Hire and pay employees in Taiwan quickly and compliantly

Complying with labor and employment laws in Taiwan

Taiwan’s labor regulations champion employee rights. The main legislation employers should know is the Labor Standards Act (LSA), which sets forth most of the rules and regulations around working conditions in the country. Whether you’re hiring in the vibrant capital of Taipei or the industrial outskirts of Taichung, abiding by the law is necessary for a steady workforce and smooth expansion in Taiwan.

Like anywhere in the world, Taiwan’s labor and employment laws can be complex, especially for foreign employers. If you’re looking to hire in Taiwan, simplify your compliance work by partnering with Rippling EOR and get expert HR support on local employment regulations so your business is always up to date on the latest laws.

Employment contracts in Taiwan

Written employment contracts aren’t universally required in Taiwan (except for apprentices). However, they’re generally advisable for maintaining clarity between employees and employers. The LSA recognizes two main types of employment contracts: indefinite and definite (or fixed-term). Fixed-term contracts are only allowed under specific circumstances, such as temporary, short-term, and seasonal work arrangements or project-based engagements. The LSA also stipulates maximum lengths for fixed-term contracts:

• Up to six months for temporary or short-term engagements
• Up to nine months for seasonal work
• Over one year for project-specific contracts, but these require prior notification to the appropriate authorities

Article 7 of the Enforcement Rules of the LSA recommends that all employment contracts include certain key details, including:

• Job description and workplace
• Working hours, including any breaks and details about rotational shifts, if applicable
• Salary details, including payment methods and timing of salary payments
• Contract terms, including termination conditions and retirement policies
• Benefits, including severance, pension, and bonuses
• Worker responsibilities for expenses they incur during job duties
• Safety, health, and welfare policies
• Labor training policies
• Disciplinary and reward systems
• Other relevant rights and obligations for both the employee and the employer

Labor unions in Taiwan

Taiwan’s labor union scene is less active than some European nations, but unions do exist, especially in public sectors or industries like large manufacturing. Unions can negotiate wages, resolve disputes, and represent workers if conflicts arise. They operate under the Labor Union Act and the Collective Agreement Act.

The union structure generally consists of:

• Enterprise unions, which represent employees of a single company
• Industrial unions, which cover all workers in a given industry, though these are less common
• Federations, which coordinate multiple unions (e.g., the Chinese Federation of Labor)

Employers should work to maintain good relationships with unions and unionized employees. For example, if your Taipei business has a union, consult them before big changes like layoffs or major wage adjustments. Transparent dealings will help to reduce friction with your workforce and maintain consistency with Taiwanese cultural norms of harmony and reciprocity.

Mitigating permanent establishment risk in Taiwan

A permanent establishment (PE) is a legal and tax concept that refers to a fixed location, such as an office, factory, or branch, where a business regularly conducts its activities in a foreign country. If a company establishes PE in another country, it generally means it has to pay corporate income taxes there on the revenue it earns in that jurisdiction.

Foreign companies operating in Taiwan might trigger PE classification if they have a substantial presence or employees regularly concluding contracts. A recognized PE can lead to local corporate tax obligations at rates around 20%.

Common risk factors for triggering PE include:

• Having a fixed office or a “dependent agent” authorized to seal deals in Taiwan
• Conducting core business consistently in Taiwan beyond just auxiliary tasks
• Employing staff full-time under your foreign entity without a local branch in Taiwan

Organizations expanding to or doing business in Taiwan (or hiring employees there) can mitigate their PE risk by ensuring their business activities don’t meet any of the above criteria to amount to a fixed place of business. Here are a few precautions to take:

• Limit on-site decision making. Keep core contract signings or strategic decisions abroad.
• Document local business activities. Show that your employees’ roles in Taiwan are supportive or ancillary, not finalizing major deals.
• Consult a local tax expert. Consult local tax advisors if you’re uncertain about your risk of inadvertently forming a PE in Taiwan.

