Protection of Rights and Interests in Work and Employment

Employees are our most important assets. We establish all systems in accordance with laws and regulations:

Legal Employment

We strictly comply with various labor laws and regulations, refuse to hire child labor less than 15 years old, and prohibit any employee less than 18 years old from engaging in hazardous work. We also make the notification of any changes in labor terms and conditions in the manners as required by laws and regulations.

**No Sexual Harassment or Discrimination **

We strictly prohibit tangible or intangible sexual harassment. In addition to the relevant requirements, we also installed the sexual harassment prevention hotline and E-mail address available to employees for reporting and complaining. Our employees are free from discrimination in race, religion, color of skin, nationality and gender. We have never encountered any dispute arising from discrimination against identity in the past.

Fair Performance Assessment System

Our performance management and development system is designed to integrate and boost individual and organizational performance. We have instituted two-way communication and implemented the employee development plan. We make every endeavor to make our performance assessment so fair and reasonable that such assessment results may serve to be the basis for promotions, raises, bonuses, and employment development and training measures. If any employee isn' t competent to perform his/her work, we will consider any appropriate guidance plan as the first priority, or assist the employee to transfer to a suitable position or affiliated company. If the employee still fails to satisfy the company-employee cooperative relationship then, we will dismiss the employee with appropriate severance pay in accordance with the relevant laws and regulations to ensure his/her interests and rights.

For all those in indirect labor (except for new hires), there are four main procedures in LITE-ON's performance appraisal: (1) Goal setting: department managers and their staff are required to set annual performance goals at the beginning of the year. (2) Q2 review: department managers are required to communicate with staff on how their first-half goals have been achieved and judge their first-half performance. (3) Yearly review: department managers are required to communicate with their staff on how their Q4 and annual goals have been achieved and judge their year-end performance. (4) Performance review: this process is intended to help employees improve their future performance and create their own individual development plans (IDP) in ways that improve the company's performance. The review should be based on how the manager has rated the employee's performance and how the employee may improve and progress in the future; it is intended to be a two-way communication.

The IDPs focus largely on employees' own choices; they value what employees want to achieve in life and encourage them to pursue self-development in ways that achieve the goals of the organization. In addition to having defined learning systems and roadmaps, LITE-ON organizes a broad variety of internal training courses (e.g. professional skill development, quality control, management etc.) each year and outlines compulsory courses that employees must take given their level, while in the meantime subsidizing those who wish to attend training courses outside the organization. Employees are free to create their own IDPs depending on their goals and needs, and are encouraged to discuss such plans with their managers. Meanwhile, the manager's role is to provide feedback, suggestions, assistance and progress tracking based on employees' performance, strengths, weaknesses, and the current status and future goals of the department.

For those in direct labor:

There is a direct link between performance of direct labor and the company's production performance. Therefore, for those in direct labor, the plants follow a monthly bonus system based on product characteristics. Employees are rewarded according to performance. Employees' overall performance will be scored in the annual performance review at the end of each year.

Compensation Guarantee

LITE-ON places particular emphasis on how employees are compensated for their services. Regardless of where the company operates, it offers competitive compensation packages and conducts salary surveys each year to align salary levels with the current market and with the various economic indicators used in the analysis. As a means of attracting top talents, LITE-ON offers some of the best starting salary packages for new hires. Employees' salaries and compensation are determined by their education, knowledge, skills, seniority, and individual performance. In no way does gender play a part in these decisions. New employees are not given different starting salaries on the basis of their race, religion, political views, gender, marital status, or union association. The company's compensation policy has been drafted on the basis of the following principles:

• LITE-ON is aware of and complies with relevant local laws and regulations, strives to establish harmonious employer-employee relations within the scope of the law, and thereby promotes sustainable management.
• In order to maintain competitiveness in the employment market, pay is set and adjusted in reflection of manpower supply and demand and the profitability of product lines.
• In order to incentivize employees, the company strives to pay appropriate salaries reflecting the market value of professional functions, the contributions of employee, and the results of the performance management system.
• Starting salaries offered to direct labor not only have to comply with local regulations, but are also competitive when compared to industry peers. Currently, LITE-ON's starting salary for direct labor is approximately 1.17 times the minimum wage in Taiwan, 1 time in China, and 1.1 times in Thailand.
• As an added incentive to employees, LITE-ON pays a performance bonus each year depending on how each individual and the company has performed. The amount of bonus granted to employees is determined by their responsibilities, contributions, and performance.

