Business in Taiwan? Guide to Taiwan Employment & Payrolling

 By Scott Thomson – Chief Operating Officer, Links International

Rated as the 10th easiest place to do business in the world by the World Bank, Taiwan is an exciting investment prospect in Asia, as the 5th largest economy in the region shows signs of recovery. Expanding your business to Taiwan all starts with your people on the ground! Here’s our guide to what you need to know about Taiwan labour law and employing staff in Taiwan.

Is employment law in Taiwan employer friendly?

Labour law in Taiwan is relatively employee friendly, compared with other major hubs in the region like Hong Kong and Singapore. The Labor Standards Act has a number of rules that protect employees, including mandatory social contributions, overtime rules and statutory requirements that regulate unilateral termination. For employers who have a presence in China, Taiwan labour law and payroll rules in Taiwan have a number of structural similarities to China labour law and payroll rules (however, similar in structure only!).

How do labour or employment contracts work in Taiwan?


Labour contracts are required to detail certain essential terms of employment terms, including the work location, duties, start time and finish time, leave, wages, rules of conduct. Employment contracts do not have to be in written format (but obviously recommended in the event of a dispute). Generally speaking, a labour relationship can take two main forms:

  • Fixed Term (temporary, short term, seasonal) – generally speaking, labour contracts relating to temporary, short-term, seasonal or specified work (for a specific period) are fixed-term labour contracts;
  • Indefinite term contract – open-ended contract with no fixed end date.

The type of contract entered determines the entitlements of the employee, so it is critical to ensure that employers use the most appropriate labour contract to ensure at a minimum that they understand how to pay employees and their employees’ entitlements. For example, fixed term workers essentially receive similar benefits to indefinite-term workers. However, fixed term workers are generally not entitled to severance payments upon expiration of their employment term. Employers in Taiwan should also understand that there are also circumstances in which a fixed term contract can become an indefinite term contract, including in the event of certain back to back employment contracts and if an employer does not raise concerns with an employee working beyond the expiration date of certain fixed-term contracts. Engaging a good Taiwan HR agency will ensure that the correct labour contract is put in place and maintained.

Who can work in Taiwan?

Employing-in-Taiwan03.jpgSimilar to most countries in Asia, all foreigners working in Taiwan must have a work permit to work in Taiwan, which is generally applied for by the employer. Once a work permit is granted, the employee also needs to obtain a Residence Visa and Alien Resident Certificate to reside in Taiwan (a period of between one to three years). There are exceptions where foreigners do not require a work permit, including if the foreigner is married to a Taiwanese national. Engaging external help in respect of obtaining the right to work in Taiwan is recommended as a good way to prevent a bad onboarding experience as a result of a poor visa application process.

Do Taiwan employment contracts need to be in Chinese?

No, written labour contracts do not need to be in Chinese. However, it is common for the Taiwan Government Departments to request for labour contracts to be translated into Chinese in the event that they need to review the contract (e.g. work permit application). Accordingly, most MNCs will usually have Taiwan labour contracts in both English and Chinese for practical purposes.

What is the approximate cost of Taiwan social security contributions on top of salary?

Taiwan mandatory social security contributions that an employer is required to contribute towards include Taiwan Labor Insurance, National Health Insurance, Labor Pension and Employment Service Insurance. The amount required to be contributed by the employer and employee depends on a number of factors (including salary levels, the type of social security contribution, number of employees in the company, etc.), but as a rough guide, an employer can expect to contribute approximately an additional 15-20% on top of a local employee’s gross salary in mandatory contributions. There are ceilings on most of the mandatory contributions, which have the effect of capping the employer’s contributions at higher income levels. Accordingly, the total salary cost of the local employee for the employer will be the gross salary plus the mandatory contributions.

Are there limits on overtime and overtime rates?

Employing-in-Taiwan05.jpgYes, Taiwan has overtime specific rules which protect employees from being exploited through overtime. Generally speaking, an employee’s normal work hours cannot exceed 8 hours per day (excluding overtime) and not more than 40 hours per week. Total working hours including overtime hours cannot exceed more than 12 hours per day and 46 hours per month (at the time of this article). However, it is possible for certain industries to opt out of these restrictions by creating a framework of flexible working hours and receive approval from a union or labour-management conference. Overtime rules become very complicated (e.g. rates depend on day of the week) and outsourcing payroll calculations to an HR agency in Taiwan is a great, cost effective way of keeping on top of your payroll calculation, changes in employment law and paying employees in Taiwan.

Under what circumstances can an employee be terminated in Taiwan?

In short, instances that an employer can terminate a labour contract in Taiwan are somewhat limited due to the relatively employee-friendly labour law of Taiwan. Instances when an employer may terminate a labour contract with notice and severance pay include:

  •         Ceasing of business or change in ownership;
  •         Business losses or curtailment of business operations;
  •         Suspension of operations for over one month as a result of a force majeure event;
  •         Alteration of the business nature resulting in redundancy; or
  •         The employee is incapable of performing their assigned job.

Circumstances under which an employer can terminate a labour contract without notice or severance payments effectively amount to what most companies would consider gross misconduct (e.g. serious misrepresentation of facts at the time of employment, theft, violence, disclosure of confidential information, abandonment, and incarceration).

What is the level of risk associated with corruption and fraud in Taiwan?

Employing-in-Taiwan04.jpgFortunately, Taiwan has a relatively good reputation in terms of corruption and is generally perceived as one of the easier places to do business in Asia. However, given Taiwan tends to be a relatively small market in Asia for companies outside of the semi-conductor and electronics industries, most foreign companies will manage their payroll risk in Taiwan by outsourcing their payroll, as the cost of maintaining a Taiwan specific payroll skillset is relatively high compared to the size of their workforce in Taiwan. Typically an MNC’s HR decision making process for Taiwan will be made from their regional HR team in China, Hong Kong, Singapore or Japan and so using a good payroll services provider in Taiwan who also has a presence in one of these countries is a common way of effectively managing Taiwan employment compliance and payroll risk.

Links International was voted Best Payroll Outsourcing Partner in 2015 and 2016 and provides payroll processing, work permit applications and HR support in Taiwan, as well as 14+ other locations across Asia-Pacific.

Are you interested in outsourcing your payroll in Taiwan? Get a free, no-obligations quote by enquiring now.