Protecting company IP in Taiwan

Intellectual property (IP) refers to creations of the mind. This can include inventions, designs, brand names, music, software, written works, and other creative works. It’s always essential to safeguard your company’s IP, no matter where in the world you’re located. Luckily for businesses looking to expand into Taiwan, the country famed for its high-tech industries and electronics R&D is also home to robust IP laws aligned with international treaties.

Legal frameworks for protecting IP in Taiwan include:

• The Patent Act, which allows for up to 20 years’ protection for inventions, 10 for utility models, and 12 for designs
• The Trademark Act, which allows for a 10-year renewable registration for trademarks
• The Copyright Act, which states that copyright is automatic upon creation of an eligible work, but works can still be registered, which can help aid enforcement

To protect IP in Taiwan, apply with the Intellectual Property Office, which is a part of the Ministry of Economic Affairs. IP disputes can lead to civil or criminal proceedings. Given that Taiwan’s economy thrives on innovation, IP protection is a cornerstone—tech firms are particularly vigilant about patent or design rights.

Local laws in Taiwan

While the LSA is one of the most important employment laws to know and covers many employee rights in Taiwan, compliance isn’t solely about the Labor Standards Act. Employers who expand into this region or hire Taiwanese employees must track multiple laws. Here are some key pieces of non-LSA legislation employers should know:

• Personal Data Protection Act (個人資料保護法): Aligns partially with global privacy norms, making sure employers safeguard employees’ personal data. Violations can result in fines or reputational damage for employers.
• Gender Equality in Employment Act (性別工作平等法): This act prohibits gender-based discrimination in workplaces and enforces parental leaves for employees.
• Occupational Safety and Health Act (職業安全衛生法): Taiwan’s OSHA mandates safe work conditions, especially in factories or labs.

Taiwanese employees, known for strong courtesy and community spirit, often appreciate employers that go beyond compliance—like providing extra health measures or flexible hours for family care. Observing these laws while caring about staff’s personal needs can help foster loyalty among your workforce.

Wherever you set up—Taipei’s high-rise offices or Tainan’s industrial estates—respecting these local statutes cements your positive standing. The more you demonstrate genuine adherence and cultural empathy, the stronger your local brand will be.

Worker classification and misclassification in Taiwan: Contractors vs. employees

Under Taiwan’s Labor Standards Act and related statutes, differentiating employees from contractors isn’t just semantics—it dictates social insurance enrollment, labor rights, and potential severance obligations. If you mislabel a full-time worker as a “contractor,” authorities can penalize you for circumventing labor law.

Taiwanese courts have determined a number of guidelines for distinguishing between employees and independent contractors. Learn more about them below.

Worker classification in Taiwan: Key differences between contractors and employees

Consequences of misclassification in Taiwan

Misclassification can happen if a business hires a contractor, but they function more like a full-time employee. If labor inspectors or courts deem your “contractor” is effectively an employee, you could face a number of consequences:

• Back pay: Employers may need to retroactively provide social insurance, overtime, annual leave compensation, or severance to misclassified employees.
• Fines: The Ministry of Economic Affairs or local labor bureaus can impose penalties, especially if misclassification is repeated or intentional.
• Reputational damage: News travels fast in a smaller job market like Taiwan. Misclassifying workers can deter future talent from joining your organization.

For example, say you hire a “contractor” to work eight hours per day from your Taipei office, using a company-issued laptop and following a manager’s instructions. The labor bureau would likely reclassify them as an employee and may require you to pay back contributions to labor insurance and potential late fees.

Getting classification right protects you from legal headaches and fosters trust with your workforce. If the role involves set schedules, direct oversight, and indefinite tasks, you should treat workers as employees under the LSA for transparency and compliance.

