Hire in Taiwan

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Last updated at June 16, 2022
Breathtaking view of Taipei Tower

Currency

New Taiwan Dollar (TWD)

Capital

Taipei

Time Zone

GMT+8

Key Country Facts

Introduction

The political and legal statuses of Taiwan are contentious issues. The People’s Republic of China (PRC) claims that the Republic of China (ROC) government is illegitimate, referring to it as the “Taiwan Authority”. The ROC, however, with its own constitution, independently elected president and armed forces, continues to view itself as a sovereign state. Internationally, there is controversy on whether the ROC still exists as a state or a defunct state per international law due to the loss of membership/recognition in the United Nations and lack of wide diplomatic recognition.

Area

Taiwan consists of several islands with a total area of 36,193 square kilometres. Smaller islands include the Penghu archipelago in the Taiwan Straits, the Kinmen, Matsu and Wuqiu islands near the Chinese coast, and some of the South China Sea islands.

Climate

Taiwan’s climate is subtropical, except in the south where it is tropical. Winters are short and mild, and summers are long and hot. July to September is typhoon season, and the months with the most rain are May & June.

Culture

Taiwan’s culture can be described as traditional. It has been shaped by imperialism and colonization, mainly Chinese in origin and is patriarchal, with the family at the centre of cultural activities. Business culture incorporates elements of mainland Chinese and Japanese customs, which are highly influenced by Confucianism and thus many Taiwan businesses are hierarchical in nature.

The aboriginal cultures of Taiwan represent 2% of the population of the island. There are 12 aboriginal tribes: the Amis, Atayal, Bunun, Paiwan, Puyuma, Rukai, Thao, Saisiyat, Tsou, Kavalan, Truku, and Yami.

Religion

Taiwan is very diversified in terms of religious belief, and freedom of religion is inscribed in the Constitution. Buddhism, Taoism, Christianity, Mormonism, Yiguandao, the Unification Church, Catholicism, Islam, Eastern Orthodoxy, Judaism, Hinduism, as well as native sects such as Yiguandao and others is practised. The country not only respects traditional faiths but also opens its arms to other types of religious thought from the outside.

Official Language

Mandarin is the official national language and is spoken by the majority of the population of Taiwan. It has been the primary language of instruction in schools since the Japanese rule ended. As in Hong Kong and Macau, traditional Chinese is used as the writing system in Taiwan.

Taiwan HR at a Glance

Employment Law

Employment in Taiwan is governed under the Labor Standards Act (LSA), which establishes the minimum terms and conditions. The Civil Code covers terms and conditions in individual contracts for some occupations and industries not covered by the LSA. Conditions such as issues on labor contracts, wages, work hours, leaves of absence, compensation, retirement, and benefits all are covered in the LSA. Hiring foreign nationals is governed by the Employment Services Act (ESA).

Employment Contract

Written contracts are not mandatory, but most businesses use them as they are highly recommended. They need to follow the LSA requirements. Upon mutual agreement, an employment contract can be conveyed in Chinese, English or any other language. In case of any future dispute, Chinese translation will be required.

Contract Terms

The enforcement rules of the LSA suggest up to 13 items to be included in written contracts to outline the rights and obligations of employers and employees and to avoid disputes. Employers must meet or exceed the minimum terms of the LSA or other laws. Employers must seek agreement by a Labor Management Conference or Labor Union before changes to working conditions can be made.

Work Rules

Any employer who has more than 30 employees is required to have written work rules registered with the local labor authority.

Probation Period

Generally three months. Per Article 16-1 of LSA, company is not required to give advance notice.

Overtime

Required for workers subject to LSA, but the following types of workers may arrange their own working hours, regular days off, etc:

  • Supervisory, administrative workers, and professional workers with designated responsibility,
  • Monitoring or intermittent jobs, and
  • Other types of job in special nature. Generally, employees can either choose compensatory leave or overtime payment for any required overtime payment or opt out by entering a flexible working hours arrangement. Employers must comply with the requirement to record employees’ work attendance.
  • For overtime calculation subject to LSA Article 24, 32, 36, 40.
  • Working hours cannot exceed 12 in one day, and maximum overtime is 46 hours monthly. Overtime is paid at 134% for the 8th – 10th hours(daily) and 167% for the 10th – 12th hours (daily). Overtime on “flex-day” is paid at 134% for the first two hours, 167% for 2nd – 8th hours, and 267% for 8th – 12th hours.

