If you are planning a business entry into the Taiwan market, you might want to hire an employee in Taiwan to test the market before fully establishing your business there. The article below would help you to understand the basic employment related policies and norms in Taiwan.
Companies who don’t have any legal entity in Taiwan, do not have any hiring ability in Taiwan. If a foreign company needs to hire an employee in Taiwan, they have to hire the employee through an experienced employment service provider in Taiwan, like HROne. HROne aims to smoothen the market entry of foreign companies into Taiwan market by offering the services they might require at different stages of their Taiwan market entry.
In recent years, with the increase of employment law disputes, hiring employees in Taiwan has become an increasingly prominent issue. The Labor Standards Act (LSA) is the most important labor-related law which modulate terms and conditions of employment in Taiwan. The LSA can be applied to most of the industries and categories of employees.
In case of foreigner employees working in Taiwan, no matter what governing law has been chosen on the employment contract, Taiwanese law should be also applicable. With a few exceptions, foreign nationals must hold a work permit to work legally in Taiwan. If an employee has been employed under Taiwan labor law and the employer requests him/her to work overseas, the employment relationship will continue to be governed by the labor law of Taiwan unless the original agreement has been terminated.
An employment contract is a very important for any employment relationship. But, if a company wants to hire employees in Taiwan, it is not mandatory to have a written employment contract. However, it is highly recommended for the employer company to use written contracts to protect all the legitimate rights and obligations of both employer and the employee.
The LSA broadly defines “worker” as a person who is hired by an employer to do a job for which wages are paid. In Taiwan, there are two types of contracts; fixed-term (temporary), including but not limited to seasonal and designated work, temporary, short-term, and indefinite-term (permanent) contracts.
While there is no standard employment contract template, the following terms should always be included:
- Code of conduct
- Discipline at work
- Working time
- Leaves and Vacations.
- Location of work
- Job duties
Upon mutual agreement, an employment contract can be conveyed in Chinese, English or any other language. In case of any future dispute, Chinese translation of the agreement, and any supporting documents will be required.
Hiring Expatriate Employees in Taiwan
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.
Taxation of Expatriate Employees in Taiwan
Employees who are the residents of Taiwan are subject to 20% flat rate. The top rate of individual’s income tax is 45%. The employees who are non-residents and stay in Taiwan for less than 183 days, are subject to a flat rate of 18%.
Employee Mandatory Benefits in Taiwan
Explained below are the employee statutory benefits in Taiwan:
- National health insurance (NHI)
National health insurance contribution allocated among the employee (30%), the government (10%) and the employer (60%).
- Labor insurance
Taiwanese Legal Entities with more than 5 employees must contribute for labor insurance. The labor insurance is shared by the employers (70%), employees (20%) and the government (10%). The maximum monthly insurance salary is TWD 45,800.
- Employment Insurance
Companies with at least one employee in Taiwan must contribute to the insurer’s employment service insurance premium.
- Labor pension
At least 6% of employees’ monthly wages, shall be contributed by the employers in Taiwan.
Public Holidays in Taiwan
Taiwan has 10 to 15 public holidays. Some of the holidays are fixed dates and some are based on the lunar calendar.
- Founding Day of the Republic of China (January 1)
- Republic Day/New Year’s Day observed (January 2)
- 228 Memorial Day (February 28)
- Youth Day (March 29)
- Women and Children’s Day (April 3)
- Qingming Festival/Tomb-Sweeping Day (April 5)
- Dragon Boat Festival (lunar May 5)
- Mid-Autumn Festival (Lunar New Year August 15)
- Teachers’ Day (September 28)
- National Day (October 10)
- Taiwan’s Retrocession Day (October 25)
- Anniversary of the President Chiang Kai-shek (October 31)
- Sun Yat-sen’s Birthday (November 12)
- Constitution Day (December 25)
- Lunar New Year’s Eve
- Lunar New Year (first three days of the lunar month)
- Other public holidays as designated by the central competent authority
Employers and employees can mutually reach an agreement to adjust these holidays to working days.
Annual leave in Taiwan
In Taiwan, Employees who have commenced their employment:
- Over six months but less than one year ago, he/she is entitled to 3 days leave.
- Over one year but less than two years ago, he/she is entitled to 7 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 ten years ago, he/she is entitled to 15 days leave.
- Over ten years, he/she is entitled to one additional days of leave (up to a maximum of thirty days).
Employment Termination policies in Taiwan
In Taiwan, An employment relationship shall always be terminated in compliance with the LSA’s terms and conditions. Employers need provide an advance notice and pay severance payment only under special conditions.
The advance notice has to be provided on the basis of the duration of employment:
- For the employees who serve more than three months and less than one year, the advance notice should be ten days.
- For the employees who serve more than one year but less than three years, the advance notice should be twenty days.
- For the employees who serve three years or more, the advance notice should be thirty days.
How HROne can be beneficial to your business
HROne’s offers Employee Leasing/Talent dispatching services for companies not having a legal entity in Mainland China, Taiwan and Hong Kong. HROne fulfills all essential responsibilities as that of a legal employer for the local employees in Mainland China, Taiwan and Hong Kong.
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