Gender Salary Differences by Job Nature (Taiwan):

According to Taiwan regulations, all employees need to be insured under the Labor Insurance and National Health Insurance schemes from their onboard date, and have contributions made to pension funds. In addition to mandatory coverage, the company also provides group insurance policies that cover: life, accidental death, hospitalization, cancer, and emergency medical treatment. Employees may choose to include their spouse/children/parents in the coverage at additional cost. Furthermore, the company offers even broader group insurance coverage for expatriated employees, giving them peace of mind when working overseas. Compensation for overseas employees has been set at reasonable and competitive levels depending on local market conditions. Meanwhile, long-term and short-term bonuses are also offered as added incentives according to local regulations and industry practices. Overseas employees are covered by social insurance schemes as required by local regulations. LITE-ON's pension policies have been established strictly in compliance with local regulations. In Taiwan, the pension policy complies with the Labor Standards Act where contributions are made regularly to employees' pension accounts. LITE-ON provides comprehensive welfare systems throughout its worldwide locations to give employees the best care as possible. The company has also established relevant committees according to the law in order to enhance employee welfare. In addition to securing their basic welfare, the company has made it part of its mission to offer employees an environment of “happiness, growth, health and harmonization” to work, making them an enjoyable experience at LITE-ON.

Pension Scheme

LITE-ON makes contributions to employees' pension funds according to local regulations, regardless of where it operates in the world. Today, 100% of its employees have joined a pension plan. In Taiwan, employees' pension schemes are governed either by the Labor Standards Act (the old scheme) or the Labor Pension Act (the new scheme). Employees who came onboard on or before June 30, 2005, are entitled to carry forward their years of service from the old scheme to the new scheme. Under the old scheme, the company contributes 2% of employees' monthly salaries into a pension account held with the Central Trust of China. This reserve has accumulated to NT$1.09 billion to date, and is sufficient to provide for employees' retirement needs.

Under the new scheme, the company contributes 6% of employees' monthly salaries into their personal pension accounts. In addition to the monthly 6% contributions made by the employer, employees may also choose to contribute another 0%~6% of their salaries into their pension accounts.

Violation of Labor Standards Act

• The above violation of Article 30, Subparagraph 5 was caused by the fact that the company was fined by the Department of Labor for not keeping an employee attendance record. The company had explained to the Department of Labor that the company's office personnel adheres to an honor system based on mutual respect between managers and employees. The company consistently complies with laws and regulations. However, the company operates in various cities across Taiwan, and its employees move around quite frequently. The company has also established overseas offices around the world, therefore to facilitate business activities on a global scale, the company has given consent that managers and employees may work flexible hours as needed. Due to the above reasons, the company is unable to comply with regulatory requirements at the present, but continues to try and find a feasible solution that complies with the regulatory requirements.

• With respect to violation of Article 24 and Article 32 regarding overtime, the company has established comprehensive overtime guidelines and an eflow application process. The unit was engaged in completing the 9-in-1 merger at the time and did not finish the process in time. The human resource department had explained the overtime application rules to the managers and other employees, and provided assistance to employees in completing the application process. In addition, certain managers were required to conduct appropriate allocation of work and personnel.

Diverse Welfare Systems

LITE-ON offers employees a multitude of welfare initiatives such as commendations for long service, commendations for excellence, festive events, fitness centers, group insurance, emergency aid, birthday and festive gifts, marital subsidies, birth subsidies, hospitalization and funeral relief, training subsidies, children's education subsidies, employee assistance programs (EAPs), medical counseling and all other welfare measures as required by law. Though some welfare details may differ from plant to plant, welfare measures in place nevertheless comply with and even surpass the requirements of local laws. To help employees bond and raise work morale, LITE-ON sponsors employees to establish social clubs, and subsidizes them in the form of funds or event venues so that they may enjoy a balanced, healthy and joyful work life. Employees are assured that they will not be treated differently in any way due to race, gender, nationality, religious beliefs, political views, or union associations.

Employee Assistance Programs

Since 2013, LITE-ON has been introducing Employee Assistance Programs (EAPs) that provided employees with free, 24-hour professional, multi-lateral and highly confidential consultation services on four main areas: mental health, business administration, legal affairs, and healthcare. EAPs are currently run by outsourced consultant companies. Each employee at LITE-ON is given an EAPs card that contains contact information through which employees may obtain the most immediate and professional assistance in an emergency situation. In 2015, a total of 148 LITE-ON employees used the service to gain access to one-on-one professional consulting services provided by external professionals. The average satisfaction with the service was 92%, demonstrating the suitability of EAPs services to employee requirements.

