- Overview: Taiwan
- Global HR Compliance
- Global PEO and payroll
- Work permit for hiring expats via PEO
- Contractor vs. employee: which is better?
- Expand without a company set up
Global HR Compliance in Taiwan
If you hire international workforce, or plan to hire, then Hiring and Firing Workforce in Taiwan Guide below will help you understand the nuances of labor legislation in the country.
There are two main reasons for companies hiring foreign workforce:
- Expanding into foreign markets to sell company product or products there. In this case, companies hire sales representatives who would exclusively represent their product in the target market and sell it to their local client base.
- Hiring the right foreign talent with a unique expertise, often related to IT sphere that cannot be found in the home country or that costs less compared to local specialist with similar skills.
After you have found the right candidate, the question is how to hire and provide compensation to this person so you as a business remain 100% compliant when working with global workforce. Another thing to consider is whether you want to keep the talent long-term and how you can do that.
If you need to hire foreign workforce in Taiwan so you can expand there, then our Global Employer of Record solution may be of help. We help you legally hire and reward your foreign workforce by making them employees via a global employment outsourcing service. This is simple as employ your in-house workforce with the only difference that workers can live anywhere in the world and Acumen International would be their legal employer on your behalf. This means we would bear all employment risks, not you. Also, we manage bonuses, vacations, sick leave and can rent the office and a car for your foreign sales representatives if that is what you need.
With our solution, you can test new foreign markets before deciding whether you are going to get established there. You gain flexibility and expand with reduced costs, and easily withdraw from the unattractive countries.
We are experts in global workforce employment in Taiwan, and our goal is to become your single provider. Instead of working with numerous local staffing agencies and legal advisors, Acumen International can solve your global business challenges and save you time, costs, and resources.
Our team of English-speaking professionals frees you from working through language nuances. Acumen International works 24/7 and can assist you whenever you need, regardless of time zones. Our goal is to create tailored labor solutions for you that are managed legally and in full compliance with the local employment laws.
With our knowledge and deep understanding of local nuances, you easily satisfy your need for skilled professionals in your global industry. With our qualified local partners, you can trust that your global workforce satisfies all local tax, social security, and immigration requirements in Taiwan.
Hiring and Firing Workforce in Taiwan Guide
Contracts may be divided into two categories: fixed-term contracts and non-fixed term contracts. A contract in nature for temporary, short-term, seasonal or specific work may be made as a fixed-term contract. If a business entity violates the abovementioned regulation, the fixed-term contract signed with employees shall be a non-fixed term contract.
Fixed-term labor contracts shall have the following denotations:
- Temporary work and short-term work shall not exceed six months.
- Seasonal work shall not exceed nine months.
- Of specific work is to exceed one year, it should be reported to the competent authority for approval and record.
The contract must include certain essential terms of employment, including, among other things, details on:
- Place of work
- Work duties
- Time of starting and finishing work
- Rules of conduct
- Work discipline.
Employment contracts in Taiwan are indefinite-term contracts unless otherwise specified as fixed-term, and statutory employment rights are enjoyed upon commencement of employment.
A contract for continuous work should be a non-fixed term contract. If a business entity violates the abovementioned regulation, the fixed-term contract signed with employees shall be a non-fixed term contract.
Any working conditions agreed upon in a collective agreement with unions or employee representatives will automatically be implied into any employment agreement executed between an employer and any workers who are the subject of the collective agreement. Where working conditions are different from those stipulated in a collective agreement, those conditions are ineffective and must be replaced by the stipulations in the collective agreement, unless either:
- The collective agreement expressly allows otherwise.
- The change to working conditions is for the workers’ benefit.
Employment Termination and Severance Pay (Dismissal)
For resignation from the employee’s side, in principle, an employee may terminate a fixed-term employment contract for a term of more than three years with a 30-day notice to the employer upon completion of three years’ work, while an employee may terminate an employment contract with indefinite term without cause with prior notice. The employee may also immediately terminate the employment relationship upon the occurrence of statutory situations specified under Article 14 of the LSA described below.
