Newsletter
MAJOR OVERHAUL OF LSA IN PREPARATION
The CLA recently approved a draft of proposed amendments to the LSA. Its main points include: (1) the maximum period for fixed-term em-ployment contracts is to be extended from one year to three years. (2) The current right of the old and new employers in a merger or acquisition to select which employees will be retained is to be abolished. In future M&As, the new em-ployer will be required to assume the existing employment contracts of all affected employees from the old employer, and it will be left to em-ployees themselves to decide whether they wish to continue in employment with the new em-ployer. The new employer must recognize the years of service of those employees who consent to remain in employment, and the old and new employers will be jointly and severally liable for the severance payments and retirement payments of those employees who choose not to stay. (3) The maximum monetary indemnity for breach of an employment contract that may be stipulated between employer and employee is to be ex-pressly limited to not more than the wages or salary corresponding to a one-month period of notice.
The draft amendments will be submitted to the Executive Yuan by the end of 2006 at the earliest, and should be presented to the Legislative Yuan for scrutiny during the next legislative session. The amended LSA is likely to take effect in 2007.