Law Articles
2026-08-11
MLM
With the New Workplace Bullying Regulations Taking Effect, Are Direct Sellers Considered “Workers”? A Comprehensive Guide for the Direct Selling Industry
【Zhong Yin Law Firm Partner Charlotte Wu / Attorney Dan Yang】
charlotte.wu@zhongyinlawyer.com.tw
charlotte.wu@zhongyinlawyer.com.tw
A district manager of a direct selling company, Mr. W, had long subjected newly recruited administrative assistants and direct sellers under his supervision to verbal humiliation during morning meetings, making remarks such as “Are you brainless?” and “How dare you receive bonuses with such poor sales performance?” He even deliberately excluded certain personnel from group announcements.
In the past, such conduct was often regarded merely as a “strong management style” or part of the “industry culture.”
Even when those affected felt aggrieved, they often had little choice but to endure the situation.
However, following the formal implementation of the dedicated chapter on workplace bullying prevention under the Occupational Safety and Health Act, such “aggressive management practices” may now directly constitute violations of law. For the direct selling industry, which heavily relies on organizational momentum, performance incentives, and interpersonal networks, the new regulations present particularly significant challenges. Among these, the unique status of direct sellers raises a critical question: Are direct sellers considered protected persons under the Occupational Safety and Health Act?
I. Key Changes Under the New Regulations: Workplace Bullying Formally Incorporated into the Legal Framework
On December 2, 2025, the Legislative Yuan passed the amendment to certain provisions of the Occupational Safety and Health Act through its third reading, adding a dedicated chapter on workplace bullying prevention. The amendment was promulgated by the President on December 19 of the same year and fully came into effect on July 1, 2026 1. In addition, the Ministry of Labor announced two supporting regulations on June 23, 2026, namely the Workplace Bullying Prevention Measures Regulations and the Regulations Governing the Handling of Workplace Bullying Complaints Against the Highest-Level Responsible Person by Local Competent Authorities, which serve as the basis for the implementation of the new regulatory framework 2.
Pursuant to Article 22-1, Paragraph 1 of the Occupational Safety and Health Act 3, workplace bullying refers to a situation where:“A worker, while performing duties at a workplace, suffers harm to their physical or mental health due to personnel of the business entity utilizing occupational authority or power-based relationships to continuously engage in offensive, threatening, neglectful, isolating, humiliating, or other inappropriate words or conduct beyond the necessary and reasonable scope of work. However, where the circumstances are serious, continuity of such conduct is not required.” Furthermore, Article 2 of the Workplace Bullying Prevention Measures Regulations 4 provides four typical forms of workplace bullying, including: Social exclusion — deliberately excluding an individual or preventing their participation in necessary meetings or activities; Work interference — intentionally obstructing work performance, withholding information, or providing false information; Abuse of authority — assigning unreasonable work targets; and Reputational harm — spreading rumors or disclosing private information.
Under Article 22-2 of the Occupational Safety and Health Act 5, when an employer becomes aware that a worker has suffered workplace bullying, the employer shall adopt a series of “immediate, effective, and appropriate measures,” including accepting complaints, conducting investigations, and imposing disciplinary or other appropriate actions. Article 22-3 6 further grants workers the right to directly file a complaint with the local competent authority where the alleged perpetrator is the highest-level responsible person of the business entity.
II. A Unique Challenge for the Direct Selling Industry: Are “Direct Sellers” Considered Workers Protected Under the Occupational Safety and Health Act?
This is the first and most critical issue that must be clarified when applying the new workplace bullying prevention framework to the direct selling industry. The Occupational Safety and Health Act protects “workers,” and according to prevailing judicial opinions, the relationship between a multi-level marketing enterprise and its direct sellers generally does not constitute an employment relationship.