Wages and payroll in Taiwan

Managing wages and payroll in Taiwan takes more than just making monthly salary transfers—it requires abiding by the official minimum wage, calculating correct monthly or semi-monthly payouts, and factoring in potential year-end bonuses. Proper payroll means paying your workforce accurately and on time, especially in a culture that values job stability and timely pay.

Minimum wage in Taiwan

Taiwan’s Executive Yuan revisits the monthly and hourly minimum wage, typically each year. As of 2025, the monthly minimum wage is NT $28,590, and the hourly minimum wage is NT $190. Taiwan examines and raises rates frequently to keep pace with living costs.

Employers need to keep up with the minimum wage in Taiwan, even as it changes frequently, because paying below minimum wage invites fines from the Ministry of Labor.

It’s important to note that skilled professionals, especially in Taiwan’s population hubs, often earn well above minimum wage. You may need to pay more than the legal threshold to attract and retain top talent.

Payroll frequency in Taiwan

Employers most commonly pay monthly, but other payment frequencies are allowed, as long as you clearly communicate and make payments on time at the stated frequency.

The Labor Standards Act requires timely, full payment in legal tender. If you choose a monthly cycle, wages must typically arrive by a set date (e.g., the 5th or 10th of each month). Delays beyond seven days can provoke employee disputes or Ministry of Labor investigations.

13th month pay in Taiwan

13th month pay (or 14th month pay) is an additional salary payment—often given to employees as a vacation or holiday bonus. In some parts of the world, 13th month salary payments are mandatory. In Taiwan, a 13th month salary or “year-end bonus” is not mandated by law but is widely practiced—and many employers give 13th month payments to align with the Lunar New Year. For many Taiwanese employees, receiving a “red envelope” bonus is almost an expectation rather than a perk.

Receiving holiday bonuses before Lunar New Year can help cover expenses like gifts for family, travel, or new-year traditions. The amount can be one month of salary or variable, sometimes based on company profits or the employee’s performance. Not fulfilling a year-end bonus can cause disappointment, as many staff count on it for big holiday or family gatherings.

Some companies define “performance bonus” criteria in their employment contracts or staff handbooks—like hitting revenue targets or personal KPIs. Others might provide a flat 13th month payment regardless of performance. Ultimately, since 13th month payments aren’t mandated in Taiwan, it’s up to individual employers to decide how (or even if) they want to pay bonuses. 

One important note: Under the Income Tax Act, bonuses are typically taxed as regular wage income, so be cognizant of any payroll deductions you need to withhold from extra salary payments.

Run payroll compliantly in Taiwan

Staying consistent with wage laws, insurance contributions, and tax withholdings helps your Taiwanese operation run smoothly. Accurate payroll means balancing legal frameworks, local traditions, and the everyday realities of taxes and other obligations. Mistakes, such as failing to withhold enough social insurance or misunderstanding personal income tax withholding, can land you in hot water with authorities.

By working with an EOR, you can get all the help you need to handle deductions, adhere to local wage laws, and make accurate, on-time payments. Rippling EOR makes hiring and paying employees across the globe quicker and easier than ever.

Employer and employee taxes in Taiwan

Like in most places, if you employ staff in Taiwan, you’ll need to withhold and remit taxes from their earnings, plus contributions to labor and employment insurances, the pension fund, and other social contributions. Missing payment or filing deadlines can lead to fines and other penalties, so it’s important to understand both employer and employee obligations in Taiwan if you’re eyeing an expansion or planning to make Taiwanese hires.

Here are the key things to understand about employer and employee taxes in Taiwan.

Employer taxes in Taiwan

Employee taxes in Taiwan

In addition to payroll taxes, employers are responsible for withholding and remitting personal income tax from their employees’ paychecks on their behalf. Taiwan has a progressive personal income tax for residents, meaning the more an employee earns, the higher their income tax rate:

Non-residents in Taiwan pay a flat income tax of 18%.

Penalties for not paying taxes in Taiwan

Failing to comply with Taiwanese tax obligations can result in more than extra interest. The National Taxation Bureau (國稅局) and labor authorities can issue fines, freeze assets, or even initiate legal actions for severe offenses.

Some common noncompliance issues (and their potential penalties) include:

• Underwithholding: If you incorrectly calculate personal income tax or fail to withhold for foreign workers, you may owe back taxes plus penalty interest.
• Late filings: Delaying monthly or annual returns can trigger fines (often a set sum or a percentage of the unpaid tax).
• Incorrect or missed insurance contributions: If you skip labor or health insurance payments, the Bureau of Labor Insurance may demand retroactive premiums, plus extra surcharges or interest.

Staying timely and precise with Taiwan’s tax regimen is crucial. By promptly paying your tax obligations, cooperating with authorities, and keeping thorough financial records, you’ll maintain a positive standing in an environment that values compliance and clarity. You can also help mitigate tax compliance concerns by letting an EOR handle payroll taxes on your behalf, making sure all your local taxes are paid correctly and on time. This allows you to focus on growing your business in Taiwan and beyond.

Employee benefits in Taiwan

When expanding your business into a competitive hiring environment like Taiwan, one way to attract and retain top talent is by offering comprehensive employee benefits. Taiwanese employees often expect a blend of mandatory and optional benefits. Understanding what the law requires not only ensures legal compliance but helps you stand out in a job market hungry for perks—like flexible work arrangements or extra holiday pay.

Here’s an overview of statutory and optional benefits.

Mandatory benefits in Taiwan

Mandatory benefits are those that employers are legally required to provide for their eligible employees. Under the LSA and other regulations, several benefits are statutory for employees in Taiwan, including: 

• Labor insurance and national health insurance: Employers must enroll staff in labor and health insurance within a set timeframe. Premium rates are shared among employers, employees, and government.
• Employment insurance: Employment insurance is guaranteed for all employees and has a separate legal foundation from LI and other social insurances.
• Pensions: Under the Labor Pension Act (勞工退休金條例), employers deposit at least 6% of the employee’s monthly salary into a personal pension account. This ensures a retirement safety net, reflecting the Taiwanese emphasis on familial and financial stability.

Optional benefits in Taiwan

While meeting mandatory benefits is non-negotiable, many employers up their game by adding perks and fringe benefits, especially in competitive sectors like IT in Hsinchu or finance in Taipei. These extra offerings can attract and retain top-notch employees.

Here are some common optional benefits you might consider when hiring in Taiwan:

• Flexible hours or remote work: Post-pandemic, many Taiwanese employees appreciate some work-from-home days, especially if they commute from suburbs or adjacent cities.
• Year-end or mid-year bonuses: Beyond “13th month pay,” some companies award mid-year performance bonuses or set “Dragon Boat Festival” gifts.
• Meal or transportation subsidies: Catered lunches, vouchers for local restaurants, or bus/rail passes can be a boon, especially if your office is in a traffic-heavy district.
• Health checkups or wellness perks: Sponsoring annual health screenings (popular in Taiwan) or gym memberships can boost morale.

Going beyond the basics helps you shine in a market where word-of-mouth can quickly elevate your brand among Taiwanese professionals.

Working hours, overtime, and leave in Taiwan

When hiring across international borders, it’s essential for employers to understand working hours, overtime rules, and leave laws, which can all vary significantly from one jurisdiction to another. Taiwan’s workforce can be highly dedicated—think of late-night engineers perfecting microchips in Hsinchu—but the country’s employment law sets firm rules to prevent burnout and exhaustion. The LSA prescribes standard work hours, rest requirements, and overtime pay to ensure workers get fair treatment.

Standard working hours in Taiwan

Under the LSA, employees typically work eight hours per day, 40 hours per week. The LSA has a “one fixed day off and one flexible rest day” scheme—some industries may adopt shift systems or alternate schedules, but 40 hours remains the norm. 

