International Employment Law Guide

Analysis

Taiwan

International Employment Law Guide

This page outlines country-level details about the onboarding process when hiring employees, and touches upon the applicable rules when terminating employment contracts.

Last updated: 1 April 2021

A. Hiring of employees (onboarding)

Mandatory employer requirements

When employing an individual in Taiwan, some employer obligations are to be met:

  • Take out labor insurance (in Chinese: 勞工保險), employment insurance (in Chinese:就業保險) and national health insurance (in Chinese:全民健康保險);
  • Draft work rules (in Chinese: 工作規則) and report to the authorities if hiring at least 30 people;
  • Register with the national health or labor insurance authorities to establish the insurer unit;
  • Make monthly contributions to the employee’s personal labor pension account;
  • Apply for government permission if employing foreign workers; and
  • Take precautions and measures for the safety and health of the employees to prevent occupational hazards, and to provide a working environment with proper conditions and welfare facilities.

The work rules must contain a number of mandatory items such as the work schedules, holidays, overtime, bonus, the salary pay date, disciplinary measures, termination, layoff, retirement, etc.

It is not required to establish a Taiwan legal entity to hire someone to work in Taiwan.

Probation periods

The employer and employee may agree on a reasonable probation period in good faith. The law does not foresee a maximum probation period, but in practice, the probation period is often limited to 3-6 months. During the probation period, the employer must comply with the Taiwan Labor Standards Act in the event of termination of the employment, including respecting the ordinary notice period.

Hiring checks

Medical examination
Employers must conduct pre-employment physical examinations for employees at the time of employment, and health examinations for current employees. The employer bears the costs. The employees have an obligation to accept the pre-employment physical examinations.

Requesting personal information

  • An employer is prohibited to request any personal information documents unrelated to the employment, in violation of their free will from job seekers or employees;
  • The “personal information” includes physiologic information (e.g., genetic test, medication test, medical treatment tests, HIV tests, intelligence quotient tests and fingerprints), psychological information (e.g., psychiatric tests, loyalty tests and polygraph tests, etc.), and personal lifestyle information (e.g., financial records, criminal records, family plans and background checks); and
  • When requesting personal information, the employer must request personal information within the necessary and specific scope based on the purpose of economic demands or public interest protection.

Diversity & inclusion

For the purpose of ensuring equal opportunities in employment across Taiwan, an employer is prohibited from discriminating against any job applicant or employee on the basis of race, class, language, thought, religion, political party, place of origin, place of birth, gender, gender orientation, age, marital status, appearance, facial features, disability, horoscope, blood type, or past membership in any labor union. However, the above restriction does not apply to the situation in which the nature of work would only be suitable to a specific gender.

Types of employment contracts

Labor contracts may be divided into two categories: fixed-term contracts and open-ended contracts. An employment contract for continuous work is considered to be an open-ended contract.

Temporary, short-term, seasonal, or specific work may be performed under a fixed-term contract. In addition, to encourage employers to rehire elder employees, it is allowed to employ individuals at the age of 65 or more by fixed-term contact. However, in any one of the following situations, a fixed-term contract must be deemed as an open-ended one upon the expiration of the contract (a fixed-term contract for specific or seasonal work will not apply):

  • When an employer raises no immediate objection when a worker continues his/her work; and
  • When, despite the execution of a new contract, the prior contract and the new one together cover a period of more than 90 days and the period of time between expiration of the prior contract and execution of the new one does not exceed 30 days.

Specific rules for executives

If there is a personal, economic and organizational subordination between the business entity and the executive—an employee-employer relationship is established, and thus the employment must be governed by the Taiwan labor laws.

Language requirements

No specific language requirements apply.

COVID-19 measures

Taiwan government provides subsidies to employers hiring the unemployed, and also educational assistance and subsidies to the unemployed who have children.

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B. Termination of employees (offboarding)

Kinds of dismissal

The employer may only terminate the employment contract under the circumstances prescribed by law, which can be divided into the following two situations:

  • Requiring advance notice:
    The employer may terminate a labor contract with advance notice only if any of the following situations arise:
    • The employer’s business is suspended, or has been transferred;
    • The employer’s business suffers operating losses or business contractions;
    • Force majeure necessitates the suspension of business for more than one month;
    • The change of the nature of business necessitates reduction of the workforce and the terminated employees cannot be reassigned to other suitable positions; or
    • The employee is clearly not able to perform the duties required of the position held satisfactorily.
  • Without advance notice:
    The employer may terminate an employment contract without advance notice only in one of the following situations:
    • The employee misrepresents a fact at the time of signing the employment contract in a manner which might mislead the employer and thus caused him/her to sustain damage therefrom;
    • The employee commits a violent act against, or grossly insults, the employer, his/her family member or agent of the employer, or a fellow employee;
    • The employee has been sentenced to temporary imprisonment in a final and conclusive judgment, and is not granted a suspended sentence or permitted to commute the sentence to payment of a fine;
    • The employee is in serious breach of the employment contract or in serious violation of work rules;
    • The employee deliberately damages or abuses any machinery, tool, raw materials, product or other property of the employer, or deliberately discloses any technical or confidential information of the employer, thereby causing damage to the employer; or
    • The employee is, without good cause, absent from work for three consecutive days, or for a total of six days in any month.