For example, Taiwan High Court Civil Judgment No. 11 of 2017 (Lao-Shang-Zi) 7 held that direct sellers merely obtain authorization to distribute products and recruit downline members in order to earn commissions. They do not provide labor services under the supervision and direction of the multi-level marketing enterprise. Therefore, the relationship between the parties is a contractual relationship under the multi-level marketing arrangement, rather than an employment relationship. Similarly, Taipei District Court Civil Judgment No. 6728 of 2021 (Su-Zi) 8 and Ciaotou District Court Civil Judgment No. 737 of 2019 (Su-Zi) 9 (which was affirmed on appeal by the Taiwan High Court Kaohsiung Branch Court Civil Judgment No. 236 of 2020 (Shang-Yi-Zi) 10) adopted the same position, holding that direct sellers “possess greater autonomy and independence than employees in a typical employment relationship and are not obligated to be dependent upon or comply with instructions issued by the multi-level marketing company.” It should be noted that, in the appeal proceedings, although the plaintiff argued that the company had provided specific guidance regarding recruitment activities of direct sellers and had arranged administrative personnel to accompany and provide transportation support during business activities, thereby establishing an employment relationship, such arguments represented only the claims of one party. The courts did not make any substantive finding on this issue. Rather, the appeals were dismissed based on other grounds. Accordingly, neither court level actually determined that “a direct seller had an employment relationship with the multi-level marketing enterprise”.
In other words, based on the prevailing judicial opinions, it remains uncommon for courts to recognize an employment relationship between direct sellers and multi-level marketing enterprises in individual cases. This means that, under current practice, the employer obligations, complaint mechanisms, and penalty risks imposed by the workplace bullying prevention chapter of the Occupational Safety and Health Act primarily protect internal employees who have an employment relationship with the direct selling company (such as administrative personnel, customer service staff, and sales supervisors), rather than all participants within the broader direct selling network.
However, this does not mean that the label of “direct seller” itself provides an absolute shield. Taiwanese labor law has consistently adopted the principle of substantive determination, meaning that the title of a contract or the terminology used by the parties is not decisive. Instead, the key issue is whether the actual relationship demonstrates characteristics of subordination. Judicial Yuan Interpretation No. 740 11 expressly recognized that even where a contract is labeled as a contract for services or an intermediary contract, it may still be deemed an employment contract if the provision of labor services possesses elements of subordination, regardless of the contract’s title. More importantly, Supreme Court Criminal Judgment No. 3227 of 2019 (Tai-Shang-Zi) 12 further clarified that, considering the legislative purpose of the Occupational Safety and Health Act to protect the safety and health of workers, an employment relationship may be broadly recognized where the labor service relationship “contains partial elements of subordination.” Otherwise, employers could “circumvent the obligations imposed by the Act merely by formally characterizing the relationship as a contract for services.” Although this Supreme Court judgment did not concern the direct selling industry, it demonstrates the courts’ consistent approach when applying the Occupational Safety and Health Act: compared with ordinary civil disputes, the determination of whether an individual qualifies as a “worker” is subject to a broader and more protective interpretation.
Accordingly, if a direct selling company exercises a level of management control or instruction over certain direct sellers that approaches, or is equivalent to, the manner in which ordinary employees are managed (for example, requiring fixed schedules, assigning mandatory workplaces and working hours, requiring personal performance of specific tasks without delegation, or imposing similar managerial controls), there remains a substantial possibility that a court may recognize such individuals as “workers” under the Occupational Safety and Health Act based on its established approach of broadly interpreting subordination. In such circumstances, the employer’s obligations and complaint mechanisms under the workplace bullying prevention chapter may become applicable, even though no specific case involving the direct selling industry has yet been established.
III. Even If Direct Sellers Are Not Considered Workers, They Remain a Risk Area That Direct Selling Companies Must Manage
Even if the majority of direct sellers do not have an employment relationship with direct selling companies, this does not mean that bullying-type verbal conduct within a multi-level marketing organization involving direct sellers carries no legal risks. Direct selling companies should not simply exclude such risks from their management scope on the sole ground that “direct sellers are not workers.”
