8 December 2021
Winning tenderer of government procurement with more than a hundred employees shall employ indigenous people covering at least 1 percent of its total workforce during the term of contract performance. As expressly stated in Article 12, Paragraph 1 and 3, of the Indigenous Peoples Employment Rights Protection Act (“IPERP”), those failing to meet such requirement shall reimburse payments to the employment fund of the Aboriginal Comprehensive Development Fund. The Justices of the Constitutional Court have explained in Judicial Interpretation No. 719 that the aforementioned regulation is not in violation of the principle of equality and principle of proportionality in Articles 7 and 23 of the Constitution and is in line with the protection of property rights and freedom to business operation under Article 15 of the Constitution. However, regarding Article 24, Paragraph 2 of the IPERP — which states that “the vouchers mentioned in Section 3 of Article 12 shall be calculated based on the monthly salary multiplied by the difference in the number of people. (‘Difference’)” — the Justices announced on October 8, 2021, in its Judicial Interpretation No. 810, that the aforementioned requirement on all of the winning tenderers of government procurement with more than a hundred employees to “reimburse employment payments based on the Difference” has made unreasonable restriction on people’s property rights protected by Article 15 of the Constitution and is not in conformity with the principle of proportionality under Article 23 of the Constitution. Accordingly, the Justices proclaimed that it shall be amended within 2 years from the date of this Interpretation’s publication.
The Justices of the Constitutional Court elaborates that Article 24, Paragraph 2 of the IPERP, which imposes reimbursement obligations for those failing to perform or only partially performed their legal duties, constitutes restrictions on people’s property rights. Such limits shall be in line with the principle of proportionality under Article 23 of the Constitution. The legislative purpose of this regulation is legitimate, that to increase the willingness of the winning tenderers to hire indigenous people, and the methods adopted help to achieve such a purpose. However, calculating the reimbursement amount by multiplying the base monthly salary with the Difference overlooks circumstances “not attributable to the winning tenderer.” It also disregards the “procurement amount,” which may result in situations where the reimbursement amount exceeds the procured amount, causing the tenderer to reimburse with property outside of the procured amount. Such a case extends beyond the scope of reasonable burden, as the reimbursement is clearly disproportionate to the procured amount. Interpretation No.719 has previously addressed this issue for a prompt review and amendment by relevant agencies. However, legislators have yet to revise and establish any appropriate adjustments. Therefore, as stated by this Interpretation, the restriction placed by the provision limits people’s property rights beyond the principle of proportionality requirement and is thus unconstitutional and shall be amended within the stated period.
After this Interpretation’s announcement, the relevant agency shall revise and amend Article 24, Paragraph 2 of the IPERP no later than 2 years from the announcement date; before such amendment takes place, the relevant agency and Court shall follow the precedent of this Interpretation in dealing with overtly harsh cases (i.e., when the reimbursement amount exceeds the procured amount).
For further information, please contact:
Elizabeth Pai, Lee Tsai & Partners
lawtec@leetsai.com