Other key points employers should know:

• The regular workweek is Monday through Friday, but this can vary by industry.
• It’s typical for workers to have at least two rest days per week. Sundays are typically a compulsory day off, and employees generally have one other flexible rest day.
• Employers must track attendance meticulously—punch cards or digital logs are common.

Overtime laws in Taiwan

Overtime (OT) in Taiwan is when an employee exceeds 40 hours of work in a single workweek. The LSA caps monthly overtime at 46 hours. Employees cannot work more than 12 hours per day, including overtime.

Employees are entitled to higher rates of pay for overtime hours. Overtime pay rates are on a progressive scale, depending on how many overtime hours the employee works and whether it’s their regular rest day or a holiday:

• 134% of the employee’s regular hourly wage for the first two OT hours on a regular workday
• 167% of the employee’s regular hourly wage for hours beyond the initial two
• 267% of the employee’s regular hourly wage for any overtime hours if they work on their rest day
• Double pay (200%) possible for public holidays if the employee must work

Employers typically need employees’ consent for overtime beyond certain thresholds, and the labor authority can investigate if employees regularly work overtime that surpasses monthly limits.

Rest period and break laws in Taiwan

Under the LSA, employees are entitled to breaks to prevent overwork—at least 30 minutes of meal or rest time after four hours of continuous work. Employees should also be allowed to take short rest breaks if needed, and teams should be careful to allow appropriate meal and rest intervals between rotating shifts.

Leave laws in Taiwan

Employees in Taiwan are entitled to several different types of leave, including statutory annual leave, public holidays, and special leaves for marriage, bereavement, or personal events. For major festivals like the Mid-Autumn Festival, some employees take extra time off to travel and see family. Planning your staffing levels ahead can avoid disruptions, so it’s essential for employers to understand both the mandatory leave schemes employees are entitled to and the cultural nuances in Taiwan.

Here are the types of leave employees receive:

• Annual leave: Employees receive up to 30 days of annual leave. The exact amount of annual leave is tied to the employee’s length of service:

• Sick leave: Employees are entitled to up to 30 days of sick leave per year, paid at 50% of their regular wage. If hospitalized, the employee can take up to 12 months of unpaid leave over a two-year period. If the leave lasts more than 12 months, the employer can permit additional unpaid leave or end the employment contract.
• Family care leave: Employees are entitled to up to seven days of family care leave per year to care for family members’ needs.
• Maternity leave: Pregnant employees are entitled to at least eight weeks of paid maternity leave, which can be extended to 12 weeks if they have pregnancy-related complications or illness. They are also entitled to five days of paid leave before the birth to attend prenatal medical appointments. Employees who experience a miscarriage are also entitled to paid leave, depending on how far along the pregnancy was:
• Under two months of pregnancy: Five days of leave
• Two to three months of pregnancy: One week of leave
• Over three months of pregnancy: Four weeks of leave
• Paternity leave: Employees who become fathers are entitled to five days of paid paternity leave.
• Adoption leave: Employees who adopt young children may take unpaid leave until the child is three years old.
• Parental leave: Most parents can take up to two years of unpaid parental leave until their child is three years old.
• Bereavement leave: Employees are entitled to paid bereavement leave depending on their relationship to the deceased:
• Death of a spouse, parent, or adoptive parent: Eight days of leave
• Death of parents of the employee’s spouse, adoptive or stepparents of the spouse, a child, or a grandparent: Six days of leave
• Death of a spouse’s grandparents or a spouse’s sibling: Three days of leave
• Jury duty leave: Employers are required to provide paid leave to employees to perform civic duties, such as jury duty. The leave must cover the exact number of days needed for the civic duties.
• Military leave: Employees are entitled to paid leave if they are called to fulfill national service obligations.
• Public holidays: Taiwan observes between 10 and 15 public holidays, depending on the lunar calendar. These include:
• New Year’s Day
• Republic Day
• Chinese New Year
• Peace Memorial Day
• Children’s Day
• Qing Ming Festival
• Worker’s Day
• Dragon Boat Festival
• Mid-Autumn Festival
• ROC National Day

Employee onboarding in Taiwan

Onboarding new employees—no matter where in the world you hire them—gives you the chance to lay the foundation for that relationship throughout their tenure. This is especially important for employers—and a smooth, well-organized onboarding process can (and should) begin well before a new hire’s first day on the job. 