The factual background of the aforementioned Taiwan High Court Civil Judgment No. 11 of 2017 (Lao-Shang-Zi) illustrates another type of verbal conflict that may arise within a multi-level marketing organization. In that case, a “core high-ranking leader” within the organization posted comments on the company’s Facebook group, publicly insulting another direct seller by using derogatory terms such as “Director Qian” and “Black Dog.” The court held that such conduct constituted an infringement of the other party’s right to reputation and ordered the individual offender to pay NT$60,000 in damages and issue a public apology. However, because there was no employment relationship between the offender and the direct selling company, the company was not required to bear joint and several liability under Article 188 of the Civil Code 13. In other words, conduct such as disparagement, humiliation, or exclusion by upline members toward downline members, or by senior members toward junior members within a multi-level marketing organization, may not be directly subject to the workplace bullying prevention chapter of the Occupational Safety and Health Act. Nevertheless, the individual offender may still face civil tort liability (for infringement of reputation rights) or even criminal liability for offenses such as public insult or defamation under the Criminal Code.
Another often-overlooked source of risk arises when employees of a direct selling company who actually have employment relationships with the company (such as sales supervisors, training instructors, or customer service personnel) engage in management, coaching, or support activities involving direct sellers. During such interactions, conduct such as verbal humiliation, deliberate obstruction, or exclusion may also occur. These employees themselves are precisely the “workers” protected under the workplace bullying prevention chapter of the Occupational Safety and Health Act. Their interactions with one another, or with supervisors who possess managerial authority, are fully subject to the requirements of the Act. Even where the person subjected to bullying or improper treatment is a direct seller rather than a company employee, once such disputes become public, the damage to the company’s reputation and the cohesion of the direct selling organization will not necessarily be reduced merely because the affected individual is classified as a “direct seller.”
IV. Legal Consequences: Both the Direct Selling Company and Its Top Responsible Person May Face Penalties
If employees of a company (such as internal administrative personnel or sales staff) are subjected to workplace bullying and the matter is not properly handled, the company may face the following penalty risks under the Occupational Safety and Health Act:
Deficiencies in the workplace bullying prevention system: Where an employer fails to establish complaint channels or prevention measures in accordance with the size of its workforce, and fails to make improvements within the deadline specified by the competent authority after being notified to do so, the employer may be subject to a fine of not less than NT$30,000 and not more than NT$750,000 pursuant to Article 45 of the Occupational Safety and Health Act 14. The competent authority may further increase the fine by up to one-half of the statutory maximum amount, taking into account factors such as the scale and nature of the business or the severity of the violation. If a violation of workplace bullying prevention obligations results in an employee suffering from an occupational disease or work-related illness, the employer may be subject to a fine of not less than NT$50,000 and not more than NT$3,000,000 pursuant to Article 43 of the same Act 15. The fine may likewise be increased by up to one-half of the statutory maximum amount. Pursuant to Article 46, Paragraph 1 of the same Act 16, where the top responsible person of a company (such as the employer or chairperson of the board) is determined to be the perpetrator of workplace bullying, that individual may additionally be subject to a fine of not less than NT$10,000 and not more than NT$1,000,000. Such penalty is imposed on the individual personally and will not be waived merely because the company itself has also been penalized.
V. Practical Recommendations for Direct Selling Companies
Based on the above regulatory developments and judicial practices, the authors provide the following recommendations for direct selling companies:
First, identify the scope of internal “workers.”
Companies should first review the personnel who are actually employed by the company, including administrative staff, customer service personnel, sales personnel, and training instructors who have employment relationships with the company. Based on workforce thresholds of 10, 30, and 100 employees, companies should establish appropriate complaint channels, prevention measures, disciplinary mechanisms, and investigation procedures. These are statutory obligations that cannot be avoided regardless of the company’s size.
Second, review the level of management control exercised over direct sellers.
If a company or its administrative personnel exercises a high degree of control over direct sellers’ recruitment activities, schedules, sales scripts, training programs, or other business operations in a manner resembling direction and supervision of employees, the company should be aware of the risk that such relationship may be substantively recognized as an employment relationship under the Occupational Safety and Health Act’s established approach of broadly interpreting the element of subordination. Companies should appropriately adjust their management practices to preserve the autonomy and independence that direct sellers should possess, while reducing the possibility of the company being held jointly liable in future disputes.
