Employer of Record in Taiwan: Hire, Manage, and Pay Talent Seamlessly
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Employment Norms in Taiwan
Taiwan is an island country in Eastern Asia. The Labor Standard Acts oversee the rules and regulations of employment in Taiwan. Businesses need to have a local presence for hiring employees. However, companies can hire employees without opening a local entity. The labor laws here are flexible for hiring purposes. Taiwan is one of the best choices for business expansions in the Asia Pacific region.
General Information:
- Taiwan's currency is New Taiwan Dollar (TWD).
- Taipei is the capital of Taiwan.
- Mandarin Chinese is the official language, and other languages are Taiwanese, and Hakka. Documentation can be in Mandarin Chinese. The translation of documents into other languages and vice-versa is also available.
- As of 2022, the GDP of Taiwan was reported to be 1564.23 billion USD.
The Labor Standard Act provides employees with health and social benefits. It regulates wages, work hours, leaves, and other employment entities.
Table of Contents
- Agreements
- Onboarding Process
- Visa
- Minimum Wage
- Payroll Cycle
- Annual Bonus
- Health Benefits
- Working Hours and Overtime
- Leaves
- Social Security
- Taxes for Employers
- Taxes for Employees
- Probation
- Termination
- Severance Pay
- Employees or Contractors
- Final Words
AgreementsOnboarding ProcessVisaMinimum WagePayroll CycleAnnual BonusHealth BenefitsWorking Hours and OvertimeLeavesSocial SecurityTaxes for EmployersTaxes for EmployeesProbationTerminationSeverance PayEmployees or ContractorsFinal Words
Agreements in Taiwan
The Labor Standard Laws govern the employment agreements in Taiwan. The employment agreements can be in oral or written format. The written agreement must be in the official Taiwanese language i.e. Mandarin Chinese or Taiwanese Hakka. If the employee asks for a translation it may be provided. There are mainly two types of employment contracts in Taiwan:
- Indefinite or open-ended contract - A contract without any fixed expiry period is called an indefinite contract. It is usually for continuous work. This type of contract is widely used for hiring full-time employees. The indefinite contract can be terminated by mutual agreement.
- Definite or fixed-term contract - A contract with a fixed end date is said to be a definite or fixed contract. If an employee keeps working even after the term ends, the contract will be treated as an indefinite contract. A definite contract in Taiwan should not exceed 90 days. If the contract term exceeds 90 days it is considered an indefinite contract.
Onboarding Process in Taiwan
The onboarding process in Taiwan is just like any other country. The hiring process may take a few days. It has the following steps:
- A job description is prepared by the HR team if there is a vacancy in the company.
- The description is uploaded on the official site of the company. It is uploaded on other platforms like LinkedIn.
- The employer may choose to publish the job description in local newspapers and magazines.
- Candidates apply for the job by proving their eligibility. They are further shortlisted based on rounds of screenings and interviews.
- Final shortlisted candidates then negotiate their terms and conditions with the employer. The candidate is hired as an employee after a mutual agreement between the employer and the candidate.
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Visa in Taiwan
Taiwan has mainly two types of visas:
- Short-term Visa- It is also called Taiwan Visitor Visa. It is granted for shorter stays of up to 90 days. It is mainly given for tourism, medical care, business invites, and other purposes.
- Long-term Visa- It is known as Taiwan Residence Visa. It is issued for longer stays that are more than 90 days. This type of visa is issued to students, workers, and others who intend to stay longer. The Taiwan Residence Visa is issued to those who want to stay in the country.
Minimum Wage in Taiwan
The minimum wage is governed by Labor Standard Laws. The minimum wage in Taiwan is legally fixed at around TWD 26400 per month.
Payroll Cycle in Taiwan
The payroll cycle in Taiwan is on monthly basis. There are no legal provisions for getting weekly or bi-weekly pay, although it depends on the employer.
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Annual Bonus in Taiwan
There is no legal provision for an annual bonus in Taiwan. However, the annual bonus is a common practice in Taiwan. The 13th salary is usually paid during the lunar new year in Taiwan.
Health Benefits in Taiwan
- The employee's health and safety are the employer's responsibility. Employers have to maintain healthy working conditions.
- An employee is obliged to declare health conditions.
Working Hours and Overtime in Taiwan
- Work hours: The working hours in Taiwan are restricted to 8 hours per day. An employee has to work over 40 hours a week. The regular working week is of 5 days from Monday to Friday.
- Break: Every employee is entitled to take an unpaid break of 30 minutes. This break is taken after 4 hours of continuous work. The break can be rescheduled according to the nature of the work.
- Overtime: The overtime hours in Taiwan must not exceed 4 hours per day. The employer has to pay 134% of the regular hourly rate for the first 2 hours of work. After 2 hours the employer has to pay 167% of the regular salary. For those who work on rest days are paid 234% for the first 2 hours of their hourly rate and 267% for the next 10 hours of employees' hourly wage. The employer has to pay 200% of the regular salary for overtime on public holidays or regular or annual leave.
