The underlying fact is noted as follows. The Ministry of Transportation and Communications (hereinafter MOTC) set up the state-owned Chunghwa Telecom Co., Ltd. (hereinafter “Chunghwa Telecom”) in accordance with Article 30 of the Telecommunication Act as amended and promulgated on February 5, 1996. Chang, Ching-Chou and his co-petitioners (hereinafter Petitioners) – who number 12,950 altogether (see Appendix No. 1) – were either former commissioned public servants of the Directorate General of Telecommunications, MOTC and its subsidiaries under the Act Governing the Employment of Transportation and Communications Personnel, or their heirs. In accordance with Article 10, Paragraph 1 of the Act of Chunghwa Telecom Co., Ltd., which came into force on July 1, 1996 until its repeal on December 24, 2014 (hereinafter “Chunghwa Telecom Act”), the Petitioners were then transferred to and reemployed by the Chunghwa Telecom and worked for it or its subsidiaries and affiliates, including the International Business Group, the Northern Taiwan Business Group, the Central Taiwan Business Group, the Southern Taiwan Business Group, the Telecom Training Institute, the Telecom Laboratories, the Data Communications Business Group, and the Mobil Business Group, all of which are referred to as the “Affiliated Units.” Later on, in order to facilitate the privatization of the Chunghwa Telecom, the Fourth Legislative Yuan on May 28, 1999 passed the budgetary bill on the sale of Chunghwa Telecom shares in its Thirteenth Sitting of the First Session (see The Legislative Yuan Official Gazette, Vol. 88, No. 30, pp. 272-42). Accordingly, the MOTC sold shares of the Chunghwa Telecom by installments. With the Government’s stake reduced to less than 50%, the Chunghwa Telecom officially became a private company on August 12, 2005 on the approval of the Executive Yuan. On the eve of its becoming private, the Chunghwa Telecom and its Affiliated Units issued every Petitioner a notification letter dated August 11, 2005 (hereinafter the “08/11/2005 Letter ”) concerning her reemployment after it officially became a private company and her settlement payment based on her years of service under the terms of the Statute of Privatization of State Enterprises (hereinafter the “Statute”). Contesting the lawfulness of the 08/11/2005 Letter, the Petitioners applied for internal review. After their claims were rejected, they filed two suits in the Taipei High Administrative Court. In the first suit, the Petitioners asked the court to revoke the decision on the settlement decision and the result of the said internal review made by the Chunghwa Telecom. In the second and separate suit, they asked the court to declare that the Petitioners were still public servants with the MOTC. Regarding the first suit, the Taipei High Administrative Court dismissed the petition on procedural grounds in the ruling of 97 Su Zi No. 328 (2008). Meanwhile, the court held that the Petitioners were no longer public servants with the MOTC in the judgment of 97 Su Zi No. 328 (2008). The Petitioners then appealed both the said ruling and judgment of the Taipei High Administrative Court to the Supreme Administrative Court. In the judgment of 98 Pan Zi No. 907 (2009) and the ruling of 98 Tsai Zi No. 1977 (2009), the Supreme Administrative Court vacated the said judgment and ruling, remanding the case to the Taipei High Administrative Court. In the judgment of 98 Su Geng Yi Zi No. 110 (2009), the Taipei High Administrative Court dismissed the case. The Petitioners appealed again to the Supreme Administrative Court. In the judgment of 102 Pan Zi No. 350 (2013) (hereinafter “the Final Judgment”), the Supreme Administrative Court dismissed the case on the grounds of merits. The Petitioners filed a petition for constitutional interpretation with this Court, claiming that Article 8, Paragraph 3, First Sentence of the Statute, which provides, “For those reemployed after the privatization of a state enterprise, their original employer may, on the date of their reemployment, settle the payment based on their years of service in accordance with the payment criteria set forth in the preceding paragraph,” (hereinafter the “Disputed Provision”) applied in the Final Judgment contravenes Articles 7 and 23 of the Constitution and violates their right to hold public office and right to equality.
