor inspections, employers can also submit favorable materials to state their opinions as one of the basis of the competent authority's disposition, so it is not entirely unfavorable to the employer.

Although the labor complaint itself cannot directly seek compensation measures for the laborer or the employer, the result of the labor inspection can be used as one of the favorable evidences in future litigation.

(3) Labor dispute mediation and litigation

With the implementation of the Labor Incident Law and the Labor Dispute Settlement Law, the choice of labor dispute resolution channels has become more diverse, and the procedure time has also been greatly shortened. In addition, it also provides geographically convenient measures for workers to respond to hearings nearby, and at the same time reduces the burden on workers on procedural costs, allowing workers to have a more equal status to compete with employers, but employers lack these protections, so employers must bear the burden All costs incurred.

According to the provisions of the Labor Dispute Settlement Act, the employer and the employee can initiate mediation, arbitration or adjudication procedures through the competent authority or the labor union to resolve disputes through non-litigation channels. During the mediation, arbitration or adjudication period, the employer shall not suspend business, suspend work or take other actions unfavorable to the workers, and the workers shall not go on strike or cause other disputes because of this, so that the two parties can conduct the procedure in a peaceful state and avoid the expansion of the conflict.

If non-litigation mechanisms are not considered, both parties may also choose to file a lawsuit. According to the Labor Incident Law, in principle, labor dispute litigation adopts a compulsory mediation system. In order to speed up the procedure, at most 3 mediations must be arranged within 3 months. If the mediation fails, it will enter the litigation stage. Depending on the situation, a lawsuit can be filed to request the payment of severance pay, confirm the existence/non-existence of the employment relationship, etc. In principle, the lawsuit must be concluded within 6 months.

Do you need legal assistance in case of severance disputes? Whether you are a laborer or an employer, welcome to join the official LINE of First Law and discuss with us!

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