Leaves in Taiwan
Sick Leave
There are two types of sick leaves in Taiwan according to the Labor Laws. These are:
- Regular sick leave - An employee is entitled to 30 days of paid leave. The employer has to pay 50% of the salary during the regular sick leave.
- Serious sick leave - This leave is given in case an employee is hospitalized for a serious health condition. An employee can take 1 year of leave every 2 years. It is an unpaid leave
Maternity leaves
- A pregnant female employee is entitled to 8 weeks of paid maternity leave in Taiwan, paid by the employer.
- The employer must pay 100% of the salary if the female employee has worked more than 6 months. In case of work duration below 6 months, 50% salary is paid.
- Additional 5-7 days of leave is given for prenatal check-ups.
Paternity Leave
- A male employee is entitled to 7 days of parental leave in Taiwan. The employer has to pay 100% of the salary.
Annual leaves
An employee is entitled to paid annual leave in Taiwan. The annual leave depends on the tenure of work of the employee
- 6 months of employment - paid leave of 3 days
- 1 year of employment - paid leave of 7 days
- 2 years of employment - paid leave of 10 days
- 3 years of employment - paid leave of 14 days
- 5 years of employment - paid leave of15 days
- 10+ years of employment - 1 additional day is given every year, the maximum annual leave is 30 days.
Parental leaves
- Parental leaves are unpaid in Taiwan. Either of the parent is allowed to take parental leave and decide how to divide the time. Parental leaves are for 2 years.
Other leaves
- Bereavement leave: Employees can take 8 days of paid leave in case of the death of their spouse or parent. Off of 6 days is granted in case of death of a parent-in-law, grandparent, or child. In case the grandparent-in-law or sibling of the employee dies, they can avail 3 days off.
- Personal leave: 14 days of unpaid leave is granted to the employees for their work.
- Marriage: 8 days of paid leave is given to the employees for their wedding.
- Leave for civic duty: To fulfill their civil obligations, employees can take the paid time. Leaves taken for jury duty or military service are termed civic duty leaves.
Public Holidays (for the Calendar year 2024)
Some dates may vary based on official notifications and traditional calendars.
- January 1 - Republic Day
- February 9 - Chinese New Year's Eve
- February 10 - Chinese New Year
- February 11-15 - Spring Festival Holiday
- February 28 - Peace Memorial Day
- April 4 - Children's Day
- April 5 - Tomb-Sweeping Day
- May 1 - Labor Day
- June 10 - Dragon Boat Festival
- September 17 - Mid-Autumn Festival
- October 10 - National Day/Double Tenth Day
Public Holidays (for the Calendar year 2025)
Some dates may vary based on official notifications and traditional calendars.
- January 1 - Republic Day
- January 30 - Chinese New Year's Eve
- January 31 - Chinese New Year
- February 1-5 - Spring Festival Holiday
- February 28 - Peace Memorial Day
- April 4 - Children's Day
- April 5 - Tomb-Sweeping Day
- May 1 - Labor Day
- June 1 - Dragon Boat Festival
- September 8 - Mid-Autumn Festival
- October 10 - National Day/Double Tenth Day
Taxes for Employers in Taiwan
According to the Labor Standard Act taxes are levied on employers in Taiwan. These taxes include:
- Labor Insurance - 10.5%
- Employment Insurance - 1%
- Pension Fund - 6%
- Health Insurance - 5.17%
- Accidental Insurance - 0.20%
- Overdue Wages - 0.025%
- A corporate tax of 20% is levied on companies with annual income over 120,000 TWD.
Taxes for Employees in Taiwan
The Labour Standard Laws impose taxes on employees in Taiwan. Every employee has to pay taxes that include:
- Labor Insurance contribution - 10.5%
- Health Insurance - 5.17%
- Employment Insurance - 1%
- An income tax is also levied on every employee ranging from 5% to 40%. A higher income tax rate is imposed on a higher salary.
- NTD 560,000: 5%
- NTD 560,001 - NTD 1,260,000: 12%
- NTD 1,260,001 - NTD 2,520,000: 20%
- NTD 2,520,001 - NTD 4,720,000: 30%
- Above NTD 4,720,001: 40%
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Probation in Taiwan
The probationary period in Taiwan is usually 3 to 6 months. The duration of the probation can be decided between the employer and the employee.
Termination in Taiwan
- An employer must provide a written notice stating the reason for termination.
- The notice period depends on the tenure of work of the employee.
Severance Pay in Taiwan
- An employee who joined before 2005 is entitled to 1 month's salary as severance pay.
- An employee who joined after 2005 will get half a month's salary for every year of employment.
Employees or Contractors in Taiwan
- A person who works for a company and gets paid is an employee.
- An organization that hires workers or employees is a contractor or employer.
- A penalty is imposed on an employer found guilty of misclassification of an employee as a contractor.
- A civil lawsuit can be filed against an employer if found guilty of the misclassification of an employee.
Final Words
Taiwan is a booming economy in Eastern Asia. Its flexible labor laws make it a perfect choice for expanding business. Those who are willing to expand their business in Taiwan must know the norms followed by the country, to ensure that they have a smooth business experience.
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Social Security in Taiwan