Valid Reasons for Terminating Employment in Taiwan

In Taiwan (China), labor laws clearly define circumstances under which an employer can lawfully terminate an employment contract. When certain conditions are met, the employer is obligated to provide notice and severance pay. These conditions include:

- Business Discontinuation or Ownership Transfer:

Employers may terminate contracts if the business is shutting down or being sold to a new owner.

- Change in Business Nature:

If the nature of the business changes and results in workforce reduction, and affected employees cannot be reassigned to other suitable roles, termination is permitted.

- Financial Losses or Business Downsizing:

Significant financial losses or a necessary reduction in business operations can justify termination.

- Force Majeure Events:

If operations are halted for more than a month due to unforeseen circumstances beyond the employer’s control, employment termination may be considered.

- Inability to Perform Assigned Tasks:

If an employee is unable to fulfill their job duties, this can be a valid reason for termination.

In certain cases, an employer in Taiwan can terminate employment without notice or severance pay. These situations include:

- Unjustified Absenteeism:

An employee missing work for three consecutive days or six days in a month without a valid reason.

- Deception at Contract Signing:

If an employee provides false information during the hiring process, causing potential harm to the employer.

- Serious Contract Breaches:

Any severe violation of the employment contract or company policies.

- Intentional Disclosure of Secrets:

Unauthorized sharing of the employer’s technological or business secrets.

- Violence or Threats:

Any violent acts directed at the employer, their family, representatives, or other employees.

- Imprisonment:

An employee sentenced to temporary imprisonment that cannot be suspended or converted to a fine.

- Damage to Employer’s Property:

Purposeful damage or misuse of the employer’s property by the employee.

Unfair Reasons for Terminating Employment in Taiwan

Taiwan is not an at-will employment jurisdiction. This means employers cannot terminate employees for arbitrary reasons. The Labor Standards Act (LSA) strictly limits termination to the valid grounds mentioned above. Any other type of dismissal, such as discretionary or unjustified termination, is considered illegal and will be deemed unfair by the Labor Courts.

Proper Dismissal Procedure in Taiwan

When an employer decides to terminate an employee, they must adhere to a specific process:

- Written Notification:

The employer must formally notify the employee in writing, detailing the reasons for termination. This notice must be sent via courier, ensuring the employee’s signature upon receipt.

- No Need for Government Approval:

Employers are not required to obtain permission from local authorities to execute a lawful dismissal. However, they must notify the local authority of the dismissal at least 10 days before it takes effect.

- Notice and Severance Pay:

Employers are required to provide appropriate notice and severance pay unless the termination falls under one of the grounds that does not necessitate these obligations.

Resignation Procedure in Taiwan

Employees in Taiwan wishing to resign must follow a set procedure:

- Advance Written Notice:

Employees are required to submit a written resignation statement to their employer, clearly stating the reason for leaving.

- Proper Notice Period:

The resignation must include the correct notice period, allowing the employer to make necessary arrangements.

By understanding these employment laws and procedures in Taiwan, both employers and employees can navigate the complexities of contract termination, dismissal, and resignation more effectively, ensuring compliance with local labor standards.