Guide to Hiring in Taiwan

Labour Law – Basics

What are the different work permits and visas in Taiwan?

There are 3 main steps to secure permission to work in Taiwan.

• Obtain a work permit – this is the document that allows employees to legally work in Taiwan. Work permit applicants must typically meet the following criteria:
  • Have at least 5 years of working experience in the field
  • Have a job offer
  • Be offered a salary that meets the minimum salary requirements

• Obtain a work visa – this allows the visa holder to travel to Taiwan for employment purposes. An application for a work visa can be made to the Taiwanese Bureau of Consular Affairs in the country where the employee lives, or to the Bureau of Consular Affairs if the employee is already in Taiwan.
• Obtain a residence permit – known as the Alien Resident Certificate (ARC), this document allows employees to legally reside in Taiwan. After an employee receives a Taiwan work visa and travels to Taiwan, they will need to get an ARC from the National Immigration Agency within 15 days of arrival. The ARC allows the employee to conduct daily activities without having to carry their passport around.

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:

1. Permission to hire must be obtained from the competent authorities.
2. Individuals from the Mainland can be employed in Taiwan for a maximum period of one year without changing employers or job positions.
3. In some circumstances, with permission from the competent authorities, individuals from the Mainland can change employers or job positions if their current employer shuts down or suspends business operations, or in other extraordinary situations.
4. If individuals from the Mainland change employers or job positions as mentioned above, the duration of their employment will be calculated by combining the periods of employment before and after the change.
5. Employment contracts for individuals from the Mainland should be of a fixed-term nature.

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.

What are the basic requirements for employers in Taiwan?

• Mandatory Statutory Contributions

Employers in Taiwan are expected to contribute to several funds for their employees each month, such as:

• • Labor Insurance – 7.70%
  • Employment Insurance – 0.7%
  • Pension Fund – 6%
  • Health Insurance – 4.87014%

• Type of Labor Contracts

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:

• • Temporary or short-term work of up to six months.
  • Seasonal work, of no more than nine months duration.
  • Special work, the duration of which is specified; approval is needed if such employment will last longer than a year.

Both of these are recognised by the Labor Standards Act, Taiwan’s primary labour legislation.

• Written Work Rules

If a company has more than 30 employees, it is required to have its written work rules registered with the local labour law authority.

What are the different discrimination laws in Taiwan?

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.

What are the working hours in Taiwan?

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:

• First two hours of overtime: 134% of the regular salary rate
• Following two hours of overtime: 167% of the regular salary rate

What is the legal probation period in Taiwan?

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.

What are the minimum wage requirements in Taiwan?

Starting 1 January 2023, Taiwan’s minimum wage has been increased to:

• NTS26,400.00 per month
• 00 per hour

This marks the 7^th 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.

What to note for existing employees?

• 13^th/14^th Month Salaries

There is no law that makes 13^th and 14^th 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.

• Individual Income Tax

Tax rates depend on the employee’s status in Taiwan:

• A non-resident alien residing in Taiwan for less than 90 days in a calendar year – subject to 18% withholding tax (WHT) on salary remuneration.
• A non-resident alien residing in Taiwan for more than 90 days but less than 183 days in a calendar year – subject to tax at a flat rate of 18% on Taiwan taxable salary income.
• A resident alien – subject to a progressive tax rate as follows:

Source: Tax Office

Termination of Employment – Severance Payment & Protection Against Dismissal

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 employer is closing the business or ownership is transferred.
• The operations of the employer are suspended for more than one month by reason of force.
• The business nature of the employer is altered, requiring a reduction in the number or employees and there are no suitable job openings for the redundant employees.

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.

Notice Period

• • 10 days’ notice for employees with more than three months but less than one year of service.
  • 20 days’ notice for employees with more than one year but less than three years of service.
  • 30 days’ notice for employees with more than 3 years of service.

Severance Pay

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:

• • one month of average wages for each year of service for an employee who has been continuously employed by the same entity
  • employees who have worked for less than a year will be entitled to severance pay in proportion to their months of service – with a fraction of a month deemed equal to one month

Severance pay under the LPA (for employees who began their current jobs after 1 July 2005):

• • severance is 50% of the average monthly pay per year of service, up to a maximum of six months’ pay

What is the retirement age in Taiwan?

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.

Employment Dispute Channels

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.

Is employment insurance compulsory in Taiwan?

Taiwan has several types of insurance that both employers and employees – and in some instances, the government – must contribute to: