Employer of Record Guide in Taiwan
Taiwan's thriving tech ecosystem and skilled workforce make it an attractive destination for global expansion, but navigating local employment laws requires careful attention to detail. Our comprehensive guide breaks down everything you need to know to hire compliantly and build your dream team in this dynamic market.
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Taiwan's economy is powered by innovation hubs like Taipei and Taichung, where demand for AI engineers and semiconductor specialists continues to surge. Understanding the local market dynamics—from tax structures to talent hotspots—sets the foundation for successful hiring decisions.
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Your EOR guide in Taiwan
From minimum wage requirements to complex leave policies, Taiwan's employment regulations demand precision and local expertise. This detailed breakdown covers the essential compliance requirements that will keep your hiring process smooth and legally sound.
Minimum Wage
Taiwan's minimum wage is adjusted annually by the government. As of 2024:
- Monthly Minimum Wage: TWD 27,470 (approximately CAD $1,200)
- Hourly Minimum Wage: TWD 183 (approximately CAD $8)
- Effective Date: January 1, 2024
The minimum wage applies to all employees except domestic workers, who have separate wage standards. Employers must pay at least the minimum wage regardless of the payment structure (monthly salary, hourly wage, or piece rate).
Payroll Cycle
- Monthly: Most common payment schedule (by the 5th of the following month)
- Bi-weekly: Allowed but less common
- Weekly: Permitted for certain industries
Taiwan's Labour Standards Act requires employers to pay wages at least once per month, with specific deadlines for payment.
Individual Income Tax
Taiwan uses a progressive tax system for residents:
| Annual Income (TWD) | Tax Rate |
|---|---|
| Up to 560,000 | 5% |
| 560,001 to 1,260,000 | 12% |
| 1,260,001 to 2,520,000 | 20% |
| 2,520,001 to 4,720,000 | 30% |
| Over 4,720,000 | 40% |
Tax Residency: Individuals residing in Taiwan for 183 days or more in a calendar year are considered tax residents and subject to tax on worldwide income.
Employer Payroll Contributions
Employers in Taiwan must contribute to several mandatory insurance and pension schemes:
| Contribution Type | Employer Rate | Employee Rate | Total Cost |
|---|---|---|---|
| Labour Insurance | 7.5-13.5% | 2-3% | 9.5-16.5% |
| National Health Insurance | 4.91% | 4.91% | 9.82% |
| Labour Pension | 6% minimum | 0-6% voluntary | 6-12% |
| Employment Insurance | 0.05% | 0.05% | 0.1% |
Estimated Total Employer Cost: 15-20% of gross salary
Note: Rates vary based on industry risk classification and salary levels. Writers should verify current rates with Taiwan's Ministry of Labour.
Working Hours
Taiwan follows standard international working time regulations:
- Standard Work Week: 40 hours over 5-6 days
- Daily Limit: 8 hours per day (can extend to 12 hours with overtime)
- Weekly Limit: 40 hours regular time + maximum 46 hours overtime per month
Flexible Working: Employers may implement flexible schedules with employee consent, including:
- Flexitime arrangements
- Compressed work weeks
- Variable daily hours (within legal limits)
Overtime Pay
Taiwan has specific overtime compensation requirements:
- First 2 hours daily: 1.33× regular hourly rate
- Beyond 2 hours daily: 1.67× regular hourly rate
- Rest days: 1.33× for first 8 hours, 1.67× thereafter
- National holidays: 2× regular rate
Monthly Overtime Limit: 46 hours maximum per month, with annual limit of 138 hours.