Overtime

In general overtime should be limited to two hours per day. Compensation for overtime work must be at least 50% greater than the compensation for regular work. If the overtime is performed on Sundays or holidays, the additional pay is 100 per cent of the standard rate.

Employees may negotiate with the employers and agreement may be made to bank hours to compensate any overtime worked instead of taking payment. In this sense, the overtime worked in one day may be compensated by the exact reduction of the work shift in another day or days, within a period of six months.

The following employees are not entitled to overtime payments and are not subject to the limits on working hours under the Labour Code:

  • employees who perform activities outside of the company’s facilities and wherein those activities as such, are not compatible with defined working hours;
  • employees (such as managers) who occupy trust positions; and
  • employees who work in a remote work system.

Bonus

Often a 13th or even 14th month of salary is provided to Taiwanese employees, although this is not required. The 13th and 14th month salaries are typically paid before the Chinese New Year Holiday. Festival bonuses may also be given before the Dragon Boat Festival and the Mid-Autumn Festival.

Termination

Any employee termination in Taiwan must be made pursuant to one or more of the specific causes set forth under Article 11 and 12 of the LSA, and the employer must provide advance notice (or an amount in lieu thereof), severance pay, and any outstanding payments or benefits where an employee is terminated for any of the causes stipulated under Article 11.

Notice Period

Employers: Where notice and severance pay must be given, advance notice is provided based on length of service:

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

Employees subject to:

  • Fixed-term contracts of over three years may be terminated when three years is completed but must give 30 days’ notice.
  • Fixed-term contracts of less than three years are not permitted to terminate their contracts without meeting certain requirements or without the employer’s agreement.
  • Indefinite-term contracts must give the same amount of notice as employers.

Redundancy/ Severance Pay

Required. Calculated based on one month’s average wages for each year of service, but the amount payable for each year of service will be equal to 50% of the employee’s average monthly wage, for up to a maximum of six month’s pay.

For severance payment in lieu of notice periods (and notice period required depends on duration of employment), the total payment shall equal the total number of days in the required notice period multiplied by the employee’s daily wage.

Other Standard Items

Meal allowances can be provided for up to a maximum of TWD 2,400 per month and are exempted from individual income tax.

Group Insurance, within TWD 2,000 per employee (and non-taxable income to employee) can be fully deducted as operating expenses. Other allowances subject to PIT. Housing and travel allowances are also common.

Statutory Costs

Approximately 18.4% of base salary covering National Health Insurance (NHI), Labor insurance, Employment Insurance and Labor Pension. Refer to more details below.

Tax and Social Security

Personal Income Tax

Individual resident taxpayers are taxed only on Taiwan-sourced income which includes business income, salaries (as well as allowances, bonuses and other compensation), severance pay, professional fees and commissions. Other income from dividends and interest that is derived from assets in Taiwan is also included.

Tax rates for 2022 Personal Income Tax returns:

Taxable Income Over (TWD) Taxable Income Not Over (TWD) Tax Rate (%)
0 560,000 5.0
560,001 1,260,000 12.0
1,260,001 2,520,000 20.0
2,520,001 4,720,000 30.0
4,720,001 and above 40.0

A resident individual must file an income tax return between May 1st and May 31st of the following year and pay any tax due.

INCOME TAX: EMPLOYER REQUIREMENTS

An employer is required to deduct and withhold income tax from its employees. Employer is liable to pay to tax office for tax withheld from employees before the 10th day of the following month.

STATUTORY BENEFITS

National Health Insurance (NHI): National health insurance contribution of 5.17% allocated among the employee (30%), the government (10%) and the employer (60%). The formula is Salary Base x Insurance Premium Rate x Contribution Ratio x (1 + number of dependents). The number of dependent as of January 2020 is 0.58. Effective January 2022, the minimum monthly earnings amount is TWD 25,250.

Labor Insurance: Taiwanese Legal Entities with more than 5 employees must contribute labor insurance. Labor insurance benefits payment is divided into two main categories: ordinary risk insurance and occupational accident insurance. Ordinary risk insurance includes five kinds of cash benefits: maternity, injury or sickness, disability, old-age, and death benefits, while occupational accident insurance provides three types of benefits payable in cash, which are injury or sickness, disability and death benefits, plus medical benefits. The insurance contribution of 10.5% is shared by the employers (70%), the employees (20%), and the government (10%). The maximum monthly insurance salary is TWD 45,800 (Percentages: employee 2.10%, employer 7.35%).

Employment Insurance: The insurance contribution of 1.0% is shared by the employers (70%), employees (20%) and the government (10%). The maximum monthly insurance salary is TWD 45,800 (Percentages: employee 0.2%, employer 0.7%). Employers with fewer than five employees are required to contribute 1% of pay per employee.

Labor Pension: Employers must contribute at least 6% of employees’ monthly earnings. Employees can voluntarily contribute up to 6% of their wages. This must be deposited to a specific Individual Pension Account. Subject to monthly earnings ceiling of TWD 150,000.

Wages Compensation Fund (in Article 28 of the Labor Standards Law): Employer shall contribute 0.025% of the total insured wages to the wages compensation fund every month.

Supplementary NHI Premium: There is supplementary premium for additional income earned (e.g. bonuses, commission). Employers must contribute based on (Employee’s monthly taxable amount, minus NHI Insured Amount) x 2.11%.

Social Security System
Monthly Salary Cap (TWD) Employer Contribution (%) Employee Contribution Rate (%) Government Contribution (%)
National Health Insurance (NHI) 219,500 4.90 1.55 0.82
Labor Insurance 45,800 7.35 2.10 1.05
Employment Insurance 45,800 0.70 0.20 0.10
Labor Pension 150,000 6.00 (minimum) Voluntary 0.00 – 6.00 (maximum) 0.00
Workers’ Compensation (or Occupational Hazards Insurance) 72,800 0.06 – 2.97 (common rate = 0.21% x 60%) 0.00 0.00 (common rate = 0.21% x 40%)
Wages Compensation Fund (or Arrear Wage Payment Fund, added in Dec 2021) 45,800 0.025 0.00 0.00
Supplementary NHI Premium (on bonuses, commission)   2.11

*The above rates serve as a broad guideline. Actual rates charged will differ.

Employees

Salary Payment

Generally monthly. Common to pay between the 25th – 31st of the month or by the 5th of the following month.

Payslip

Monthly available on website, pdf, or paper.

Annual Leave

An employee can work no more than eight hours a day (not including overtime) and no more than 40 hours per week. He/she must have at least two rest days every seven days, with one mandatory day off and one flexible rest day. An employee cannot agree to work on the mandatory rest day. The employee may agree to work on the flexible rest day, but higher overtime rates will apply.

Holiday Allowance

Taiwan has 10 to 15 public holidays. Generally, full time employees will be paid for public holidays.

Some of the holidays are fixed dates, and some are based on the lunar calendar. Employers and employees can mutually reach an agreement to adjust these holidays to working days.

Annual Leave

For employees who have commenced their employment:

  • Over six months but less than one year ago, he/she is entitled to three days leave.
  • Over one year but less than two years ago, he/she is entitled to seven days leave.
  • Over than two years but less than three years ago, he/she is entitled to 10 days leave.
  • Over than three years but less than five years ago, he/she is entitled to 14 days leave.
  • Over than five years but less than 10 years ago, he/she is entitled to 15 days leave.
  • Over 10 years, he/she is entitled to one additional day of leave (up to a maximum of 30 days).

Please refer to Article 38 of LSA for more detail.

The company can have more favorable plan than the LSA. However, per the LSA, employee has to work for the company for at least six month to become entitled to annual leave.

The employer and the employee can agree to carry over unused annual leave to the next year. However, any remaining annual leave must be converted into wages and paid to the employee at the end of the second year, or upon completion of the employment contract. When the employer and the employee do not agree to carry over unused annual leave to the next year or when their employment contract is terminated, one day’s regular wages must be paid for each day of unused annual leave remaining.

Employers must notify their employees of their annual leave entitlements and the total amount to be paid in respect of unused annual leave on an annual basis, and they must record this information in each employee’s salary roll. Employees should be notified in writing, electronically, or be provided with some means to access and print out the information, prior to the period when wages are usually paid each year.

Sick Leave

  • Employees receive medical service or rest on account of ordinary injury, sickness, or physical reasons, he shall be entitled to ordinary sickness leave according to the following provisions: 1. For the non-hospitalized, a total of less than thirty days in one year; 2 For the hospitalized, not exceeding one year; 3. The total of hospitalized and non-hospitalized sick leave shall not exceed one year; when employees diagnosed with cancer (including carcinoma in situ) or pregnancy with threatened abortion by physician, out-patient treatment period shall be included to hospitalized sick leave.
  • When employees take sick leave, employees receive 50% of their regular pay from the employer. In case the insured person has at least one full year of insurance coverage prior to the occurrence of the injury or sickness, such benefits shall be payable for an additional six months. Any cash sickness benefit provided by labor insurance that is less than 50% must be made up by the employer. The combined number of sick days taken generally cannot exceed one year within a two-year period. Employers can grant additional leave beyond the maximum one-year period at their discretion, or they can choose to terminate the employment relationship.
  • Employees can take additional unpaid leave with employer’s approval if their paid sick leave and annual leave allowances have been used. The employer can grant the employee an absence of leave without paying for a maximum period of one year.

Maternity & Parental Leave

  • Female employees are entitled to maternity leave before and after childbirth for a combined period of eight weeks.
  • If the employee has more than six months of service, she is entitled to full pay during her maternity leave.
  • If she has been working less than six months, she is entitled to half-pay.

Paternity Leave

  • A male employee is entitled to seven days of paid paternity leave, to be used when he accompanies his spouse for pregnancy checkups or when the child is born.

Pregnancy Checkup Leave

During an employee’s term of pregnancy, their employer shall grant seven days of leave for pregnancy checkups.

Other Leaves

Parental leave: Employees with children under the age of three are eligible for up to two years of unpaid leave for the care of the child. Leave must be for a minimum of six months. Employees covered by labor insurance with more than one year of coverage are eligible for a parental allowance.

Employers should allow employees with children under three years old to reduce their work day by one hour (without pay), or adjust their working hours.

Family leave: Employers with more than five employees must grant employees seven days of paid leave per year for personal care of family members.

Personal leave: Employees are also entitled to additional days of paid leave, including eight days for marriage, and three to eight days upon the death of a relative, depending on the relationship. Employees may receive a maximum of 14 days of unpaid leave annually for personal business. Employees must be granted leave if called for military duty.

Benefits to the Employee in Taiwan

Overtime Rates

Overall working hours cannot exceed 12 hours a day (regular working hours plus overtime hours), and the maximum amount of overtime hours currently allowed is 46 hours per month. Taiwan’s amended Labor Standards Act stipulates that overtime can now be calculated over a consecutive three-month period by employers and may not exceed 54 hours in one month and 138 hours in three months.

The overtime payment calculations for overtime work completed by employees on workdays are as follows:

  • Between eight and up to 10 hours: 1.34 times the regular hourly wage.
  • Over 10 hours and up to 12 hours: 1.67 times the regular hourly wage.

The new overtime payment calculations for overtime work completed by employees on flexible rest days are as follows:

  • Between 0 and up to two hours: 1.34 times the regular hourly wage.
  • Over two hours and up to eight hours: 1.67 times the regular hourly wage.
  • Over eight hours and up to 12 hours: 2.67 times the regular hourly wage.