Third, incorporate interactions between company employees and direct sellers into workplace bullying prevention efforts. Even though direct sellers themselves are currently not directly covered by the workplace bullying prevention chapter of the Occupational Safety and Health Act, employees with employment relationships with the company, such as sales supervisors, trainers, and customer service personnel, should still comply with principles prohibiting bullying and derogatory conduct when managing or assisting direct sellers. Companies should also provide channels through which direct sellers may raise concerns or submit complaints. Such measures not only help maintain organizational cohesion and prevent disputes from escalating through social media and damaging the company’s reputation, but may also serve as evidence that the company has fulfilled its reasonable duty of care and management obligations if a dispute arises and a court later substantively determines that an employment relationship exists.
Fourth, implement comprehensive record retention practices.
Whether regarding workplace bullying prevention training for internal employees, complaint handling records, or management records concerning interactions with direct sellers, companies are advised to maintain complete documentation in preparation for potential investigations by competent authorities or judicial review.
Conclusion
The implementation of the workplace bullying prevention chapter represents a significant regulatory change for ordinary businesses. For the direct selling industry, which heavily relies on interpersonal networks and organizational dynamics, the challenges are even more complex. Although the independent status of direct sellers has long served as a foundation for the operation of the industry, ...
References and Legal Sources
1 Occupational Safety and Health Administration, Ministry of Labor (December 2, 2025). Legislative Yuan Passes Third Reading of Amendment to Certain Provisions of the Occupational Safety and Health Act (Press Release). Available at: https://www.osha.gov.tw/48110/48417/48419/197070/post
Original text:“On December 2, the Legislative Yuan passed the third reading of the amendment to certain provisions of the Occupational Safety and Health Act (hereinafter, the ‘OSH Act’). A total of 25 provisions were amended (including six newly added provisions), representing the most significant revision since the comprehensive amendment of the OSH Act in 2013.”
2 Ministry of Labor (June 23, 2026). To Implement the New Workplace Bullying Prevention Framework under the Occupational Safety and Health Act, Ministry of Labor Announces Subsidiary Regulations and Supporting Measures to Assist Enterprises in Ensuring Legal Compliance and Building Healthy and Friendly Workplaces (Press Release). Available at:
https://www.mol.gov.tw/1607/1632/1633/93088/
Original text:“In preparation for the implementation of the new workplace bullying prevention framework under the Occupational Safety and Health Act, which will officially take effect on July 1, 2026, the Ministry of Labor announced on June 23 two subsidiary regulations: the ‘Regulations for Prevention of Workplace Bullying’ and the ‘Regulations Governing the Handling of Workplace Bullying Complaints Against the Highest Responsible Person by Local Competent Authorities.’”
3 National Laws and Regulations Database, Ministry of Justice. Occupational Safety and Health Act, Article 22-1. Available at:
https://law.moj.gov.tw/LawClass/LawSingle.aspx?pcode=N0060001&flno=22-1
Original text:“Workplace bullying as referred to in this Act means that, during the performance of duties at the workplace, a worker suffers harm to his or her physical or mental health because personnel of the business entity use their position, authority, or other relationships to repeatedly engage in offensive, threatening, neglectful, isolating, humiliating, or other improper verbal or behavioral conduct beyond the necessary and reasonable scope of business operations. However, where the circumstances are serious, repeated occurrence is not required.”
4 National Laws and Regulations Database, Ministry of Justice. Regulations for Prevention of Workplace Bullying, Article 2.
Original text:“The determination of workplace bullying shall comply with the definition set forth in Article 22-1, Paragraph 1 of the Act and shall be comprehensively assessed based on the background, frequency, location, motive, and purpose of the incident, as well as the following circumstances: 1. Deliberately excluding, ignoring, isolating, or preventing a specific person from participating in necessary important meetings, affairs, or activities. 2. Damaging or deliberately obstructing a specific person’s work, making things difficult by abusing one’s position, intentionally withholding information, or providing false information. 3. Exercising power over a specific person to impose unreasonable work targets or assignments clearly inconsistent with such person’s capabilities. 4. Deliberately spreading rumors about a specific person or disclosing his or her privacy.”
