Expand your business into Taiwan - without an entity
Horizons provides global employment solutions for businesses wanting to hire employees and distribute payroll in Taiwan. Through our Taiwan PEO and EOR, we manage your company’s payroll, benefits, and expenses in Taiwan. Additionally, we oversee HR duties, as well as employment and tax compliance.
Horizons will act as your employees’ Employer of Record, which means you can begin doing business in Taiwan without a local entity. This not only allows your business to go to market faster, but also has the potential to save your business thousands in expansion costs.
As the only Taiwan PEO with an in-house recruitment team, Horizons will source, hire, and onboard your Taiwan workforce. We hire employees in accordance with Taiwan’s labor regulations and coordinate all expense claims and benefits payments. Although we act as your employees’ Employer of Record, you still maintain full autonomy and control over all employees.
Our Taiwan PEO simplifies your expansion
Horizons enables your business to expand its operations into Taiwan – without setting up a legal subsidiary.
Horizons ensures day-to-day guidance to help your business navigate Taiwan’s labor laws and regulations. We also provide mandatory monthly payroll requirements, and absorb all local employment liabilities. Partnering with our Taiwan PEO is the quickest and most cost-effective way to enter the Taiwan market.
Employment & Labor Laws in Taiwan
📝 Taiwan employment contract types
Historically, individual employment contracts in Taiwan were not a common practice. However, in today’s employment landscape, individual employment contracts are common in Taiwan.
While individual employment contracts are not mandatory, employers are advised to establish these contracts when hiring new employees. Best practice is to draft a concise, written contract in the local language. Contracts should clearly state the employee’s job description, their responsibilities, and the compensation and benefits attached to the role.
In Taiwan, both offer letters and employment contracts should state the salary and any compensation figures in Taiwan dollars (TWD/NT$). Horizons can assist you to draft employment contracts, either through our Taiwan PEO or your own local entity.
Employment regulations in Taiwan are generally covered in the Labour Standards Act (LSA). However, there are some occupations in Taiwan that are not covered by this Act. In these circumstances, the Civil Code covers terms and conditions in individual contracts that are not covered in the LSA.
There are two main types of employment contract that recognized by the LSA. These contracts govern fixed-term and non-fixed-term employment. Fixed-term employment can be classified as:
- Temporary or short-term work – for a period of up to six months.
- Seasonal work – for a period of up to nine months.
- Special work – the duration of this form of employment is specified in the LSA. For special work, approval is required if the employment is due to last more than a year.
All employers with more than 30 employees must have their written work rules registered with Taiwan’s local labour authority.
⏰ Working hours in Taiwan
In Taiwan, the average work week consists of 40 hours – with eight hours per work day.
Aside from the highest-level country manager of an entity, all employees in Taiwan are eligible for overtime, even if they are on a salary. For the initial two hours of overtime on a standard work day, overtime is paid at a rate of 133%. The next two hours of overtime is paid at a rate 166%.
There are subsequent rules and costs if overtime occurs on a public holiday or rest day. In Taiwan, it is illegal for employers to request employees to work overtime on their day off.
📅 Taiwan public holidays
In Taiwan, there are public holidays for which employees are given the day off. These public holiday.
If any of these days fall on a Saturday, the preceding Friday will be a public holidays. Alternatively, if any of these days fall on a Sunday, the proceeding Monday will be a public holiday.
Lunar New Year Holiday
Peace Memorial Day
Tomb-Sweeping Day (in lieu)
Children’s Day (in lieu)
Dragon Boat Festival
Dragon Boat Festival Holiday
Mid Autumn Festival
National Day (in lieu)
Double Ninth Day
🏦 Income tax
In Taiwan, employees pay a progressive income tax. The highest tax rate is around 45% and begins at a salary level of NTD 10,310,001.
Employers in Taiwan must comply with local labor laws that stipulate the payment of certain benefits. Employers are required to provide benefits to employees and offer assistance with enrollment in the country’s social security systems. Additionally, employers must and pay for the following types of insurance:
- Labor insurance – at 9.5% of the employee’s insured grade
- Employment insurance – at 1% of the employee’s insured grade
- Health insurance – at 4.69% of the employee’s insured grade. 60% of this amount is paid by employer, 30% by the employee, and 10% by Taiwan government.
Employers in Taiwan also need to pay at least 6% of an employee’s insured grade, towards their pension plan. This benefit is paid into an employee’s Individual Pension Account.
🏥 Health insurance
All employers in Taiwan are required to enroll and participate in the National Health Insurance Act (NHIA). The NHIA states that all employers must provide comprehensive health coverage for their employees.
It is not compulsory for employers to provide their employees with private health insurance. However, many senior executives in Taiwan receive some form of private health insurance in their benefits.
When employers choose to provide their employees with supplemental benefits, this is generally made through a personal allowance. The employee is then able to purchase a health care plan that meets their requirements. Employers should budget no less $300 to cover the cost of private health insurance.
For employees that need to travel outside of Taiwan – as part of their job role – they need an appropriate travel insurance policy. This policy must include provisions for trip cancelation, baggage, medical repatriation, evacuation, and emergency travel expenses. Any employees that need to purchase travel insurance can can claim expenses through normal reimbursement channels.