Benefits and Pensions

Labor Pension Act (LPA) requires employers to make contributions equal to no less than 6% of pay to employees’ LPA sub-account monthly. Employees can contribute no more than 6% of pay on voluntary basis and be current year income tax deductible. LPA normal retirement is 60 years of age. Benefit can be paid under annuity form for LPA participation of no less than 15 years. Survivors benefit or retirement with less than 15 years of LPA participation will be made in lump sum.

Other Benefits

Other common employee benefits arranged by employers include:

  • Leaving service benefits (LSB)
  • Life, accident, and business travel insurance
  • Housing allowances
  • Festival bonuses, etc.

Meal allowances can be provided for up to a maximum of TWD 2,400 per month and are exempted from individual income tax.

Housing allowances are mainly provided to expatriates and some senior level executives and are included from taxation. Most multinational companies provide these enhanced benefits to attract and retain local talent.

Medical benefits are typically extended to employees’ spouses and dependent children.

Generally, it is recommended to budget about 20% as benefits cost on top of the gross salary to allocate the total employer’s cost, including benefits in Taiwan.

Visas and Foreign Workers

General Information

Foreign employees need a valid work permit to work in Taiwan. They can apply for a residence permit after the work permit has been approved. Foreigners who have a valid offer letter to work in Taiwan but have not obtained a visa must apply for a residence visa before entering Taiwan. Those who have registered for the normal expansion visa can apply to convert the residence visa to National Immigration Bureau Visas (NIA). Foreign employees who have obtained a residence permit must apply for an alien residence permit (ARC) within 15 days after the arrival date.

The procedure is generally as follows:

Work Permit: The employer must submit an application to the Council of Labor Affairs for a work permit. The work permit is typically issued for six months’ validity, although it may be extended up to a maximum period of three years. For the application of the work permit, there are two job categories: specialized or technical workers and managerial employees. For the employer to be eligible to hire managerial employees, there are more stringent revenue requirements. In addition, different types of employment require different documents.

Visa: Once the work permit has been approved by the Ministry of Labor, the foreign worker must apply for a work visa from an Overseas Office of the Republic of China (Taiwan). The visa allows the employee to reside in Taiwan for the duration of employment.

Resident Certificate: Once the employee receives the work permit from the employer and has visa clearance, he/she can travel to Taiwan. The employee must obtain an Alien Resident Certificate (ARC), which is proof that the visa may be used for day-to-day activities without the need for a passport while the employee is in Taiwan. The ARC also allows multiple re-entries, which must be shown at immigration checkpoints if the employee intends on entering and exiting Taiwan. This is done through a local National Immigration Agency (NIA) in Taiwan and must be done within 15 days of arrival in Taiwan.

Medical Examination: Within three days of arrival in Taiwan, the foreign worker must undergo a medical examination if it is his/her first time traveling to Taiwan. This can be done at a local Center for Disease Control.

Application for Employee Insurance: Once the employee has obtained the work permit, visa and Alien Resident Permit, he/she is able to work under the employer. However, the employer must take further measures and registration steps within three days of receiving the ARC or will be subject to a small fine.

Additionally, within three days of the worker’s arrival, the employer must apply for an entrance report at the local Department of City Government. This must be done, or the employer’s recruitment permit and the employer’s work permit may be annulled. The employer must also apply for the coverage enrollment of National Health Insurance within three days from the date the ARC is issued. This is done through the Bureau of National Health Insurance.

Public Holidays in 2022

S.No Occasion Date
1 New Year’s Day January 1st
2 Chinese New Year January 29th – February 6th
3 Peace Memorial Day February 28th
4 Tomb Sweeping Festival April 2nd – 5th
5 Labour Day May 1st
6 Dragon Boat Festival June 3rd
7 Mid-Autumn Festival September 9th
8 National Day October 10th

 

*If a public holiday that falls on a rest day (typically Sunday) or another public holiday, the next working day shall be a holiday in substitution.

 

 

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