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Employment in Taiwan

Employment in Taiwan is governed under the Labor Standards Act (LSA), which establishes the minimum terms and conditions of employment in Taiwan. Conditions such as issues on labor contracts, wages, work hours, leaves of absence, compensation, retirement, and benefits all are covered in the LSA. Hiring foreign nationals is governed by the Employment Services Act (ESA). Provisions for labor contracts are not very strict and are flexible. Currently, there is a push for greater flexibility for the LSA to provide fixed-term labor contracts, and to incorporate dispatched workers in employment regulations.


Key points on employment in Taiwan

Taiwanese Labor laws allow the formation of trade unions under the constitution, which may form a larger confederation of businesses for widespread employee representation, such as the Taiwan Confederation of Trade Unions. The formation of employee and employer associations are widely used to discuss and negotiate employment issues, as well as lobbying the government on employment policies.

The Collective Agreements Law provides for collective bargaining arrangements, which occurs at the enterprise level. Although it is allowed, very few employees or employers are under collective bargaining arrangements.

  1. Contracts

    Employment contracts may be in the form of writing or an oral agreement. They are governed by the LSA, while any provisions not covered by the LSA is covered by the Civil Code. Employment contracts may be written in a foreign language if both parties agree, although most are drafted in Mandarin Chinese. Typically, the employment contract must describe the following:

    • Address of workplace
    • Working hours
    • Rest periods
    • Leave and holidays
    • Salary
    • Allowances and bonuses
    • Termination and severance pay
    • Retirement
    • Compensation for injury and sickness
    • Development and training

    Fixed-term contract

    Fixed-term contracts are appropriate when the employment arrangement is for temporary, short-term, seasonal or special work that will have a given period of activity for the employee who must fulfil that obligation, where the employment arrangement ends upon expiry of the contract or satisfying the terms of the contract.

    Fixed-term contracts become indefinite-term contracts when the employee continues to work even when the contract has been terminated due to expiry. In addition, employees who consecutively enter into fixed-term contracts lasting more than 90 days will be considered as working under an indefinite-term contract.

    Indefinite term contract

    Any labor contract for continuous work is considered a non-fixed-term contract.

Employee Entitlements

Information Explanation
Medical Leave ?

Employees receive a maximum of 30 days’ of non-hospitalized sick leave per year, and up to one full year of hospitalized sick leave. After three days of sick leave, employees receive 50% of their regular pay from the employer, and 50% from Labor Insurance. Any cash sickness benefit provided by Labor Insurance that is less than 50% must be made up by the employer.


Employment Termination

Information Explanation
Termination of Employment ?

The termination of employees must ensure that the rights and benefits the employee is entitled to under the LSA are maintained, where termination does not violate these minimum standards. According to the LSA, the employer may not terminate an employment contract unilaterally unless the reason falls under Article 11 or Article 12 of the LSA, which includes causes such as:

  • False or misleading statement by employee that may cause harm to employer
  • Committing acts of violence against the employer
  • The employee is incompetent or incapable of performing his/her duties
  • The employee violates the employment agreement
  • The employer’s business is suspended
  • The employer suffers operating losses or business contraction

For the more severe reasons under Articles 11 and 12, no severance pay or termination notice is required. For less severe reasons or reasons not related to the employee, prior notice should be given, which ranges from 10 days to 30 days depending on the employee’s duration of employment.

Redundancy has a very limited scope for being valid grounds for termination. Only when redundancy is caused by suspension of the employer’s business, operating losses, or business losses may the employer terminate the employee.

Incompetence may be reasonable grounds for termination, given that poor performance has been carried out and improvements for performance has been demanded of the employee. Failure to accomplish the task of the role may deem the employee incompetent, and may be terminated on these grounds.

Outsourcing Employment Through a GEO Employer of Record Service

Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in Taiwan. For companies which intend to employ their staff directly through their incorporated Taiwanese entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in Taiwan.

As a Global Employer Organization (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Taiwan.

The Shield GEO solution is an attractive alternative where

– the company is looking to employ staff quickly

– the company doesn’t have an appropriately incorporated entity in Taiwan

– the company wants to work within a defined budget

– the company wants to limit its initial commitment in Taiwan

– the company needs help with tax, employment, immigration and payroll compliance in Taiwan

Shield GEO can contract directly with the company to employ and payroll their staff in Taiwan. Shield GEO supplies local employment contracts for the staff which ensure that local statutory requirements are met covering issues such as termination, probation periods, leave entitlements and statutory benefits.  Shield GEO is able to advise companies how to cover local employment regulations whilst still providing consistent global employment policies. Understand more about outsourced employment through Shield GEO.



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