Taiwan boasts a stable and thriving economy, and this has made it an attractive market for entrepreneurs. On top of that, it is in a strategic part of Asia and has served as a gateway to other Asian markets, providing access to a vast consumer base.
The country’s business-friendly environment is characterised by transparent regulations, strong intellectual property protection, and government support for entrepreneurship through incentives and grants. The nation also offers a highly skilled workforce, particularly in science, technology, engineering. If you’re considering expanding into Taiwan, you get to capitalise on the country’s economic strength, supportive ecosystem, and strategic advantages to establish or grow your venture successfully.
Want to hire in Taiwan? This complete guide with Taiwan’s key labour law must-knows is what you’ll need!
*Please note that all the information listed below are to be used as a general guideline. For more detailed accounts of Taiwan employment laws and regulations, please visit the official governmental websites.
There are 3 main steps to secure permission to work in Taiwan.
Hiring workers from the Mainland
Employers in Taiwan who want to hire from Mainland China must follow the following rules that are set in Article 11 of the Act Governing Relations between the People of the Taiwan Area and the Mainland Area:
Hiring workers from Hong Kong and Macau
Effective 7 November 2022, only white-collar workers from Hong Kong and Macau apply to work in Taiwan.
An employer who wishes to hire an employee has to request The Council of Labor Affairs to issue the employee a work permit. Each permit is valid for up to 3 years and can be extended. Employers will have to apply for this extension at least 4 months before the permit expires. If the employee has worked elsewhere previously, the previous employer must cancel the work permit before the current employer can apply for a new one.
There is no legal requirement to provide written employment contracts except in the case of hiring foreign employees. Such contracts must outline key information such as the place of work, duration of employment and salary.
Article 38 of Taiwan’s People with Disabilities Rights Protection Act states that companies with under 67 employees must employ staff with disabilities no less than 1% of the total number of employees, and that the minimum must be one person. Employers do not need to inform the government when hiring employees with disabilities, as the government will already have this information. Employers who fail to do meet the hiring requirement must contribute the following amount to the Disabled Employment Funds:
Required number of disabled employees
Statutory monthly minimum wage
Taiwan released a set of guidelines in early 2023 to regulate how and when wages should be paid each month. The guidelines state:
The Ministry of Labor has clarified that the guidelines are not mandatory legal requirements and have no penalties for those failing to adhere to them. They are, however, intended to encourage businesses to pay wages within specific periods as scheduled in accordance with the guidelines.
Employers in Taiwan are expected to contribute to several funds for their employees each month, such as:
Employers should take note that in Taiwan, there are two main types of labor contracts – non-fixed term contracts and fixed term contracts.
Non-fixed term contracts are for work that goes on for a continuous period. Fixed-period contracts can be:
Both of these are recognised by the Labor Standards Act, Taiwan’s primary labour legislation.
If a company has more than 30 employees, it is required to have its written work rules registered with the local labour law authority.
Taiwan has 2 main legislations for employment discrimination: the Employment Service Act 1992 and the Gender Equality in Employment Act of 2002.
Article 5 of the Employment Service Act 1992 states that “employers cannot discriminate employees and job applicants on the basis of race, class, language, thought, religion, marital status, party affiliation, age, birthplace, one’s provincial/county origin, gender sexual orientation, facial features, appearance, disabilities, and former membership in labor unions” to ensure national workers’ employment opportunity and equality.
The Gender Equality in Employment Act 2002 on the whole looks at ensuring gender equality in the workplace. It has 40 Articles that cover various portions of the law, from specific groups of employees to specific offences and penalties.
Standard working hours are 8 hours a day/ 40 hours per week. Anything exceeding this amount is considered overtime. Overtime is capped at 4 hours a day, so the maximum hours an employee can work in a day is 12 hours. The total overtime hours in a month should not exceed 46 hours.
Overtime pay is typically counted as follows:
Taiwan’s labour laws do not specify a fixed probation period, however it is usual for companies to implement a 3-month probationary period for employees.
Starting 1 January 2023, Taiwan’s minimum wage has been increased to:
This marks the 7th consecutive wage increase in Taiwan since 2016. The current minimum monthly and hourly wages have increased by 31.9% and 46.7%, respectively, from the previous wage hike.
There is no law that makes 13th and 14th salaries mandatory, but it is customary for employers to provide them in Taiwan before Chinese New Year.
Besides that, it is also common for a festival bonus to be given before the Dragon Boat Festival and the Mid-Autumn Festival.
Tax rates depend on the employee’s status in Taiwan:
Source: Tax Office
Generally, terminations in Taiwan are not done at-will, meaning as and when the employer wishes. Rather, there must be a solid reason for termination an employee, such as:
The employee is confirmed to be incompetent to carry out the work assigned to him or her.
For reasons such as the above, the employer will have to abide by the notice period and provide severance pay. However, in cases of termination due to employee misconduct, such as violence, continued absenteeism and misrepresentation, no notice or severance pay is required.
The severance pay that the employee receives depends on whether they’re under the Labor Standards Act (LSA) or the Labor Pension Act (LPA).
