Definitive Guide to Hiring in Taiwan

Hiring in Taiwan

Hiring employees compliantly in Taiwan means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Taiwan so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Taiwan; or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Labor Laws in Taiwan

Employee Probation Period

• There is no maximum period for the trial period in Taiwan, where the length of probationary periods is open to negotiate between the employer and employee.
• It is widely practiced that a three months’ trial period is used.

Annual Leave in Taiwan

• In Taiwan, all employees are entitled to paid annual leave, which is determined based on the employee’s years of service with the company.
  • If the employment period is between 6 months and 1 year, paid annual leave is of 3 days
  • If the employment period is between 1 year and 2 years, paid annual leave is of 7 days
  • If the employment period is between 2 years and 3 years, paid annual leave is of 10 days
  • If the employment period is between 3 years and 5 years, paid annual leave is of 14 days
  • If the employment period is between 5 years and 10 years, paid annual leave is of 15 days
  • If the employment period is more than 10 years, paid annual leave is of 15 days plus 1 additional day per year of service over 10 years, up to a maximum of 30 days

Holidays in Taiwan

Here is the full list of public holidays in Taiwan:

Maternity Leave Taiwan

• Female employees are entitled to maternity leave before and after childbirth for a combined period of eight weeks.
• If the employee has more than six months of service, she is entitled to full pay during her maternity leave.
• If she has been working less than six months, she is entitled to half-pay.

Paternity Leave Taiwan

• A male employee is entitled to five days of paid paternity leave when the mother of his child gives birth.

Sick Leave in Taiwan

• Employees are entitled to ordinary sick leave of 30 days per year, which is paid at half-pay.
• In addition, if an employee is hospitalized, s/he is entitled to unpaid sick leave of up to one year.
• Total sick leave cannot exceed one year in every two consecutive years.

Working Hours in Taiwan

• 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.

Overtime in Taiwan

• 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 overtime payment calculations for overtime work completed by employees on work days are as follows:
  • When the overtime work does not exceed 2 hours, the worker shall be paid, in addition to the regular hourly wage, at least an additional one-third of the regular hourly rate.
  • When the overtime work is over 2 hours, but the total overtime work does not exceed 4 hours, the worker shall be paid, in addition to the regular hourly wage, at least an additional two-thirds of the regular hourly rate.
  • When the overtime work requested is governed by the rotation system the worker shall be paid two times the regular hourly rate.

Termination of Employment in Taiwan

• As Taiwan is not an at-will termination jurisdiction, any termination must be carried out according to one of the specifically allowed circumstances for unilateral termination under the Labor Standards Act.
• An employer can terminate an employment contract with notice (or with pay in lieu of notice) and 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.
• An employer can terminate an employment contract without advance notice or severance pay only in one of the following circumstances:
  • Misrepresentation of the facts by the employee at the time the labor contract was signed which leads, or may lead, to the employer suffering damage.
  • Serious breaches by the employee of the employment contract or work rules.
  • The employee has been sentenced to temporary imprisonment in a final judgment, which cannot be suspended or commuted to a fine.
  • Purposeful damage or abuse to the employer's property by the employee.
  • Intentional disclosure by the employee of the employer's technological or business secrets.
  • The employee's absence from work for three consecutive days, or for six days in a month, without justifiable reasons.

Notice Period in Taiwan

• 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.
• 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 indefinite-term contracts must give the same amount of notice as employers

Severance in Taiwan

• For severance pay under the Labor Standards Act (LSA), severance pay will be equal to one month of average wages for each year of service for an employee who has been continuously employed by the same entity.
• An employee who has worked for less than a year will be entitled to severance pay in proportion to the months of service, with a fraction of a month deemed equal to one month.
• For severance pay under the Labor Pension Act (LPA), entitlement to severance pay is still calculated based on one month's average wages for each year of service, but the amount payable for each year of service will be equal to 50% of the employee's average monthly wage, for up to a maximum of six month's pay.

Taiwan Salary and Wages

13 / 14th Month Salary in Taiwan

• Yes
• There is no statutory requirement to pay the 13th or the 14th month salary.
• However, it is customary for employees to pay the 13th month salary.
• This is usually paid before the Chinese New Year. Some employers also pay the 14th salary.

• There is no social security tax in Taiwan, but factories, mines, and all companies with 50 or more employees must establish funds for employee welfare.
• When an enterprise is founded, 1% to 5% of its registered capital, amounts equal to 0.05% to 0.15% of monthly revenue, 0.5% of the monthly wage and allowances of each employee, and 20% to 40% of the proceeds from the sale of scrap or waste materials at the time of each sale, must be set aside and added to the employee welfare fund.
• There are two social security programs in Taiwan: Labor Insurance and National Health Insurance.
  • For Labor Insurance, the overall rate is 11.5% of the insured person's monthly insurance salary.
  • The employer contributes 70% of that amount, the employee contributes 20%, and the government contributes 10%.
  • For National Health Insurance, the rate is 4.69% and the employer contributes 60%, the employee 30%, and the government 10% of the total.
• A 2.11% supplemental premium is imposed on all other income (at different thresholds) received by the insured, including substantial bonuses, income from a professional practice, dividend income, interest income, rental income, and income from part-time employment.
• In addition, employers are required to contribute 6% of an employee’s monthly salary to employees’ pension accounts at the Bureau of Labor Insurance. Contributions are voluntary for employees.