Employment Classifications
Full-time Employees:
- Work 40 hours per week
- Entitled to full benefits and protections
- Subject to standard termination procedures
Part-time Employees:
- Work fewer than 40 hours per week
- Pro-rated benefits based on hours worked
- Same hourly wage protections as full-time staff
Fixed-term Contracts:
- Maximum 3 years duration
- Can be renewed once for same period
- Automatic conversion to permanent after 6 years total
Vacation Leave
Taiwan provides generous annual leave that increases with tenure:
| Years of Service | Annual Leave Days |
|---|---|
| 6 months - 1 year | 3 days |
| 1 - 2 years | 7 days |
| 2 - 3 years | 10 days |
| 3 - 5 years | 14 days |
| 5 - 10 years | 15 days |
| 10+ years | +1 day per year (max 30 days) |
Vacation Pay: Full salary during leave Carryover: Unused leave may be carried forward or paid out, subject to company policy
Sick Leave
Taiwan provides comprehensive sick leave coverage:
- Paid Sick Leave: 30 days per year at full salary
- Extended Sick Leave: Additional days at half-pay (up to 1 year total)
- Medical Certificate: Required for leave exceeding 3 consecutive days
- Chronic Conditions: Special provisions for ongoing medical treatment
Maternity Leave
Duration: 8 weeks (56 days) of paid maternity leave Timing: Can be taken before and/or after childbirth Pay: Full salary during leave period Job Protection: Guaranteed return to same or equivalent position
Paternity Leave
Duration: 5 days of paid paternity leave Timing: Must be taken within 15 days of child's birth Pay: Full salary during leave period
Parental Leave
Duration: Up to 2 years unpaid leave per child (until child turns 3) Eligibility: Available to both parents after 6 months of employment Job Protection: Right to return to work guaranteed Benefits: Continued health insurance coverage
Family Care Leave
Duration: 7 days per year for family emergencies Pay: Unpaid leave Usage: Can be taken in hourly increments Qualifying Events: Serious illness or injury of family members
Bereavement Leave
| Relationship | Leave Days | Pay Status |
|---|---|---|
| Spouse, parents | 8 days | Paid |
| Grandparents, siblings | 6 days | Paid |
| Other relatives | 3 days | Paid |
Summary
| Leave Type | Duration | Paid? | Funding |
|---|---|---|---|
| Annual Leave | 7-30 days/year | Yes | Employer |
| Sick Leave | 30 days + extended | Yes/Partial | Employer |
| Maternity Leave | 8 weeks | Yes | Employer |
| Paternity Leave | 5 days | Yes | Employer |
| Parental Leave | Up to 2 years | No | — |
| Bereavement | 3-8 days | Yes | Employer |
Termination Types
Termination With Cause:
- Serious misconduct or violation of work rules
- No advance notice required
- No severance pay obligation
- Must be documented and justified
Termination Without Cause:
- Business reasons, redundancy, or performance issues
- Requires advance notice or payment in lieu
- Severance pay may be required
- Must follow proper procedures
Notice Period Requirements
Notice periods vary based on length of service:
| Length of Employment | Notice Period |
|---|---|
| 3 months - 1 year | 10 days |
| 1 - 3 years | 20 days |
| 3+ years | 30 days |
Payment in Lieu: Employers may pay salary equivalent instead of providing working notice.
Severance Pay
Severance pay is required for certain termination scenarios:
Calculation:
- First 15 years: 0.5 months' salary per year of service
- Beyond 15 years: 1 month's salary per year of service
- Minimum: 1 month's salary (if employed over 3 months)
When Required:
- Business closure or downsizing
- Employer-initiated termination without cause
- Certain contract non-renewals
Mass Layoffs
Special procedures apply for large-scale terminations:
- 10+ employees: 10 days advance notice to labour authorities
- Consultation: Required with employee representatives
- Retraining: Employer may be required to provide job placement assistance
Final Pay Requirements
Employers must provide final payment within 30 days of termination, including:
- Outstanding salary and overtime
- Unused vacation pay
- Severance pay (if applicable)
- Any other contractual benefits
Legal Protections
Employees cannot be terminated for:
- Pregnancy or maternity leave
- Filing labour complaints
- Union activities
- Discrimination based on protected characteristics
- Refusing to work excessive overtime
National Holidays
Taiwan observes 12 national holidays annually:
| Holiday | Date | Notes |
|---|---|---|
| New Year's Day | January 1 | 3-day weekend |
| Lunar New Year | Variable (Jan/Feb) | 7-day holiday |
| Peace Memorial Day | February 28 | — |
| Children's Day | April 4 | Combined with Tomb Sweeping |
| Tomb Sweeping Day | April 5 | Variable date |
| Dragon Boat Festival | Variable (May/June) | Lunar calendar |
| Mid-Autumn Festival | Variable (Sept/Oct) | Lunar calendar |
| National Day | October 10 | Double Ten Day |
Holiday Pay Rules
Working on Holidays:
- Employees receive double pay (2× regular rate)
- Alternative day off may be provided instead
- Overtime rules apply if working beyond 8 hours
Eligibility: All employees are entitled to holiday pay regardless of tenure or employment type.
