Firms with fewer than 4 employees required to join Labor Insurance Program

This article was published by the Taiwan Headlines on April 27, 2006. It reports that the Executive Yuan in Taiwan recently passed the revised Statue for Labor Insurance. The revised draft expands the scope for compulsory participation in the labor insurance program to businesses with less than four employees. It also extends the compulsory insured age for laborers to 65. These changes are expected to inflict extra premium burden of over NT$3 billion on local employers every year.

The existing Statue for Labor Insurance requires owners of businesses with over five employees to take part in the labor insurance program for their employees. Now, as required by the revised draft, about 50,000 small businesses with less than four employees will have to take part in the labor insurance program. This will involve more than 200,000 laborers. The employers will have pay NT$2.8 billion for 70 percent of the premiums for the workers every year. The Ministry of Economic Affairs and the Council of Labor Affairs are preparing to provide necessary assistance to those small businesses that face increased financial burden.

The revised draft further raises the age ceiling for compulsory participation of laborers in the insurance program to 65, up from the existing 60, in order to encourage citizens in advanced ages to join the labor market. In the future, employers will have to arrange for their employees aged under 65 to participate in the insurance program, if they have not attended it already.

According to the Council of Labor Affairs, there are currently 288,000 laborers aged between 61 and 65. About 267,000 of these have joined the insurance program voluntarily. After the passage of the revised draft, the remaining 21,000 laborers will also be able to enjoy the protection of the insurance program. On the basis of the average insured pay of NT$26,000, employers will have to bear extra premium burden of NT$250 million every year. On the basis of the maximum insured pay of NT$42,000, the amount will expand to NT$400 million.

Finally, the revised draft lowers the fine for deferred premium payment to 0.1 percent, down from the existing 0.2 percent. The effective period for claims of insurance compensation has also been extended to five years, from the existing two years.

In total, the revision of the Statue of Labor Insurance will bring an extra financial burden of NT$3.2 billion to all employers in Taiwan every year. The revised draft will be sent to the Legislative Yuan for ratification and then put into force.