Employment Law

Types of Employment Contracts in Taiwan

Historically, individual employment contracts were not common in Taiwan. However, in today's employment landscape, individual employment contracts are common in Taiwan.

Although individual employment contracts are not compulsory, it is recommended that employers enter into these contracts when hiring new employees. Best practice is to draft a concise written contract in the local language. The contract should clearly define the employee's job description, responsibilities, and compensation and benefits for the role.

In Taiwan, both offer letters and employment contracts should state the amount of salary and any compensation in New Taiwan Dollars (NTD/NTD). Remoly can assist you with drafting employment contracts through our Taiwan PEO or your own local entity.

Taiwan's employment regulations are generally covered by the Labor Standards Act (LSA). However, there are some occupations in Taiwan that are not covered by this law. In this case, the Civil Code covers terms and conditions in personal contracts that are not covered by the LSA.

There are two main types of employment contracts recognized by the LSA. These contracts apply to fixed-term and non-fixed-term employment. Fixed-term employment can be divided into:

• Temporary or short-term employment – ​​up to six months.
• Seasonal work – up to nine months.
• Special jobs – The duration of this form of employment is specified in the LSA. For special jobs, approval is required if the employment period exceeds one year.

All employers with more than 30 employees must register their written work rules with the local labor department in Taiwan.

Fixed Term

Indefinite

Taiwan Working Hours

In Taiwan, the average working week is 40 hours - 8 hours per working day.

With the exception of the entity's most senior country managers, all Taiwanese employees are eligible for overtime, even if they are salaried. Overtime pay for the first two hours of the standard working day is paid at 133%. The overtime rate for the next two hours is 166%.

If overtime occurs on a public holiday or rest day, there will be subsequent rules and fees. In Taiwan, it is illegal for employers to require employees to work overtime on rest days.

Taiwan Public Holidays

There are public holidays in Taiwan, and employees can take time off. these public holidays.

If any of those days falls on a Saturday, the preceding Friday will be a public holiday. Alternatively, if any of these days falls on a Sunday, the following Monday will be a public holiday.

Income Tax

In Taiwan, employees pay progressive income tax. The maximum tax rate is approximately 45%, and the salary level starts at NT$10,310,001.

Employers in Taiwan must comply with local labor laws that require the payment of certain benefits. Employers must provide benefits to their employees and assist them in joining the national social security system. In addition, employers must pay for the following types of insurance:

• Labor insurance - 9.5% of employee insurance level
• Employment Insurance – 1% of employee coverage level
• Health insurance - accounts for 4.69% of employee coverage levels. Of this, 60% is paid by the employer, 30% is paid by the employee, and 10% is paid by the Taiwan government.

Employers in Taiwan are also required to contribute at least 6% of the participation level into their employees' pension plans. The benefit is deposited into the employee's personal pension account.

Health Insurance

All employers in Taiwan are required to join and participate in the National Health Insurance Act (NHIA). The NHIA requires all employers to provide comprehensive health insurance to their employees.

It is not compulsory for employers to provide private health insurance to their employees. However, many senior executives in Taiwan have some form of private health insurance as part of their benefits.

When an employer chooses to provide supplemental benefits to employees, it is usually through a personal allowance. Employees can then purchase a health care plan that meets their requirements. Employers should budget no less than $300 to cover private health insurance costs.

For employees who need to travel outside Taiwan (as part of their job duties), they need appropriate travel insurance. The policy must include provisions for trip cancellation, baggage, medical repatriation, evacuation and emergency travel expenses. Employees who need to purchase travel insurance can reimburse their expenses through normal reimbursement channels.

Holiday Policy

Take a Vacation

All employees in Taiwan are entitled to paid annual leave. The length of annual leave depends on the number of years the employee has been with the company.

• Employees who have worked for the company for more than half a year but less than one year are entitled to three days of annual leave.
• Employees who have worked for the company for more than one year but less than two years are entitled to 7 days of annual leave.
• Employees who have worked for the company for more than two years but less than three years are entitled to 10 days of annual leave.
• Employees who have worked for the company for three years but less than five years are entitled to 14 days of annual leave.
• Employees who have worked for the company for more than 5 years but less than 10 years are entitled to 15 days of annual leave.
• For employees who have been with the company for more than 10 years, they are entitled to 15 days of annual leave, plus one more day for each year of service - up to a maximum of 30 days of annual leave.

