Taiwan passes law requiring profit-sharing

Central News Agency
Date: 2015-05-01
By: Tai Ya-chen and Scully Hsiao            

Taipei, May 1 (CNA) The Legislative Yuan passed an amendment on Labor Day Friday that will require businesses to share their profits with their employees.

The amendment to the Company Act said that companies must make a commitment in their charters to share a “reasonable” lump sum amount or a specific percentage of their annual pre-tax profits as bonuses in the form of stock or cash. The amounts or percentages would be left to each company’s discretion, but the law did not offer any guideline on what “reasonable” distributions might be. Companies that ran a profit in a particular year could use the earnings to offset accumulated losses from previous years and would not have to share a portion of the gains with employees. The amendment also will not apply to state-run enterprises unless the agencies overseeing them stipulate that profits should be shared. The changes are the first to be passed from among amendments to four laws and statutes proposed to improve the well-being of Taiwan’s working population, which faces stagnant wages amid rising commodity and housing prices. Lawmakers remain divided over proposed changes to the Labor Standards Act, Factory Act, and Small- and Medium-Sized Enterprises (SME) Development Statute that seek to shorten the work week, enforce the profit-sharing clause and give companies incentives to raise employee wages.

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