Onboarding in Taiwan involves more than just signing a contract; it’s a chance to immerse new hires in local work culture. You can have your new employees tackle administrative tasks like background checks and paperwork before they arrive, so they’re ready to hit the ground running on their official start date.

An onboarding checklist can help you manage all the moving parts and keep the process moving smoothly forward as a new hire ramps up.

How to onboard employees in Taiwan: A simple checklist

Our new hire onboarding checklist can set your new employee up for success on their first day:

Running background checks in Taiwan

Are background checks legal in Taiwan?

Background checks are legal in Taiwan as long as they follow the Personal Data Protection Act (個人資料保護法). The law requires employers to:

• Obtain consent from the job applicant before running any background checks. The candidate should agree to the scope of any checks you do (education, past employment, etc.).
• Demonstrate that background checks are relevant to the role the candidate is applying for, and only gather information that’s directly job-related (like verifying a teacher’s credentials).
• Keep job candidates’ personal data safe and secure, and protect it from unauthorized use or disclosure.

What types of background checks are illegal in Taiwan?

There aren’t any specific types of background checks that are explicitly against the law in Taiwan. However, collecting data on political affiliations, religious beliefs, or other sensitive personal information without a legitimate need violates PDPA. Also, accessing personal data via questionable channels—like hacking or paying for black-market references—can result in civil or criminal penalties.

Employers should also steer clear of:

• Investigating an applicant’s financial records or credit history with no job relevance
• Secretly calling a candidate’s acquaintances for personal opinions beyond professional references

[H4] Types of Taiwan background checks

Offer letters in Taiwan

An offer letter in Taiwan isn’t the same as a legally binding labor contract. But even though it isn’t legally mandated, an offer letter can clarify the basics of a job offer—like position, salary, and start date—before the formal employment agreement is drafted and signed. This less formal, pre-contract step allows both parties to align on expectations and avoid last-minute misunderstandings.

Since there isn’t a legal framework for offer letters, it’s ultimately up to the employer whether to draft one at all and what information to include. Here’s a brief list of details you may want to add to an offer letter (but keep in mind that this isn’t an exhaustive list):

• Job title, description, and company name 
• Start date 
• Working hours 
• Compensation and benefits (including the employee’s salary, equity, and other perks)
• Termination policy 
• Confidentiality and non-disclosure agreements 
• Contact information and phone number

Consider referencing local perks you plan to offer, like the possibility of a year-end bonus. And make sure any details mentioned carry over into the final contract to avoid conflict or confusion down the line.

NDAs and confidentiality agreements in Taiwan

In an economy known for high-tech manufacturing, confidentiality is paramount. Protecting your company’s trade secrets is important no matter where you hire, and Taiwan is no exception. While non-disclosure agreements (NDAs) are standard for employees in many countries, legal experts recommend using a non-use, non-disclosure, non-circumvention (NNN) agreement to protect your company’s IP in Taiwan—and making sure it’s enforceable in China.

Probationary period in Taiwan

Probationary periods for new employees in Taiwan are customary, but not explicitly required under the LSA. Typically, employers and employees agree to a trial period. The standard initial length is three months, and employers can extend for up to three additional months, but it must be based on a legitimate, documented reason and mutually agreed upon by both the employer and the employee.

If there is a probation period, it should appear in the contract or written agreement. Some companies pay a slightly lower “probation salary,” but this must be clearly stated and must not fall below minimum wage.

If the probation passes smoothly, the employee continues under the existing employment contract.