Considering that this petition pertains to the right to hold public office in respect of the petitioners who had previously held public servant status and to the protection of property rights in respect of other petitioners who are the heirs of former public servants in terms of the pecuniary effect from the latter’s right to hold public office on the inherited estate, the Court finds that the petition for constitutional interpretation has satisfied the requirements of Article 5, Paragraph 1, Subparagraph 2 of the Constitutional Interpretation Procedure Act (hereinafter the “CIPA”) and thus renders this Interpretation on the following grounds:
‘Those reemployed after the privatization of a state enterprise,” as provided for in the Disputed Provision, refers to both personnel who had been recruited in accordance with the statutes or regulations concerning the state enterprise employees and thereby stand in a public law-governed relationship of service and loyalty with the state, and the employees who had been under a private law-governed contract of employment or mandate with a state enterprise whereby the right to hold public office provided for in the Articles 18 of the Constitution is not engaged. Since the Petitioners either held public servant status themselves or are heirs of those who held such status, it should be noted in advance that only insofar as the Disputed Provision applies to those reemployed who had previously held public servant status is it subject to this Interpretation.
Article 18 of the Constitution provides that the people have the right to hold public office, the purpose of which is to protect the people’s right to the administration of official affairs pursuant to statutes or regulations. The scope of "public offices" under Article 18 of the Constitution is extensive. Elected representatives of all levels, civil servants of central and local governments, and other personnel who are engaged in the administration of official affairs pursuant to the law, all fall within the scope of public offices as defined in Article 18 of the Constitution (see J.Y. Interpretation No. 42). Given the variations on the nature of public office, public servants can be divided in a variety of ways such as civil servants v.s. military officials, political appointees of high ranks v.s. civil servants who are hired on professional merit, and civil servants v.s. employees of state enterprises. While Article 6, Paragraph 1 of the Additional Articles of the Constitution provides that the state shall legislate to regulate the rights and obligations of public servants, including their employment, discharge, qualification screening, scale of salaries, promotion, protection of tenure, retirement and bereavement award etc., the Legislature has certain policy discretion in making laws to regulate various types of public servants in correspondence with the nature of various public offices. Considering the institution of state enterprise being a highly policy-oriented state administration and thus liable to reorganization or dissolution with the policy changed or the goal achieved, employees of state enterprises are in no position to expect a permanent employment relationship to exist between them and the state. Furthermore, the Constitution is not explicit as to whether the relevant laws governing civil servants also apply to those state enterprise employees who hold public servant status. Thus, the Legislature may legislate in this domain, provided that such legislation does not contradict the spirit of the Constitution (see J.Y. Interpretation No. 270). As long as the Disputed Provision sets out to pursue a legitimate purpose, and the means employed therein are reasonably related to the purpose, it does not violate the principle of proportionality under Article 23 and the principle of equality under Article 7 of the Constitution. In respect of the relationship between state enterprise employees who had previously held public servant status and the state, the state shall stipulate appropriate transitional rules or other mitigating measures to protect their rights and interests if changes on the ownership of state enterprises negatively affect their right to hold public office. To determine whether the means employed in the Disputed Provision are reasonably related to the purpose pursued, this Court will also take the appropriateness of transitional rules and mitigating measures into consideration.
(1) The purpose of the Disputed Provision is legitimate.
The Fundamental National Policies provided for in Chapter 13 of the Constitution are the directive programs as to government policies and national development. Article 144 of the Constitution provides, “Public utilities and other enterprises of a monopolistic nature shall, in principle, be under public operation. In cases permitted by law, they may be operated by private citizens.” It follows that public utility enterprises and other monopolies should be publicly owned in principle, but the Constitution does not prohibit private ownership of these enterprises outright. The state may decide, by legislation, when and under what condition to allow the private sector to own and run these enterprises in the light of changing financial and economic circumstances.
It is noted that privatization of state enterprises may contribute to the improvement of the performance of such enterprises through the competition of free market with their management autonomy enhanced and the legal restrictions reduced. Further, it may improve people’s quality of life through generating financial resources for infrastructure projects, accelerating government investment, reducing inflationary pressures, absorbing overflowing capital, and scaling up a well-functioning capital market. Thus privatization of a state enterprise conducted under the terms of Article 5 of the Statute – whereby the authorities in charge of state enterprise, in view of the situation, considering that there is no need to continue to keep the relevant enterprise state-owned, the relevant enterprise may be privatized after it is so proposed to and approved by the Executive Yuan – is a political decision made in light of contemporary social and economic context, which is further subject to the democratic control of the Legislative Yuan in scrutiny of the reasonableness of such a decision through the budgetary procedures (see Article 85, Paragraph 2 of the Budget Act). Furthermore, after the privatization of a state enterprise of public utility or otherwise monopolistic nature, the state nonetheless has the obligation of supervision over these privatized enterprises to guarantee the rendering and quality of public service. Accordingly, privatization does not compromise public interest and is compatible with Article 144 of the Constitution.