Severance pay under the LSA:
Severance pay under the LPA (for employees who began their current jobs after 1 July 2005):
Under the Labor Standards Act, the statutory retirement age in Taiwan is 65 years. However, the law allows workers to apply for voluntary retirement after working for more than 25 years, or when they attain the age of 55 and have worked for 15 years.
Taiwan does not have specific labour courts, however, most courts in Taiwan have a labor division to hear employment disputes. Therefore, employees have the option of going to a civil court, or alternatively, they can go to a local government employment centre.
Employees who have been unfairly dismissed can either be given monetary compensation or be reinstated to their jobs.
Taiwan has several types of insurance that both employers and employees – and in some instances, the government – must contribute to:
|Type of insurance & contribution rate||Portion of contribution|
|Labor insurance (contribution rate is increased yearly – see ‘Relevant Links’ section for more details)|
|National Health Insurance – 5.17% of gross salary|
|Labor Retirement Funds – no less than 6% of employee’s monthly salary|
|Employment Insurance – 1% of employee’s pay|
The amount of statutory paid annual leave granted to employees would depend on their years of service and would be stipulated in the employment contract.
Employees are generally entitled to the following:
|Years of Service||Paid leave|
|6 months to less than a year||3 days|
|1 year||7 days|
|2 years||10 days|
|3 years||14 days|
|5 years||15 days|
For each additional year of service after 10 years of service, one additional day of leave is given, capped at 30 days.
Unused leave will usually have to be compensated for by the employer if not used up by the end of the year, due to resignation, or a layoff.
Compensations are usually calculated as: [daily compensation amount = monthly salary / 30 days].
In lieu of compensation, employees can be allowed to carry forward their leave to the next year, provided both employer and employee agree to it. Leave can usually only be carried forward once.
Sick leave in Taiwan comes in two forms – with hospitalisation and without hospitalisation. Employees are granted 30 days of sick leave without hospitalisation each year. Employees who take this sick leave are entitled to a salary of 50% the usual rate.
In an employee requires hospitalisation, they can take up to 12 months of unpaid leave within 2 years.
Female employees who have been employed for a minimum of 6 months are entitled to 8 weeks of paid maternity leave, at the full salary rate. If an employee has worked for less than 6 months, they will be entitled to 50% of their salary.
Taiwan also grants paid leave for expectant mothers to go for their prenatal appointments, and this was increased from 5 to 7 days in 2022. Employers may claim reimbursement for the 2 extra days from the Bureau of Labor Insurance.
Apart from these, both parentals are allowed to take unpaid parental leave for up to 2 years – each parent can take apply for parental leave twice during that period, with each period lasting for a minimum of 30 days. To be eligible, the following criteria must be met:
While on parental leave, parents can ask for a subsidy through the Employment Insurance Parental Leave allowance. The subsidy provides 80% of the parent’s average salary in the 6 months preceding the leave. Parents can claim this subsidy for 6 months out of the 2 years of leave.
Fathers are entitled to 7 days of paid paternity leave, at 100% salary. This leave can also be taken before the child’s birth, to accompany their spouses during prenatal appointments. A 15-day window is given for paternity leave to be taken before or after the date of delivery.
Like mothers, fathers can also apply for parental leave twice in a period of 2 years. The same eligibility criteria that apply to mothers also applies to fathers.
Employees in Taiwan are granted 12 paid holidays in a year. For a full list of these holidays, refer to the ‘What are the public holidays in Taiwan?’ section below.
Employees in Taiwan are entitled to 2 off days in a week. Of the two days, one is mandatory. The other day is considered flexible, and employees can pay overtime instead if the employee chooses to work on this day.
Employees cannot be required to work for more than 6 consecutive days. However, in certain sectors, employees can be asked to work 12 days in a row and work shifts with only 8 hours of rest in between – provided approval has been obtained from the government.
Employees are entitled to public holidays as follows:
|New Year||1 January|
|Republic Day||1 January|
|Republic Day Holiday||2 January|
|Chinese New Year Holiday||20 January – 27 January|
|228 Peace Memorial Day||27 February – 28 February|
|Children’s Day Holiday||3 April – 4 April|
|Qing Ming Festival||5 April|
|Labor Day||1 May|
|Dragon Boat Festival||22 June – 23 June|
|Mid-Autumn Festival||29 September|
|ROC National Day||17 July|
|New Year||1 January|
|Republic Day||1 January|
|Chinese New Year Holiday||9 February – 14 February|
|228 Peace Memorial Day||28 February|
|Children’s Day Holiday||4 April|
|Qing Ming Festival||4 April|
|Labor Day||1 May|
|Dragon Boat Festival||10 June|
|Mid-Autumn Festival||17 September|
|ROC National Day||10 October|
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*Please note that all the information listed above are to be used as a general guideline. For more detailed accounts of Taiwan employment laws and regulations, please visit the official governmental websites.
Links International is a leading payroll outsourcing provider across Asia Pacific and supports payroll in over 19 locations. Please do not hesitate to contact us.