Dozens of legislators crowded the podium of the main chamber, screaming and pushing each other and forcing the reading of the controversial bill to be suspended for hours.
Lawmakers from the opposition Kuomintang party blocked the podium, accusing the ruling Democratic Progressive Party (DPP) of "betraying workers".
Labour activists scuffled with police outside. More than 1,000 police officers were mobilised and barbed-wire fences were set up at the entrance to the building.
The clashes came after an attack by labour protesters last week on a DPP lawmaker.
Under the bill, workers would be guaranteed one mandatory day off a week in keeping with existing rules. They would also be given an additional "rest day" and paid a higher rate if asked to work on that day.
But seven annual public holidays would be scrapped.
The amendment has sparked a number of rallies and a hunger strike, with protesters accusing Tsai of betraying her campaign promise to protect labour rights.
"The DPP is pushing for the bill despite public opposition," the KMT said in a statement.
It described Tsai as "like a cold front that is sweeping Taiwan".
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