In addition, LITE-ON releases monthly EAPs newsletters that utilize case studies to offer suggestions and reflection so as to encourage employees to find a balance between body and mind, and between work and life. 12 newsletters were released in 2015. The two main themes were: 1. laws in everyday life and 2. improving mental/physical health.

Care for Employees

LITE-ON's human resource department has personnel dedicated to care for employees on matters such as work accidents, traffic accidents, and major illnesses, and to provide assistance where necessary (e.g.: group insurance, hospitalization).

LITE-ON's Employee Welfare Committee offers prompt financial aid to employees who encounter unfortunate events (e.g.: accidents, illness, natural disasters, and other major catastrophes) and provide them with assistance through times of difficulty and need. The amount of aid will vary between NT$30,000 and NT$100,000 depending on the level of emergency.

Subsidy rates 2015:

Happiness Seminars

To help its employees achieve a healthy work-life balance, LITE-ON organizes a series of arts and culture seminars every year. LITE-ON's Employee Welfare Committee offered professional seminars on positive topics, such as workplace communication, community involvement, and life and food, this year. LITE-ON held 22 Happiness Seminars in 2015, which were participated in by a total of 797 attendants. The participants as a whole were very satisfied with the seminars and gave them an average satisfaction score of 91%. Many employees also requested that more similar seminars be made available in the future. Some employees even suggested candidates for topics and lecturers. In 2015, LITE-ON offered seminars on topics such as "Laws in Everyday Life," "How To Improve Sleep Quality," and "Staying Positive at the Bottom." The seminars were designed to help the employees to achieve a work-life balance and live a healthier life.

Other welfare and benefits

LITE-ON offers employees a multitude of welfare initiatives. Though some welfare details may differ from plant to plant, they nevertheless comply with and even surpass the requirements of local laws. Some of these benefits include: health checks, stationed physicians, commendation for long-time service, commendation for excellence, fitness centers, group insurance, birthday and festive gifts, wedding subsidy, child subsidy, education subsidy, hospitalization subsidy, funeral subsidy, and any benefits mandated by law. The company also provides employees with personal travel subsidies that they can use to plan trips for the family.

LITE-ON invites its employees to complete a mental health self-assessment at their annual medical check-up, where they will have their physical health examined. The purpose is to monitor both mental and physical health in the workforce and provide consulting sessions with medical practitioners after the checkup according to the results. The Health Center is equipped with breastfeeding rooms for breastfeeding mothers. Family doctors are available onsite regularly to provide health advice for individual employees. Employees who have health related questions will be able to obtain assistance from medical practitioners and receive detailed health information and services.

Diverse Recreational Activities

Each year, LITE-ON organizes a broad variety of motivational events ranging from group trips, competitions, festive dinners, hiking activities, family gatherings, to year-end/new year celebrations. The company also provides employees with personal travel subsidies which they can use to plan trips for the family. Recreational facilities such as libraries, fitness centers, and audiovisual equipment have also been made available for employees to share their experiences, learn together, and relieve stress.

To help employees bond and raise work morale, LITE-ON encourages employees to establish social clubs, and subsidizes them in the form of funds or event venues so that they may enjoy a balanced, healthy and joyful work life. Employees are assured that they will not be treated differently in any way due to race, gender, nationality, religious beliefs, political views, or union associations.

1. Group trip - the company organizes regular group trips and encourages employees to bring their family members along. Employees in Taiwan bring more than one family member on average, through which they also can identify with the company.

2. Competitions - the company organizes sports and singing competitions on a yearly basis, while each department also organizes its own competitions depending on employee suggestions. Apart from competitions, the company also organizes fun games as a means to let off steam.

3. Festive events - the company joins its employees in the celebration of traditional festivals.

4. Sport festival and family day- LITE-ON's 40 years old in 2014, regular family day activity expanded to Sport festival and family day, focused on team competitions of 8 SBGs and with parents-children interaction, making employees joyful.

5. Year-end party - during the year-end party, the company conveys its hope of working with employees to achieve further growth, and to take corporate social responsibilities to a higher level to create a brighter future.

More information: Benefits