A worker may terminate a labor contract without giving advance notice to the employer in any of the following situations:
- Where an employer misrepresents any fact at the time of signing a labor contract in a manner which might mislead his/her worker and thus caused him/her to sustain damage therefrom.
- Where an employer, his/her family member or his/ her agent commits violence or grossly insults the worker.
- Where the work specified in a labor contract is likely to be injurious to the worker’s health and the worker has requested his/her employer to improve working conditions but all in vain.
- The employer, the agent of the employer, or co-worker suffers from a noted contagious disease that may infect employees working with the infected person and seriously endanger their health.
- Where an employer fails to pay for work in accordance with the labor contract or to give sufficient work to a worker who is paid on a piecework basis.
- Where an employer breaches a labor contract or violates any labor statute or administrative regulation in a manner likely to adversely affect the rights and interests of the particular worker.
If an employee intends to terminate the contract, he or she shall do so within 30 days of the date the employee became knowledgeable of the situation.
An employee shall not terminate the contract if the employer has terminated an agency contract or if the party suffering from a noted contagious disease has received treatment in accordance with health regulations.
In cases where the employee terminates an employment contract with indefinite term without cause, or the employee terminates a fixed-term employment contract with a term of more than three years upon completion of three years’ work, the employee is required to provide advance notice to the employer.
No employer shall, even by advance notice to a worker, terminate a labor contract unless one of the following situations arises:
- Where the employers’ businesses are suspended or has been transferred.
- Where the employers’ businesses suffers an operating losses, or business contractions.
- Where force majeure necessitates the suspension of business for more than one month.
- Where the change of the nature of business necessitates the reduction of workforce and the terminated employees can not be reassigned to other suitable positions.
- A particular worker is clearly not able to perform satisfactorily the duties required of the position held.
In any of the following situations, an employer may terminate a labor contract without advance notice:
- Where a worker misrepresents any fact at the time of signing of a labor contract in a manner which might mislead his/ her employer and thus caused him/her to sustain damage therefrom.
- Where a worker commits a violent act against or grossly insults the employer, his /her family member or agent of the employer, or a fellow worker.
- Where a worker has been sentenced to temporary imprisonment in a final and conclusive judgment, and is not granted a suspended sentence or permitted to commute the sentence to payment of a fine.
- Where a worker is in serious breach of the labor contract or in serious violation of work rules.
- Where a worker deliberately damages or abuses any machinery, tool, raw materials, product or other property of the employer or deliberately discloses any technical or confidential information of the employer thereby causing damage to the employer.
- Where a worker is, without good cause, absent from work for three consecutive days, or for a total six days in any month.
It is prohibited to dismiss
Workers are further protected from dismissal who are:
- receiving prolonged medical treatment
- on parental leave
- have experienced a miscarriage.
Employers. Where notice and severance pay must be given, advance notice is provided as follows on the basis of length of service:
- Ten days’ notice for service of more than three months and less than one year
- 20 days’ notice for service of more than one year but less than three years
- 30 days’ notice for service of three years or more.
Dismissal where notice and severance pay are not required, except where a worker has been sentenced to temporary imprisonment, must be carried out within 30 days from the date the employer becomes aware of the circumstance that initiates the dismissal.
Employees. Employees on fixed-term contracts of over three years may terminate the employment when three years is complete but must give 30 days’ notice. Employees on fixed-term contracts of less than three years are not permitted to terminate their contracts without one of the causes for termination listed below, or without the employer’s agreement. Employees on indefinite-term contracts must give the same amount of notice as employers.
An employee can terminate an employment contract without giving advance notice only in one of the following situations:
- Misrepresentation of the facts by an employer at the time the labor contract was signed, which leads, or may lead, to the employee suffering damage.
- The employer, his or her family member or his or her agent commits violence against or grossly insults the employee.
- Where work is likely to be injurious to the employee’s health, the employee has requested an improvement to working conditions, but no changes are made.
- An employer, an agent of the employer or a fellow worker contracts a harmful, contagious disease and there is a possibility that the employee may contract this disease.
- An employer fails to pay wages in accordance with the labour contract, or does not give sufficient work to an employee who is paid on a piecework basis.
- An employer breaches the labour contract or violates any labour statute or administrative regulation which is likely to adversely affect the employee’s rights and interests.