Dismissal motivation

The employer must have legal grounds before terminating the employment contract under Taiwan law. According to the court’s judgment, employers must clearly state the reason for the dismissal. If it is not clearly stated, it constitutes an illegal dismissal and the dismissal will not have legal effect.

When dismissing a worker, the employer is obliged to inform the worker specifically of the reasons for dismissal, and may not arbitrarily rearrange or add the reasons for the dismissal not originally stated. The reason for judging whether it is in accordance with the law is limited to that specifically notified by the employer at the time of dismissal, and cannot be influenced by other uninformed causes.

Notice period

The minimum period of advance notice for termination of employment by the employer is:

  • 10 days in advance where an employee has worked continuously for more than three months but less than one year;
  • 20 days in advance where an employee has worked continuously for more than one year but less than three years; and
  • 30 days in advance where an employee has worked continuously for more than three years.

After receiving the advance notice, the employee may, during hours of work, ask for a leave of absence with pay for the purpose of finding a new job (no more than two working days per week).

The employer may terminate the employment contract with payment in lieu of notice.

Severance pay

Severance pay is regulated in both pension schemes of Taiwan—the old and the new pension scheme:

  1. New pension scheme
    After the Labor Pension Act was enacted and then enforced in mid-2005, the new pension scheme applies to (a) all contracts stated after mid-2005; and (b) employment contracts started prior to 2005 but only to the seniority earned since 2005, if the employees have chosen the new pension scheme. The calculation of severance pay per new pension scheme should be based on the employee’s seniority and be equivalent to half a month of average wages for every full year of employment, and in proportion for a period of employment lasting less than one full year; the severance must not exceed six months of average wages.
  2. Old pension scheme
    If the employee continues to work for a business entity owned by the same employer, severance pay is equivalent to one month’s average wage for each year of service. The severance pay for the months remaining after calculation or for employees who have been employed for less than one year must be calculated proportionally; any period of employment less than a month must be calculated as one month.

Dismissal formalities

Employers in Taiwan may dismiss employees in writing or orally, but if a dispute arises in the future, employers have to bear the burden of proof in the civil proceedings.

In the event of a layoff, the employer must prepare a list of the laid-off employees, at least ten days prior to the termination date of employment, indicating personal information such as the names of the employees, gender, age, positions, the cause of the layoff and so on, and submit the list to the local competent authority as well as public employment services institutions, in order to inform them. The employer may complete/submit the list within three days following the termination date of employment if the layoff is caused by a natural disaster, unforeseen event or any other force majeure events.

Special dismissal protection

There are several laws containing special dismissal protection rules. For example, employers must not issue an advance notice to terminate the employment contract with employees suffering occupational accidents except under special conditions listed in the law. Also, employers must not terminate the employment if the employee gets married, becomes pregnant, or engages in childbirth or childcare activities. The termination of the employment contract in violation of these special regulations must be deemed null and void.

Legal means of employees

If the employer terminates the employment without statutory termination reasons or compliance with the statutory termination period, the dismissal is illegal. The employee is entitled to apply for mediation or arbitration or to bring a lawsuit to the court and ask the court to confirm that the dismissal is illegal and the employment contract is still valid. According to case law, the employee has to take the employer to court within five years.

Specific rules for executives

Taiwan labor laws must apply to the executives who engage in employment contracts.

Collective dismissals

In Taiwan labor laws, the rules on mass redundancy of employees (in Chinese: 大量解僱勞工) apply when a business entity plans to lay off a certain number of employees within a specific period of time:

Business unit size Number of employees dismissed
< 30 10 within 60 days
30 - 200 A third of the total within 60 days or > 20 employees within 1 day
200 - 500 A quarter of the total within 60 days or > 50 employees within 1 day
> 500 A fifth of the total within 60 days or > 80 employees within 1 day

Alternatively, the rules also apply in case a business entity dismisses more than 200 workers within 60 days or more than 100 employees within one day.

In case of mass redundancy of employees, the employer must, at least sixty days in advance, inform the officials of the competent authority and other relevant agencies, including the labor union, the labor representatives of the labor management conference, and the employees, of its redundancy plan by a written notice and announce it by publishing an announcement.

COVID-19 measures

There are no specific dismissal rules related to COVID 19. However, the employer is not allowed to terminate the employment for the reason that the employee takes “Disease Prevention Isolation Leave", "Disease Prevention Childcare Leave", or "Vaccination Leave", which are special leaves in responding to the pandemic.

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Get in touch

Show Y. Chen
Taiwan
shochen@deloitte.com.tw | +886 7 5301888

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