Immigration Taiwan

• Foreign nationals who intend to work in Taiwan must apply for employment authorizations (work permits).
• An expatriate’s entry, residence and departure are governed by the Ministry of Foreign Affairs and the National Immigration Agency.
• The Employment Rules apply to foreign nationals who wish to work in Taiwan.
• For most professional foreign expatriates, the three types of job categories are described below.

Type A

• The Type A category includes specialized or technical workers.
• To qualify as a specialized or technical worker, foreign employees must possess one of the following qualifications:
• A PhD or master’s degree in a related field.
• A bachelor’s degree in a related field with more than two years of work experience in a related field.
• Proof of employment in a related field for more than five years, and during this period, the completion of related training and the receipt of awards or recommendations from employers. Foreign employees must satisfy all three of these requirements.
• Employment with a multinational enterprise for more than one year and an assignment to work in Taiwan from the multinational enterprise.
• An employer must satisfy one of the following conditions to hire foreign specialized or technical workers in the manufacturing industry or the wholesale business:
  • Sales volume of TWD10 million for the preceding year or an average of TWD10 million for the preceding three years
  • Total import and export volume of USD1 million for the preceding year or an average of USD1 million for the preceding three years
  • Total import and export commission revenue of USD400,000 for the preceding year or an average of USD400,000 for the preceding three years
  • Company that has been incorporated for less than one year and has paid-in capital of TWD5 million
  • Foreign branch that has been established for less than one year and has registered working capital of TWD5 million
  • Foreign representative office that has been approved by the government authorities and has been operating in Taiwan
  • Research and development center or business operational headquarters that has been approved by the government authorities

Type G

• The Type G category includes contracting foreigners appointed by a foreign legal person to engage in works in order to perform contracts of construction, sale, technical cooperation and other necessities.
• To qualify to hire contracting foreigners, the employer must be the Taiwanese branch (representative agency) or contracted foreign entity (agent authorized by a foreign legal person).
• If a foreign corporation performing a contract needs to assign an expatriate to Taiwan to fulfill contractual obligations, the expatriate can apply for a work permit.
• Normally, the duration of such work permit may not exceed one year, but it is possible to apply for a renewal.
• The entry visa held by such foreign employee is deemed to be a work permit for up to 30 days.
• The work permit for the foreign employee must be applied for within 30 days following the employee’s arrival in Taiwan if the employee wishes to work for more than 30 days.
• Foreign nationals may not be self-employed in Taiwan

Value Added Tax (VAT) in Taiwan

• VAT is applicable to general industries, and the VAT rate is 5%.
• Under the VAT system, each seller collects output VAT from the buyer at the time of sale, deducts input VAT paid on purchases from output VAT, and remits the balance to the tax authority.
• The sales amount from reinsurance premiums shall be taxed at 1%.
• A 2% tax rate shall apply to the enterprises for their sales amounts which are connected exclusively with their core business

Mandatory Benefits in Taiwan

• These are mandatory benefits as postulated by law
• These include annual leave, public holidays, sick leave, maternity leave, paternity leave, overtime pay, notice period, and severance pay.
• Mandatory benefits also include social security benefits.

Payroll Accrual in Taiwan

Country Accruals Additional Information

Description

A Taiwanese enterprise normally makes a contribution of 6 percent of earnings into employees’ individual pension fund accounts for its Taiwanese employees, and 2 percent to 15 percent of earnings to its non-Taiwanese employees’ pension fund accounts to comply with the Labor Bureau’s regulations for foreign employees.

There is no requirement for Taiwan enterprises to contribute to a retirement fund for expatriates if the expatriate’s compensation is paid by a foreign employer, with no recharge to a Taiwanese enterprise.

National health insurance is 4.69 percent of gross salary where employers are liable for 60 percent of the premium, employees are liable for 30 percent of the premium, and the government is liable for the remaining 10 percent. The insurable amount is capped. Labor insurance premium contributions also must be made by the employer, employee and the government.

The insurance rate is currently 10 percent (employer at 7 percent, employee at 2 percent and the government at 1 percent respectively) of gross salary. The insurable amount is capped.

Payroll Accruals Additional Information

Accrued Benefits in Taiwan

Why use Global Expansion to hire in Taiwan

Establishing a branch office or subsidiary in Taiwan can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Taiwan labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Taiwan law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Taiwan. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Taiwan Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.