In accordance with Article 8, Paragraph 1, First Sentence of the Statute, when a state enterprise becomes private, the employees who wish to continue to work with the same enterprise shall have their wishes granted and be reemployed thereby upon the date of privatization. The Disputed Provision further provides, “For those reemployed after the privatization of a state enterprise, their original employer may, on the date of their reemployment, settle the payment based on their years of service in accordance with the payment criteria set forth in the preceding paragraph.” It follows that for those who had previously held public servant status and were reemployed by the privatized enterprise, their public law-governed employment relationship with the State is to be terminated pursuant to the Disputed Provision and their settlement payments are to be determined based on their years of public service. As regards the termination of the employment relationship governed by public law, those reemployed who had previously held public servant status in state enterprises no longer maintain relationship of service and loyalty with the state as a result of privatization. Thus the Constitution does not prohibit the Legislature from terminating their status as public servants. In respect of the settlement payment based on the years of public service under the Disputed Provision, the legislative purpose is to delineate the original and the new employers’ respective responsibilities to the employees and to encourage potential investors to participate in privatization by setting out the legal basis for the new employer to maintain the sustainable management of business and to resolve the issue of reemployment reasonably so that the privatization of state enterprises can proceed undisturbed (see Legislative Yuan Gazette, Vol. 80, Issue 38, P. 76). Clearly, the Disputed Provision pursues public interest and its purpose is thus legitimate.
(2) Considering the appropriate mitigating measures stipulated in the Statute, the Disputed Provision is not in contradiction with the principle of proportionality.
In accordance with Article 8, Paragraph 1, First Sentence of the Statute, when a state enterprise becomes private, its employees are not made redundant automatically but instead have the option to be reemployed by the same enterprise following its privatization. Furthermore, Article 16 of the Enforcement Rules of the Statute provides, “The term ‘settle’ as referred to in Paragraph 3… of Article 8 of the Statute means the settlement of the payment applicable based on the years of service. After the settlement, the years of service of those reemployed shall be reset anew.” It is noted that to those reemployed who had previously held public servant status and had met the retirement requirements on the date of privatization, Article 11, Paragraph 4 of the Labor Pension Act, which came into force on July 1, 2005, applies, “public servants of a state enterprise who had also held labor status on the date of privatization shall receive retirement payment, based on the years of service prior to the privatization, in accordance with relevant statutes and regulations governing retirement predating the privatization; on the proviso that the right of those reemployed to the monthly pension payment and other related rights shall be suspended until they leave the privatized enterprise.” Thus, the reemployed are guaranteed to receive retirement payment in accordance with relevant statutes and regulations governing retirement in relation to their public servant status predating the privatization. It follows that those reemployed who choose to receive regular monthly pension payments shall have their right to pension suspended during their reemployment until they leave the privatized enterprise. Hence the Disputed Provision does not have a negative effect on the rights and interests of those reemployed who had had met the retirement requirements. For those reemployed who had previously held public servant status but had not yet met the retirement requirements, the severance payment “shall be calculated in accordance with the criteria for payment of pensions as stipulated in the Labor Standards Law, notwithstanding age and years of service“, reads Article 8, Paragraph 2, Second Sentence. Their disadvantage resulting from their early settlement is thereby appropriately mitigated.
Furthermore, given the distinct nature of individual enterprises controlled by different agencies of the central or local governments, the different financial conditions of such enterprises, and the variations on their policy on employees’ rights and interests, it is impracticable to lay down in legislation all the details as to the safeguarding of the rights and interests of employees of the state enterprises that are to undergo privatization. Thus, in addition to the extra guaranteed payments for such employees and the compensation for losses resulting from their switch from the civil servant insurance program to the general labor insurance program, Article 8 of the Statute further provides that how to compensate for other damages and losses suffered by such employees at the time of privatization is to be drawn up by the competent authority in charge of the relevant enterprise in a regulation that requires submitting to the Executive Yuan for approval (see Legislative Yuan Gazette, Vol. 80, Issue 38, P. 83). Article 8 Paragraph 4, Second Sentence of the Statute provides, “[T]he employees who are reemployed by a privatized enterprise and incur loss on their insurance period originally covered under the civil servant insurance program as a result of their switch to the general labor insurance program shall be compensated in correspondence with the compensation for the relevant loss inflicted on those who are not reemployed. Any reduction or loss of other rights or entitlements shall also be compensated.” Paragraph 5 of the same provision further provides, “The regulations governing the compensations set forth in the preceding paragraph shall be proposed drawn up by the competent authority in charge of the enterprise and submitted to the Executive Yuan for approval.” Both stipulations concern mitigating measures to compensate for losses inflicted on those reemployed. For example, in accordance with Article 8, Paragraph 5 of the Statute, the MOTC has made the “Regulation Governing the Compensation for the Employees of Privatized Enterprises Previously Owned by the Ministry of Transportation and Communications.” This Regulation entitles those reemployed to compensation for the loss on their insurance period originally covered under the civil servant insurance program and any reduction or loss of other rights or entitlements.