Sick Leave

Taiwanese employees are entitled to 30 days of sick leave per year. The pay rate is half the standard salary. If an employee is hospitalized, they are entitled to up to one year of unpaid sick leave.

The total number of sick days in Taiwan shall not exceed one year for every two consecutive years.

Maternity and Paternity Leave in Taiwan

In Taiwan, female employees are entitled to maternity leave before and after childbirth. The combined duration of maternity leave is eight weeks.

• Female employees who have worked for the company for more than six months are entitled to full salary during maternity leave.
• Female employees who have worked for the company for less than six months can enjoy half pay during maternity leave.

Taiwanese male employees are entitled to five days of paid paternity leave. The mother of the male employee's child can be photographed after giving birth.

Termination and Severance

There is no mandatory probation period in Taiwan. Even if a probationary period is provided for in the employment contract, if the employee is dismissed during the probationary period, all requirements related to statutory reasons, advance notice and severance pay also apply to the dismissal. In Taiwan, there are restrictions on terminating employment. For an employee to be terminated, the termination must be for one or more of the following reasons:

• The business has closed or ownership has been transferred to another employer.
• The employer's business has been forced to suspend for more than a month.
• The nature of the employer's business has changed. Therefore, the number of employees needs to be reduced.

The employee is deemed incapable of performing the required work. In any of the above circumstances, the employer must provide the employee with reasonable notice and pay the employee. The only circumstances in which notice and severance are not required are serious violations. This may include situations where an employee is violent towards their employer or co-workers, or intentionally causes damage to property. Where the employer or employee is required to provide notice, the following periods apply:

• For employees who have worked for the company for more than three months but less than one year, 10 days' notice is required.
• For employees who have worked for the company for more than one year but less than three years, 20 days' notice is required.
• For employees who have served the company for more than three years, 30 days' notice is required.

Taiwanese employees are entitled to two days of paid leave per week during the notice period. This could be to find a new job. Employers may choose to pay in lieu of a specified notice period. For companies expanding overseas for the first time, dealing with employee layoffs and dealing with severance packages can be complicated. Remoly's Taiwan PEOs can reduce risk for foreign companies and provide guidance in the process.

Salary and Benefits

Taiwan Compensation Law

The minimum wage in Taiwan is NT$23,100 per month. After calculation, the minimum hourly wage is NT$150.

Taiwanese employers must comply with strict overtime laws. For the first two hours of overtime, eligible employees must be paid 133% of their regular rate. For the two hours after overtime, employees must be paid 166% of their regular rate.

Employment law also imposes additional provisions on employees working overtime on rest days or public holidays. In this case, the employer usually requires the employee to request management approval before starting to work overtime. This is because unpaid overtime wages may alter an employee's termination and severance pay.

Taiwan Welfare Protection

In terms of protecting benefits, Taiwanese employers need to include legal minimums regarding vacation, health insurance, maternity leave, and paternity leave.

Taiwan has nine public holidays every year, and employees can enjoy a day off. In addition, employees are eligible for paid annual leave based on the number of years they have been with the company.

Female employees in Taiwan are entitled to a total of eight weeks of maternity leave before and after childbirth. Female employees who have worked for the company for more than six months are entitled to fully paid maternity leave. For those who have worked for less than six months, they can take maternity leave at half pay.

Male employees in Taiwan are eligible for five days of paid paternity leave.

Taiwan Welfare Management

Taiwanese employers should be aware of the voluntary benefits that many employees expect. These benefits include:

• housing subsidy
• meal allowance
• Separation Benefits (LSB)
• Life, accident and business travel insurance
• holiday bonus
• Medical benefits extended to employee’s spouse or children

Benefits and Compensation Limitations

In Taiwan, most benefits and pay restrictions stem from collective bargaining agreements or labor unions. Although unions are not common in Taiwan, employers are advised to check whether their industry or employees are protected by such unions.