Make-up Work Days
Taiwan occasionally designates Saturdays as working days to create longer holiday periods. Employees must work these days at regular pay rates, with the time off compensated during the extended holiday period.
Required Documentation
Employment Contract: Must include:
- Job title and responsibilities
- Salary and payment terms
- Working hours and overtime policies
- Leave entitlements
- Termination procedures
- Confidentiality and IP clauses
Government Forms:
- Tax withholding forms
- Labour insurance enrollment
- National health insurance registration
- Alien Resident Certificate (for foreign employees)
Identity Verification:
- National ID card (Taiwan citizens)
- Passport and work permit (foreign nationals)
- Health examination certificate (certain industries)
Work Authorization
Foreign Employees require:
- Work permit from Ministry of Labour
- Alien Resident Certificate (ARC)
- Health examination from approved hospital
- Criminal background check from home country
Processing Time: 2-4 weeks for work permit approval
Language Requirements
- Official Language: Traditional Chinese (Mandarin)
- Contracts: Must be provided in Chinese; English translations acceptable as supplements
- Workplace Communication: Varies by company; many international firms operate in English
Banking Setup
- Local Bank Account: Required for salary payments
- Documentation: ARC, employment contract, and passport needed
- Processing Time: 1-2 weeks for account opening
Insurance Enrollment
Mandatory Enrollments:
- Labour Insurance (within 3 days of employment)
- National Health Insurance (immediate coverage)
- Employment Insurance (automatic with Labour Insurance)
Probationary Period
- Standard Duration: 3 months (can extend to 6 months by agreement)
- Termination: Shorter notice periods apply (3-10 days)
- Benefits: Full benefits apply during probation
- Performance: Regular evaluation and feedback required
Onboarding Timeline
| Step | Timeline |
|---|---|
| Job offer accepted | Day 0 |
| Work permit application (foreign employees) | Day 1-7 |
| Employment contract signed | Day 7-14 |
| Insurance enrollments | Day 14-17 |
| Bank account setup | Day 14-21 |
| First day of work | Day 21-30 |
Worker Classification
Taiwan strictly distinguishes between employees and independent contractors:
Employees:
- Subject to employer control and supervision
- Receive regular salary and benefits
- Protected by Labour Standards Act
- Employer withholds taxes and insurance
Independent Contractors:
- Operate with autonomy and independence
- Invoice for services provided
- Responsible for own taxes and insurance
- Not covered by employment protections
Misclassification Risks: Penalties include back payment of insurance contributions, taxes, and potential labour violations.
Union Relations
- Union Membership: Voluntary in most industries
- Collective Bargaining: Limited but growing in certain sectors
- Labour Disputes: Mediation through local labour bureaus
- Strike Rights: Legal but subject to procedural requirements
Anti-Discrimination Laws
Taiwan prohibits discrimination based on:
- Gender and pregnancy status
- Age (with some exceptions)
- Race and ethnicity
- Religion and political beliefs
- Disability status
- Sexual orientation
Gender Equality: Strong protections for workplace gender equality, including equal pay requirements and sexual harassment prevention.
Remote Work Considerations
Legal Framework: Remote work is permitted but not specifically regulated Equipment: Employers typically provide necessary tools and technology Working Hours: Standard hour limits and overtime rules still apply Health and Safety: Employer responsibility extends to home office setup
Cross-border Considerations: Foreign employees working remotely for Taiwan companies may face visa and tax complications.
Cultural Workplace Norms
Communication Style: Hierarchical respect with indirect communication Work-Life Balance: Improving but long hours still common in some industries Relationship Building: Important for business success Face-Saving: Avoid public criticism; provide feedback privately
Business Etiquette: Punctuality highly valued, business cards exchanged formally, and group harmony prioritized over individual recognition.
Built-in benefits packages for Taiwan
When the world is your competition, it pays to incentivize new hires and existing alike. Borderless AI benefits packages typically inlucde:
Medical Insurance
Dental Insurance
Retirement Contribution
Life Insurance
Vision Insurance
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