In conclusion, insofar as it applies to those reemployed who had previously held public servant status, the Disputed Provision is to be taken together with both Paragraph 5 and Paragraph 4, Second Sentence of Article 8 of the Statute. In order to achieve the purpose of privatization, the State thereby gives those who had previously held public servant status the choice to be reemployed by a privatized while providing appropriate mitigating measures for settling their payment based on their years of public service to protect their rights and interests. On the whole, the means employed in the Disputed Provision bears a reasonable relation to the achievement of the foregoing purpose of privatization. Thus the Disputed Provision is not in contradiction with the principle of proportionality under Article 23 of the Constitution and the right to hold public office under Article 18 thereof.
(3) The Disputed Provision is in conformity with the principle of equality.
That “equals should be treated equally and unequals unequally” is the foundation of the principle of equality under the Constitution. Therefore, if the same matters are treated in a discriminatory manner without any legitimate reason, or different matters are treated without reasonable differentiation, the principle of equality is violated. Whether a law is consistent with the principle of equality is to be determined in terms of the constitutionality of the purpose of the differential treatment under the law at issue, the nexus between the underlying classification and the purpose of the law, and the level of proximity of such nexus (see J.Y. Interpretation No. 593). The Petitioners claim that making no distinction between employees of state enterprises who are public servants from those who are not while requiring both classes to settle the payment based on their years of service, the Disputed Provision amounts to rendering undifferentiated treatment to people with different characteristics and things of different nature and thus fails to treat these two classes of employees with reasonable differentiation. Moreover, the several types of transferal processes applicable to civil servants of administrative agencies under the Civil Service Employment Act (see Articles 16, 18 and 22 of the Civil Service Employment Act) will not apply to those public servants who previously worked in state enterprises following the termination of their public law-governed employment relationship with their original employers by the Disputed Provision. It is thus further claimed that not only does the foregoing differential treatment bear no substantial relation to the purpose pursued by the Disputed Provision, but it cannot be regarded as necessary. Therefore, the Disputed Provision is claimed to be in contradiction with the principle of equality and systemic justice. Insofar as the Disputed Provision applies to those reemployed who had previously held public servant status, it aims to delineate the original and the new employers’ respective responsibilities to the employees, to encourage potential investors to participate in privatization, and ultimately to enable the privatization of state enterprises to proceed undisturbed. Therefore, the purpose is legitimate. Assuming arguendo that the Disputed Provision renders differential treatment and, in the meantime, fails to treat different classes of employees of state enterprises with reasonable differentiation as the Petitioners claims above, it still falls short of being arbitrary or manifestly unreasonable. Moreover, it bears a reasonable relation to the achievement of the purpose of the Disputed Provision. Thus the Disputed Provision is not in contradiction with the principle of equality.
(4) Petitions Dismissed
Also it should be noted that in addition to the said Petitioners, the original petitioners also include Tzou, Wei-Ping et al., who were either the employees of Chunghwa Telecom under private law-governed contract of employment following the termination of their previous status as former commissioned public servants of the Directorate General of Telecommunications, MOTC and its subsidiaries between 1998 and 2001 or their heirs, numbering 614 altogether (hereinafter Petitioners Tsou et al. See Appendix No. 2). During the period 1998 to 2001 Petitioners Tsou et al. opted to terminate their public servant status in accordance with Article 12, Paragraph 2 of the Chunghwa Telecom Act. Thus, in the Final Judgment, the Supreme Administrative Court dismissed their appeal on the ground that they were no longer public servants when the Chunghwa Telecom became private. As the Disputed Provision was not the applicable law in respect of Petitioners Tsou et al. in the Final Judgment, it is not the permissible object of the petition for constitutional interpretation. The petition filed by Petitioners Tsou et al. is not made in accordance with Article 5, Paragraph 1, Subparagraph 2 of the CCPA, and is thus dismissed in accordance with Article 5, Paragraph 3 thereof.
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＊Translated by Hui-Wen CHEN and Ming-Sung KUO