This article is an analysis of the characteristics of labor relations and labor law regime in Taiwan, so as to provide a broad and comprehensive observation of the Taiwan labor law regime. First, small and medium enterprises (SME) are the main driving forces of the Taiwanese industries. Approximately 70% of the laborers are employed by SME. Since the industries in Taiwan are mostly SME based, it is disadvantageous for the organization of labor unions. Moreover, as the enterprise-wide unions organized by SME are relatively small in size, they have less power and therefore rarely enter into collective bargaining. Most enterprises regulate and decide the labor conditions within the enterprises through the establishment of employment manuals. Such has become one of the main features of the labor relations in Taiwan The key characteristics of the current Labor Union Act in Taiwan are: (1) Mandatory organization of labor union: Where the number of laborers working in the same industry or the same area with the same position is more than 30, an industry-wide union or occupational union shall be organized in accordance with the law (Art. 6); (2) Mandatory participation in labor union: Laborers of the age of 16 and over are obliged to join the labor union (Art. 12 of the Labor Union Act); (3) Enterprise-wise union: The organization of industry-wide union are limited to laborers employed by the same enterprise or factories (Art. 6 of the Labor Union Act); and, (4) Single labor union: Every enterprise or factory shall only be allowed to have one labor union (one labor union per enterprise) and each administrative area shall only be allowed to have one federations of union (Art. 8 of the Labor Union Act). Thus, according to the law, there can only be one union for enterprise-wide union, occupation union, county or city federation of unions, or national union. It should be noted, however, in respect to the aforementioned characteristics of the Labor Union Act, except for the enterprise-wide union, the other three features have not been strictly enforced. In order to solve the issue regarding the inefficiency of collective bargaining, the Taiwanese government has amended the Collective Agreement Act in January 2008, which is expected to come into force together with the promulgation of the amendments of the Labor Union Act and the Labor Dispute Resolution Act in 2009. Article 6 of the Collective Agreement Act introduces the following concepts: (1) the duty to bargain in good faith, and (2) mandatory bargaining obligation. In other words, when the labor union requests the employer to enter into collective bargaining, the employer cannot refuse to proceed with the collective bargaining with the labor union without proper cause. Moreover, during the bargaining process, the parties shall comply with the principle of honest good faith. In the event where the employer breaches its duty to bargain in good faith or its mandatory bargaining obligation, such breach shall constitute improper labor behavior. According to the provisions under the draft amendment of the Labor Union Act, the competent authority may impose consecutive administrative fines on the employer until the employer rectifies its breach. In addition, the draft amendment of the Labor Union Act plans to establish a new relief regime, referring to the relieve regime for improper labor behavior under the Labor Union Act of Japan. In the future, a review committee will be established, which will be in charge for reviewing applications for relief submitted by laborers suffered from the improper labor behavior of the employer. However, until the end of 2007, there were only 71 cases in Taiwan involving collective agreement. It can thus show the weak power of the labor union in collective bargaining. Furthermore, collective agreements can hardly serve as a tool to regulate employment conditions. As such, the Collective Agreement Act adopts a strong policy to introduce the duty to bargain in good faith and mandatory bargaining obligation, along with the administrative penalty and the relief regime for improper labor behavior, to actively assist the labor union in conducting collective bargaining. Although such policy has specific objectives, yet considering that there is only a small number of labor unions in Taiwan that are small in size, even if the employers are forced to enter into collective bargaining with the weak enterprise-wide unions, pursuant to the principle of freedom to contract, if the employer refuses to sign the collective agreement with the labor union in the end, legally speaking, the employer cannot be forced to enter into the said collective agreement. As such, the effect of the new Collective Agreement Act is questionable.