An employer can terminate an employment contract with severance pay only in one of the following circumstances:
- Stoppage of business or a transfer of ownership.
- Business losses or curtailment of business operations.
- Suspension of operations for more than one month due to a force majeure event.
- Alteration of the business nature, forcing a reduction in the number of employees, and those employees cannot be reassigned to other suitable positions.
- The employee is incapable of performing the tasks assigned.
Employee Benefits and Contributions
Mandatory benefits required by law to be provided by an employer
National health insurance (NHI). National health insurance contribution allocated among the employer (60%), employee (30%), and the government (10%).
Labor insurance. Taiwanese Legal Entities with more than 5 employees must contribute to labor insurance.
Employment Insurance. Companies with at least one employee in Taiwan must contribute to the insurer’s employment service insurance premium.
Social Security. At least 6% of employees’ monthly wages shall be contributed by the employers in Taiwan.
Time off from work. Employers must give employees one regular day off per 7-day work week, along with a rest day. In the past, Taiwanese employees were known for working straight through a 7-day week, but a 5-day week is becoming more normal. Under these new rules, employers must pay a high amount of overtime work.
Employees are permitted to work 54 hours of overtime per month but not more than 138 hours in a three-month period. Employers may also provide extra leave as compensation for overtime work.
Maternity leave. Female employees have the right to eight weeks of maternity leave. If they’ve been working for the company for longer than 6 months, this leave is fully paid at salary, if less than 6 months, it is paid at 50% of salary.
Annual leave in Taiwan. One benefit for employees in Taiwan are days off for public holidays.
In addition, employees are entitled to annual leave, depending on the time they have worked for a company.
Probationary periods are not mentioned in the Labour Standards Act (LSA), but have been common practice in Taiwan. During probationary periods, the employer and the employee have formed an employment relationship and the minimum work conditions under the LSA still apply. The general rule of termination notice period under the LSA also applies to termination by either party during the probationary period, which is 10 days for an employment term of three months or more but less than one year. No advance notice is required for an employment term of less than three months.
Overall, working hours cannot exceed 12 hours a day (regular working hours plus overtime hours), and the maximum amount of overtime hours currently allowed is 46 hours per month. Subject to certain exceptions, overtime hours worked on flexible rest days will count towards an employee’s total overtime hours.
Taiwan’s amended Labor Standards Act provides that overtime can now be calculated over a consecutive three-month period by employers and may not exceed 54 hours in one month and 138 hours in three months. The start and end date of this period can be agreed upon by the employer and employee. To implement this overtime policy, the employer must obtain consent from the relevant labor union, or if there is no labor union, the approval of a labor-management conference. If the company has 30 or more employees (including the employees of that company’s branches or subsidiaries), this change must be reported to the local labor authority. The deadline for reporting these matters is one day prior to the effective date of the changes.
The overtime payment calculations for overtime work completed by employees on workdays are as follows:
- Between eight and up to ten hours: 1.34 times the regular hourly wage
- Over ten hours and up to 12 hours: 1.67 times the regular hourly wage.
The new overtime payment calculations for overtime work completed by employees on flexible rest days are as follows:
- Between 0 and up to two hours: 1.34 times the regular hourly wage
- Over two hours and up to eight hours: 1.67 times the regular hourly wage
- Over eight hours and up to 12 hours: 2.67 times the regular hourly wage.
Actual time worked will now be calculated at the top end of three four-hour periods:
- Less than four hours worked will be counted as the employee having worked four hours.
- Between four and eight hours worked will count as the employee having worked eight hours.
- Between eight and 12 hours will count as the employee has worked 12 hours.
An employee can work no more than eight hours a day (not including overtime) and no more than 40 hours per week, and must have at least two rest days every seven days, with one mandatory day off and one flexible rest day. An employee cannot agree to work on the mandatory rest day. The employee may agree to work on the flexible rest day but higher overtime rates will apply.
Employees must be allowed to take a 30-minute break every four hours. However, these breaks can be rescheduled to be taken within other working hours if a rotation system is implemented, or where the work is of a continuous or urgent nature. Employees on rotation must have a rest break of at least 11 hours before commencing their next shift.