Work permits in Taiwan

For foreigners wanting to work in Taiwan, having the right work permit is a must. Overlooking or incorrectly handling permits may lead to fines or deportation. Employers are a big part of this process—ultimately, it’s on you to make sure your employees in Taiwan are legally authorized to work there. Here’s what you need to know.

Who needs a work visa in Taiwan?

Generally, non-ROC nationals (those not holding Taiwanese citizenship) need authorization to legally work in Taiwan. The Employment Service Act (就業服務法) outlines categories of foreign professionals, blue-collar workers, and specialized talents. Each category requires a permit from the Ministry of Labor (MOL) or another relevant agency:

• White-collar professionals: IT specialists, managers, and consultants often apply under a work permit for specialized or technical fields.
• Blue-collar foreign labor: This typically includes those in manufacturing, caregiving, or construction, subject to quotas and additional rules.
• Freelancers or self-employed workers: They must secure a special route or rely on investor or work sponsor status.

How long does it take to get a work visa in Taiwan?

Processing times vary depending on the processing agency’s workloads and other factors like the complexity of the application and the completeness of documents submitted with the petition, but expect four to eight weeks in most cases. The typical visa application process includes:

• Making a job offer and collecting documentation: The employer obtains proof of the foreigner’s expertise and job function.
• MOL application: The next step is submitting forms, proof of qualifications, and sometimes a police clearance.
• Review and visa issuance: If the application is in order, the MOL approves the permit. Then the foreigner may need a Resident Visa or ARC (Alien Resident Certificate) for extended stays in Taiwan.

Prepare early if you want a new hire fully on board by a certain date—Chinese New Year holidays or big festivals can slow processing times. In Hsinchu or Taichung, local labor bureaus might also have additional steps employers or visa applicants must take.

Types of work visas in Taiwan

Taiwan offers two main types of work visas, but the most common is the EZ work permit, which is sponsored by the employer and issued to most foreign workers who come to the country. EZ work permits are only available to workers in certain industries and roles:

• Civil engineering
• Architecture
• Communications
• Transportation
• Tax and financial services
• Real estate
• Immigration services
• Law
• Technicians
• Healthcare
• Environmental protection
• Culture, sports, and recreation services
• Academic research
• Veterinarians
• Manufacturing
• Wholesale

EZ work permits may be issued to workers in other industries or roles based on the discretion and consultation of the central government and other relevant agencies. Spouse of foreign workers who work part-time or in jobs not on this list may also receive EZ work permits.

Taiwan also offers an Employment Gold Card for high–level professionals, which streamlines the application and immigration process for those in lucrative and highly sought-after roles.

Termination and redundancy in Taiwan

If you’re just starting to hire in Taiwan, termination procedures may be far from your mind. But understanding how to end employment is important because the LSA requires employers to follow strict rules when ending employment relationships in Taiwan. Dismissals must be justified under specific conditions, and employees may be entitled to severance. Observing these steps carefully maintains compliance, fosters harmony with your workforce, and protects your brand.

Here’s what to know about termination and redundancy rules in Taiwan.

Does at-will employment exist in Taiwan?

At-will employment is a legal principle—common in the US—that allows either the employer or employee to end an employment relationship at any time, for any reason (or even without a reason), as long as they don’t break any laws (for example, at-will employment doesn’t allow for firing an employee on a basis that amounts to discrimination).

At-will employment does not exist in Taiwan. Employers must show valid grounds—like major misconduct, redundancy, or poor performance under LSA criteria.

Some legal justifications for dismissal under the LSA include:

• Breach of the labor contract, such as repeated rule violations
• Operational adjustment, like layoffs due to structural changes or financial crises
• Inability to perform, such as if the worker is hospitalized for more than 12 months in a two-year period

Abrupt or unjust firings can spark not only legal but also reputational damage for employers, making compliance with the LSA’s termination rules all the more important.