5 National Laws and Regulations Database, Ministry of Justice. Occupational Safety and Health Act, Article 22-2.
Original text:“When an employer becomes aware that a worker has suffered workplace bullying, the employer shall take the following immediate and effective appropriate measures: Where the employer becomes aware through a complaint filed by the bullied worker: (1) Take measures to prevent the complainant from being subjected to workplace bullying again. (2) Provide relevant consultation, necessary assistance, and protective measures depending on the complainant’s needs and the circumstances of the incident. (3) Investigate the complaint; where the complainant wishes, mediation may be conducted, and if mediation fails, the investigation shall continue. (4) Impose appropriate disciplinary action or other measures against the perpetrator.”
6 National Laws and Regulations Database, Ministry of Justice. Occupational Safety and Health Act, Article 22-3.
Original text:“A worker who suffers workplace bullying shall file a complaint with the employer. However, where the respondent is the highest responsible person, the worker may directly file a complaint with the competent authority of the municipality or county (city).”
7 Taiwan High Court (2018). Civil Judgment No. 11 of 2017 (Lao-Shang-Zi). Judicial Yuan Law and Regulations Retrieval System. Available at:
https://judgment.judicial.gov.tw/FJUD/data.aspx?ty=JD&id=TPHV,106,勞上,11,20180313,2
Original text:“The relationship between Pullman Co., Ltd. and A○○ was a direct selling contractual relationship, rather than an employment relationship. Although A○○ held the status of a direct seller of the company, he merely obtained authorization to distribute the company’s products and earn performance bonuses. He was also entitled to recruit downline members to engage in direct selling activities and earn a portion of bonuses generated from the downline organization’s sales. A○○ was not supervised by the company in providing labor services, and therefore no employment relationship existed.”
8 Taiwan Taipei District Court. (2022). Civil Judgment 110-Su-No. 6728. Judicial Yuan Law and Regulations Retrieving System.
https://judgment.judicial.gov.tw/FJUD/data.aspx?ty=JD&id=TPDV,110,訴,6728,20220816,1
Original text: “Under the multi-level marketing structure, distributors are independent individuals separate from the multi-level marketing enterprise. As a general rule, there is no relationship of subordination between the enterprise and its distributors. Distributors are not employees of the enterprise, are under no obligation to accept its direction or supervision, enjoy greater independence and autonomy than employees in an ordinary employment relationship, are not subordinate to or required to obey the enterprise's instructions, and may independently determine their own product sales strategies.”
9 Taiwan Ciaotou District Court. (2020). Civil Judgment 108-Su-No. 737. Judicial Yuan Law and Regulations Retrieving System.
https://judgment.judicial.gov.tw/FJUD/data.aspx?ty=JD&id=CTDV,108,訴,737,20200430,1
Original text: “The requirements imposed by Sheng En Company on its distributors in the document entitled Implementation Plan for New Business Franchise Visits – 37th to 39th Sessions were intended to comply with the Multi-Level Marketing Supervision Act, rather than to exercise direction or supervision over Chuang Jo-Chen and Ho Lai-Pin in the capacity of an employer.... The plaintiff's reliance on the contents of the document to argue that an employment relationship existed between Sheng En Company and Chuang Jo-Chen and Ho Lai-Pin is therefore without merit.”
10 Taiwan High Court, Kaohsiung Branch. (2021). Civil Judgment 109-Shang-Yi-No. 236 (Appeal Dismissed; Affirming Taiwan Ciaotou District Court Civil Judgment 108-Su-No. 737). Judicial Yuan Law and Regulations Retrieving System.
https://judgment.judicial.gov.tw/FJUD/data.aspx?ty=JD&id=KSHV,109,上易,236,20210106,1
Original text: “(Argument advanced by the appellant, not a finding of the court.) Sheng En Company provided extensive guidance, instructions, and directions regarding distributor recruitment techniques and methods, making it difficult to conclude that the company lacked the authority to direct or supervise Ho Lai-Pin.... Accordingly, an objective employment relationship existed between the parties, and Sheng En Company should bear joint tort liability under Article 188, Paragraph 1 of the Civil Code. However, this Court made no substantive finding on that issue and instead dismissed the appeal on the ground that the appellant failed to prove that the appellees had intentionally committed any act contrary to public morals constituting a tort.”
11 Judicial Yuan Grand Justices. (2016). Judicial Interpretation No. 740. Judicial Yuan Law and Regulations Retrieving System.
https://cons.judicial.gov.tw/docdata.aspx?fid=100&id=310921
Original text: “Whether a labor service contract entered into between an insurance solicitor and the insurance company to which the solicitor belongs constitutes an employment contract under Article 2, Subparagraph 6 of the Labor Standards Act shall be determined by whether the service provider (the insurance solicitor) is free to determine the manner of providing services (including working hours) and independently bears the business risks (for example, remuneration calculated based on the insurance premiums of the policies solicited), rather than by reference to the Regulations Governing Insurance Solicitors.”
12 Supreme Court. (2019). Criminal Judgment 108-Tai-Shang-No. 3227. Judicial Yuan Law and Regulations Retrieving System.
https://judgment.judicial.gov.tw/FJUD/data.aspx?ty=JD&id=TPSM,108,台上,3227,20191212,1
Original text: “A labor service contract entered into between an employer and a worker is not limited to a typical employment contract. So long as the contract embodies a relationship of subordination, it shall constitute a labor contract subject to the Occupational Safety and Health Act, notwithstanding that it also contains elements of a contract for work. Otherwise, employers could evade the obligations imposed by the Act simply by disguising the relationship as a contract for work.... To fulfill the legislative purpose of the Occupational Safety and Health Act, and in light of the mixed nature of many contractual arrangements, a labor contract should be broadly recognized whenever the labor service relationship exhibits even a partial degree of subordination.”
13 Ministry of Justice, Laws and Regulations Database of the Republic of China (Taiwan). Article 188 of the Civil Code.
https://law.moj.gov.tw/LawClass/LawSingle.aspx?pcode=B0000001&flno=188
Original text: “Where an employee, in the course of performing his or her duties, unlawfully infringes upon the rights of another, the employer and the employee shall be jointly liable for the resulting damages. However, the employer shall not be liable if it exercised reasonable care in selecting the employee and supervising the performance of the employee's duties, or if the damage would have occurred even had such reasonable care been exercised.”
14 Ministry of Justice, Laws and Regulations Database of the Republic of China (Taiwan). Article 45 of the Occupational Safety and Health Act.
https://law.moj.gov.tw/LawClass/LawSingle.aspx?pcode=N0060001&flno=45
Original text: “Any person falling under any of the following circumstances shall be subject to an administrative fine of not less than NT$30,000 and not more than NT$750,000.... Where any of the circumstances specified in the preceding paragraph exists, the competent authority may, in light of the scale or nature of the undertaking or the severity of the violation, increase the fine by up to one-half of the statutory maximum amount.”
15 Ministry of Justice, Laws and Regulations Database of the Republic of China (Taiwan). Article 43 of the Occupational Safety and Health Act.
https://law.moj.gov.tw/LawClass/LawSingle.aspx?pcode=N0060001&flno=43
Original text: “Any person falling under any of the following circumstances shall be subject to an administrative fine of not less than NT$50,000 and not more than NT$3,000,000: ... (3) violating Article 6, Paragraph 2, the latter part of Article 22-1, Paragraph 2, or Article 22-2, Paragraph 1, thereby causing an occupational disease or work-related illness.... Where any of the circumstances specified in the preceding paragraph exists, the competent authority may, in light of the scale or nature of the undertaking or the severity of the violation, increase the fine by up to one-half of the statutory maximum amount.”
16 Ministry of Justice, Laws and Regulations Database of the Republic of China (Taiwan). Article 46 of the Occupational Safety and Health Act.
https://law.moj.gov.tw/LawClass/LawSingle.aspx?pcode=N0060001&flno=46
Original text: “Where the highest responsible person is determined to have committed workplace bullying, he or she shall be subject to an administrative fine of not less than NT$10,000 and not more than NT$1,000,000.”
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