🏖 Vacation leave
All employees in Taiwan are entitled to paid annual leave. The amount of annual leave is determined by the number of years that an employee has been with a company.
- For employees that have been with a company more than half a year, but less than a full year, they are entitled to three day’s annual leave.
- For employees that have been with a company more than a year, but less than two years, they are entitled to seven day’s annual leave.
- For employees that have been with a company more than two years, but less than three years, they are entitled to 10 day’s annual leave.
- For employees that have been with a company more than three years, but less than five years, they are entitled to 14 day’s annual leave.
- For employees that have been with a company more than five years, but less than 10 years, they are entitled to 15 day’s annual leave.
- For employees that have been with a company more than 10 years, they are entitled to 15 day’s annual leave, plus one extra day per year of service – up to 30 day’s annual leave.
😷 Sick leave
Employees in Taiwan are entitled to 30 day’s sick leave per year. This is paid at a rate that is half their standard pay. If an employee is hospitalized, they are entitled to a maximum of one year’s unpaid sick leave.
The total amount of sick leave in Taiwan must not exceed one year, in every two consecutive years.
👶 Maternity and paternity leave in Taiwan
In Taiwan, female employees are entitled to maternity leave before and after childbirth. The combined period for maternity leave is allocated at eight weeks.
- If a female employee has more than six month’s company service, she is entitled to full pay during her maternity leave.
- If a female employee has less than six month’s company service, she is entitled to half pay during her maternity leave.
Male employees in Taiwan are entitled to five day’s paid paternity leave. This can be taken when the mother of a male employee’s child has given birth.
💰 Termination and severance
Probationary employment periods are not compulsory in Taiwan. Even if a probationary period is stipulated in an employment contract, if an employee is dismissed during the probationary period, all requirements that relate to statutory cause, advance notice, and severance pay apply to the termination.
In Taiwan, there are restrictions on the termination of employment. For an employee to be dismissed, the termination must be for one or more of the following reasons:
- The business has closed or ownership has been transferred to another employer.
- The employer’s operations have been suspended by more than one month, through force.
- The nature of the employer’s business has changed. As such, a reduction in the number of employees is needed.
- The employee is deemed to be incompetent to fulfill the required work.
In any of the above circumstances, employers are required to provide reasonable notice and pay the employee. The only circumstances where notice and severance pay would not be required, are for serious breaches. This could include situations where the employee is violent towards their employer or co-workers, or causes willful property damage.
In circumstances where an employer or employee is required to provide notice, the following periods apply:
- For employees with more than three months, but less than one year’s company service, 10 day’s notice is required.
- For employee’s with more than year, but less than three year’s company service, 20 day’s notice is required.
- For employee’s with more than three year’s company service, 30 day’s notice is required.
Employees in Taiwan are entitled to two day’s paid leave – per week – during the notice period. This can be for the purpose of finding new employment. Employers can choose to make payment in lieu of the designated notice period.
Navigating employee terminations and handling severance packages can be complicated for companies expanding overseas for the first time. Horizons’ Taiwan PEO can mitigate risk for foreign companies and provide guidance through this process.
💳 Taiwan compensation and benefits
Taiwan compensation laws
The minimum wage in Taiwan is set at 23,100 NTD per month. This works out to be a minimum hourly wage of 150 NTD.
There are strict overtime laws that employers in Taiwan must abide by. For the first two hours of overtime, employees who are eligible must be paid at a rate that is 133% of their regular pay. For the second two hours of overtime, employees must be paid at a rate that is 166% of their regular pay.
Employment laws also stipulate additional regulations for employees that work overtime on rest days or public holidays. In these circumstances, employers will generally need employees to request managerial approval prior to commencing overtime. This is because unpaid overtime wages can alter an employee’s termination and severance.
Minimum Wage Country Comparison Chart
(Per month in USD)
Guaranteed benefits in Taiwan
In relation to guaranteed benefits, employers in Taiwan need to include statutory minimums concerning time-off, health insurance, and maternity and paternity leave.
There are nine annual public holidays in Taiwan, for which employees receive a day off. Additionally, employees are eligible for paid annual leave, based on the number of year’s service they hold with a company.
Female employees in Taiwan are entitled to maternity leave before and after childbirth for a combined total of eight weeks. Female employees that have worked for a company for more than six months receive maternity leave at full pay. For those that have worked less than six months, they receive maternity leave at half pay.
Male employees in Taiwan are eligible for five day’s paid paternity leave.
Taiwan benefit management
Employers in Taiwan should be aware of the voluntary benefits that many employees will expect. These benefits can include:
- Housing allowances
- Meal allowances
- Leaving service benefits (LSB)
- Life, accident, and business travel insurance
- Festival bonuses
- Medical benefits that extend to an employee’s spouse or children
Benefits and compensation restrictions
In Taiwan, the majority of restrictions for benefits and compensation stem from collective bargaining agreements or trade unions. While trade unions are not common in Taiwan, employers are advised to check whether their industry or employees are covered by such unions.