一、General：

In terms of global labor policies, different types of labor laws are established for workers in each country based on their culture and industrial relations. Further, with respect to the labor contract termination, some countries abide by the general principles of civil law, i.e., the principles of private autonomy and freedom of contract, with the intent that both employees and employers can terminate contracts at will. Furthermore, some countries adopt the idea of labor protection and require legitimate grounds for employers to terminate labor contracts with workers.

In Taiwan, not only must the employer have legitimate reasons to lay off a worker, but those reasons must also correspond to the statutory grounds for dismissal regulated in Article 11(1) or Article 12(1) of the Labor Standards Act. In other words, an employer may terminate a worker’s employment only if the statutory grounds for termination set forth in the aforementioned Labor Standards Act are met.

Though statutory grounds are set in both Article 11(1) and Article 12(1), the legal effect of one is very distinct from the other. Article 11(1) are the provisions regarding layoff which shall be conducted with prior notice and subject to the payment of severance pay according to Article 16(1) and Article 17(1) respectively, while Article 12(1) are provisions of disciplinary dismissals which may be applied to terminate labor contract without advance notice or severance pay. Following contents would focus on Article 12(1).

Article 12(1) Disciplinary Dismissals

Article 12(1) states that “In any of the following situations, an employer may terminate a labor contract without prior notice.

1. When a worker misrepresents the facts at the time when entering into an employment agreement in a manner that could mislead his/her employer and thereby cause them damage.

2. When a worker commits a violent act against or grossly insults the employer, the employer’s family member, agent of the employer or a fellow worker.

3. When a worker has been sentenced to a temporary prison sentence in a final and conclusive judgement, and is not granted a suspended sentence or is not entitled to commute their sentence to a fine.


4. When a worker is in serious violation of the employment contract or in serious violation of the employment rules.

5. When a worker deliberately damages or abuses any machinery, tool, raw materials, product or other property of the employer or deliberately discloses any technical or confidential information of the employer thereby causing damage to the employer.

6. When a worker is absent without just cause for three consecutive days, or for a total of six days in any given month.

Article 12(1) Subsection 1：Where a worker misrepresents the facts…

The following three requirements are to be met when implementing this subsection.: (1) The worker made any false representation at the time of entering into the labor contract. (2) Due the false representation, the employer was misled into signing the labor contract. (3) The employer might suffer from damage caused by the false representation.


In practices, misrepresentation about a worker’s educational background, employment history or convictions are normally deemed as severe misrepresentation which may cause substantively damage to employers, and constitute as a proper reason to dismiss the worker.

Article 12(1) Subsection 2：Where a worker commits a violent act…

Apart from the violent act, work that commits serious insults to the employer, a member of the employee’s family or an agent of the employer, or a co-worker may also be dismissed under this section.

However, whether the abuse is serious or not becomes a problem. That is why the court has established a standard that must be followed. This would take into account the severity of the insult, and the differences between workers’ jobs and those of insulted individuals., education level and social status, the motivation and the circumstances at the time of the act and their habit of using language to determine if the fact of a case matches the subsection (Supreme Court Tai-Shang Tzu No.1631, 2003).

Article 12(1) Subsection 3：Where a worker has been sentenced to a temporary prison…

When a worker is sentenced to temporary imprisonment, he/she can no longer work for the employer, making it impossible for them to fulfil their obligations under the employment contract. In such cases, the employer can dismiss the worker. Thus, if the worker has been granted a suspended sentence or was permitted to commute the sentence to a fine, which means the worker is still able to perform his or her duties, the employer would have no right to terminate the contract. Moreover, it should be noted that a short-term imprisonment or a criminal detention does not conform with this subsection.

Article 12(1) Subsection 4：Where a worker is in serious breach…

The major issue of this subsection is how to interpret the terms “serious breach” and “serious violation”. Namely, to what extend could the situation be considered as serious breach? In Supreme Court Tai-Shang Tzu No. 2465, 2006 explains that “The violation of the work rules must be such that it is hard to expect the employer to continue the employment relationship by means of punishment other than dismissal, and the dismissal must be appropriate comparing with the violation by the worker. …The following elements are the criteria： the type of violation, the first or repeated violation, intentional or negligent violation, the risk or loss that may bring to the employer and the business, the labor relationship, and the length of time the worker has been on the job etc.

Article 12(1) Subsection 5：When a worker deliberately damages or abuses…
This subsection focuses on two scenarios: One is where the worker damages employer property and the other is the behavior of divulging confidential information. The worker would only be liable if he or she intended to and had caused damage to the employer.

It should be noted that the definition of “confidential information” is treated to be the same as the term ” trade secret ” in Article 2 of Trade Secrets Act in judicial practices. Therefore, confidential information shall be any method, technique, process, formula, program, design, or other information that may be used in the course of production, sales, or operations, and meet the following requirements:(1) It is not known to those usually involved in this type of information;(2) It has real and potential economic value, due to its secretive nature; and (3) Its owner has taken reasonable measures to preserve confidentiality.

Article 12(1) Subsection 6：When a worker is absent… The term “good cause” means the situation that the worker could apply for leave depending on the employment contract or workers’ leave regulations. It should be noted that even if the worker did not follow the procedure for taking leave or did not apply for leave on urgent grounds, as long as the worker in fact had reasonable grounds, the employer would not have the right to terminate the worker under this clause.

Other：The Last-Resort Principle：
Apart from the abovementioned conditions, it is clear from recent judicial practice that the principle of last resort is also a necessary requirement when an employer terminates employment, which means that employers should try another method to improve the labor relations rather than instantly asking the workers to leave. In other words, if there is an alternative way to address the tension between workers and the employers, it would be illegal for employers to dismiss workers directly.

Article 12(2)：Preclusive Period：
At last, according to Article12(2), if the employer desires to terminate the contract in accordance with subsection1, 2, 4, 5 or 6 of the 1st Paragraph, it shall be conducted within 30 days of the day on which the employer becomes aware of the reasons for the dismissal. Namely, the right to terminate the contract would have expired after 30 days from the date the employer becomes aware of the reason for termination.