Notice periods in Taiwan

A notice period is the amount of time that an employee or employer must provide as notice before ending an employment relationship. In Taiwan, the LSA requires notice when ending an indefinite-term employment contract. The amount of notice that’s required depends on the employee’s length of service:

During the notice period, employees can use two paid hours each day to look for new employment. Dismissal for severe wrongdoing may waive notice periods.

Severance pay in Taiwan

When you terminate employees under certain conditions (like redundancy or contract termination not due to employee fault), severance is mandatory under the LSA. The formula changed when Taiwan introduced its Labor Pension system in 2005, so it’s important for employers to apply the correct formula to workers when calculating their severance.

The Ministry of Labor provides an online calculator employers can use to determine a worker’s severance pay.

How to terminate employees compliantly in Taiwan

Ending an employment relationship in Taiwan requires legal ground, giving the correct notice, and possibly paying severance.

When terminating employees in Taiwan, you must:

1. Identify a valid reason for the termination. This could be a reorganization, job redundancy, or poor performance. Check LSA conditions carefully to ensure compliance.
2. Issue a written notice to the employee. Provide the official letter in Mandarin if possible, referencing the legal reason for their termination. Respect the required notice period based on the employee’s length of service to your organization.
3. Pay severance (if required). Use the Ministry of Labor’s online calculator to determine the correct severance payment amount for the employee.
4. Provide the employee with their final wages and documents. Promptly settle unused leave, final pay, or any bonuses the employee has earned or is entitled to. Return labor insurance and pension records, letting them transfer accounts if needed.

When managing a global team, keeping track of termination regulations can be a challenge. Employers have to contend with just-cause rules, varying notice and probation periods, and inconsistent severance laws across different jurisdictions. Instead, consider partnering with an EOR solution, which can take care of compliance on your company’s behalf, ensuring you stay on the right side of the law from onboarding to offboarding.

FAQs about hiring in Taiwan

Can I hire employees in Taiwan without my own legal entity?

Yes. An employer of record (EOR) can legally employ your Taiwanese workforce and handle the local compliance, payroll, and HR duties on your behalf. Going this route can be especially beneficial for smaller companies or those that want to test out new markets without the time, investment, and hassle of establishing a local entity.

An EOR like Rippling can help you quickly tap into Taiwan's talent pool, grow your global workforce, and reduce both compliance risks and administrative workload.

What is the difference between an independent contractor and an employee in Taiwan?

In Taiwan, employees work according to labor contracts and the Labor Standards Act under their employer's direct supervision and control. Independent contractors, on the other hand, are self-employed and engage via civil or commercial contracts, manage their own taxes and insurance, and choose how and when they work.

How much does it cost to hire an employee in Taiwan?

Aside from costs associated with the hiring process and the employee’s salary, employers need to budget for labor insurance, employment insurance, contributions to the pension fund and national health insurance, and other costs.

Employer taxes in Taiwan:

What are the requirements for work permits in Taiwan?

Foreigners generally need a work permit under the Employment Service Act. Most foreign workers in Taiwan apply for the EZ work permit, which is sponsored by the Taiwan company hiring the foreign employee. The EZ permit also requires them to work in a qualifying industry or role.

What is always required when an employer terminates an employee in Taiwan?

To terminate an employee in Taiwan, the employer must have a valid reason (e.g., redundancy, misconduct, or inability to perform) per the LSA, plus provide written notice respecting seniority-based notice periods. If the termination reason qualifies, they might also owe the employee severance pay. Without meeting these requirements, the dismissal could be deemed illegal.

How does a US company pay a foreign employee in Taiwan?

There are generally three ways a US company can pay a foreign employee in Taiwan:

1. Form a local entity and open a local bank account to run payroll under Taiwanese law (with all withholdings).
2. Partner with an EOR that specializes in global employment and manages salary, insurance, and taxes on your behalf.
3. Use a global payroll service that can integrate payroll for multiple countries.

Disclaimer: Rippling and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.