Employees working under challenging or difficult conditions or with dangerous machinery must be provided with shorter working hours and longer rest breaks.
Workers on a day/night shifts must be rotated on a weekly basis, except when expressly consented to by the employee. Appropriate rest breaks must be granted.
Any shift changes in the rotation system must be specified in the employment contract.
Increased statutory annual leave entitlement: Statutory annual leave entitlement, which is based on length of service:
- Between 6 months and 1 year’s service : 3 days leave
- Between 1 and 2 years’ service: 7 days leave
- Between 2 and 3 years’ service: 10 days leave
- Between 3 and 5 years’ service: 14 days leave
- Between 5 and 10 years’ service: 15 days leave.
When an employee attains 10 years’ service, they get one additional day’s holiday for each year they work, starting from the 10th year, but up to a maximum of 30 days annual leave.
Employees can take the following sick leave:
- 30 days ordinary sick leave a year where the employee is not hospitalized.
- One year of sick leave within a two-year period where the employee is hospitalized.
The combined number of sick days taken generally cannot exceed one year within a two-year period. Employers can grant additional leave beyond the maximum one-year period at their discretion, or they can choose to terminate the employment relationship.
However, in the event of disability, injury or sickness on account of an occupational accident, an employee will be entitled to occupational sickness leave during the period of medical treatment or recuperation. This period of sick leave can exceed one year in a two-year period until the employee has recovered.
Entitlement to paid time off
Half-pay must be provided to employees on ordinary sick leave for up to 30 days in one year. If the injury or sickness is partially covered by labor insurance, but the amount of compensation is less than half of the employee’s wage, the employer must cover the balance.
When an employee is not able to work due to disability, injury or sickness as a result of an occupational accident, the employer must pay compensation on the basis of the employee’s full wage. If the employee does not recover after two years and has been diagnosed and confirmed by a designated hospital as being unable to perform the original work but does not meet the disability requirements, the employer can pay one lump sum equal to 40 months’ average wage. Employers must obtain agreement from employees to pay this on a monthly basis, and agree on what that basis is. There is no prescribed maximum time frame to make payments.
Entitlement to unpaid time off
Employees can take additional unpaid leave with employer’s approval if their paid sick leave and annual leave allowances have been used.
The employer can grant the employee an absence of leave without pay for a maximum period of one year.
Maternity leave. Employees with at least six months’ service are entitled to eight weeks’ paid maternity leave. Employees with less than six months’ service are entitled to eight weeks’ leave at 50% of their normal pay.
Pregnant employees can apply to be transferred to lighter work upon request and without a reduction in salary. Under the Act for Gender Equality in Employment, breastfeeding employees with a child under two years of age are entitled to an extra 60 minutes a day, in addition to normal break periods, and an additional 30 minutes for overtime that exceeds one hour. These breaks are considered part of the employee’s working hours.
Employees are entitled to paid leave if they experience a miscarriage. Employees who experience a miscarriage are given leave in accordance with the duration of the pregnancy, as follows:
- Employees who were pregnant for less than two months are given five days’ leave.
- Employees who were pregnant for more than two months but less than three months are given one week’s leave.
- Employees who were pregnant for three months or more are given four weeks’ leave.
Pregnant employees must be granted five days of leave for pregnancy check-ups, during which regular wages must be paid. Where a doctor has determined that the pregnancy is high-risk, the employee is entitled to hospitalized sick leave.
Pregnant or breastfeeding employees must not work between 10 pm and 6 am. Employers are prohibited from terminating an employment contract during maternity leave.
Paternity leave. Employers must grant five days’ paid paternity leave to employees whose spouse is in labor.
Employees are entitled to parental leave without pay provided that:
- The employee has worked for the employer for at least six months.
- The child has not reached three years of age.
- The employee’s spouse is employed.
Acumen International can help you fast-track your possibilities of entering and expanding your business in Taiwan by providing you with our Employer of Record services. Our unique mix of PEO/EOR solutions will enable you to jumpstart your global operations almost immediately, cost-effectively and compliantly without any need to set up a legal entity first or afterwards.