Taiwan PEO & Employer of Record

WeHG provides an International PEO and global Employer of Record service in Taiwan to companies willing to enter the Taiwanese market or hire local/expat employees in this country.

Traditional approach requires establishing a subsidiary in Taiwan.  However our solution allows you to start the operations in Taiwan within days hence save time and money.  WeHG would hire candidates on your behalf while you maintain full operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf. .

Taiwan fast facts

Population, million: 23,5
Land area: 36,197 km² 
Capital: Taipei
Local currency: New Taiwan dollar (TWD)

Taiwan  – officially the Republic of China (ROC), is a state in East Asia. Its neighbors include the People’s Republic of China (PRC) to the west, Japan to the northeast, and the Philippines to the south. It is the most populous state and largest economy that is not a member of the United Nations.

Hiring, Negotiating and Doing Business in Taiwan

Necessity of written employment contract

Generally, an employment contract need not be in writing. However, employers who wish to employ foreign nationals must have a written employment contract. The contract must include certain essential terms of employment, including, among other things, details on:

• Place of work.
• Work duties.
• Time of starting and finishing work.
• Vacations.
• Wages.
• Rules of conduct.
• Work discipline.

An employment contract can be in Chinese, English or any other language that the parties to the contract have agreed upon.

In the event of a dispute, Chinese translations of the agreement, and any supporting documents, must usually be prepared for submission with the court.

Different forms of engagement: employment, contracting, work with private entrepreneur

The Labor Standards Act broadly defines a worker as a person who is hired by an employer to do a job for which wages are paid. Employment contracts are divided into fixed-term (temporary) and indefinite-term (permanent) contracts. Contracts relating to temporary, short-term, seasonal and specified work are considered fixed-term contracts.

Individuals with substantial managerial authority may be deemed appointed managers that work under a mandate relationship under the Civil Code, rather than under an employment relationship.

An independent contractor working for a company is not considered an employee unless the language of the contract, or the substance of the relationship between the independent contractor and the company, implies that the relationship is an employment relationship.

Statutory employment rights are enjoyed upon employment. Fixed-term workers receive statutory rights and benefits that are essentially the same as those for indefinite-term workers. However, fixed-term workers are not entitled to notice or a severance payment upon expiration of the term of employment.

Taiwan Employment Contract

Types of employment agreements

Employment contracts are indefinite-term contracts unless otherwise specified as fixed-term contracts.

Employment contracts relating to temporary, short-term (less than six months), seasonal (less than nine months) or specified work (for a specific period) are considered fixed-term contracts.

Taiwan working hours

An employee can work no more than eight hours a day (not including overtime) and no more than 40 hours per week, and 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.

Vacation leave in Taiwan

In Taiwan, all employees are entitled to paid annual leave, which is determined based on the employee’s years of service with the company.

Years of Service –  Paid Annual Leave Entitlement

• More than 0.5 but less than 1 – 3 days
• More than 1 but less than 2 – 7 days
• 2 or more but less than 3 – 10 days
• 3 or more but less than 5 – 14 days
• 5 or more but less than 10 – 15 days
• 10 or more – 15 days + 1 additional day per year of service over 10 years, up to a maximum of 30 days

Taiwan Maternity Leave

Employees with at least six months’ service are entitled to eight weeks’ paid maternity leave. Employees with less than six months’ service are entitled to eight weeks’ leave at 50% of their normal pay.

Pregnant employees can apply to be transferred to lighter work upon request without a reduction in salary. Under the Act for Gender Equality in Employment, breastfeeding employees with a child under two years of age are entitled to an extra 60 minutes a day, in addition to normal break periods, and an additional 30 minutes for overtime that exceeds one hour. These breaks are considered part of the employee’s working hours.

Employees are entitled to paid leave if they experience a miscarriage. Employees who experience a miscarriage are given leave in accordance with the duration of the pregnancy, as follows:

• Employees who were pregnant for less than two months are given five days’ leave.
• Employees who were pregnant for more than two months but less than three months are given one week’s leave.
• Employees who were pregnant for three months or more are given four weeks’ leave.

Pregnant employees must be granted five days of leave for pregnancy check-ups, during which regular wages must be paid. Where a doctor has determined that the pregnancy is high-risk, the employee is entitled to hospitalised sick leave.

Taiwan Severance Laws

Notice periods

Employers. Where notice and severance pay must be given, advance notice is provided as follows on the basis of length of service:

• Ten 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.

Dismissal where notice and severance pay are not required, except where a worker has been sentenced to temporary imprisonment, must be carried out within 30 days from the date the employer becomes aware of the circumstance that initiates the dismissal.

Employees. Employees on fixed-term contracts of over three years may terminate the employment when three years is complete, but must give 30 days’ notice. Employees on fixed-term contracts of less than three years are not permitted to terminate their contracts without one of the causes for termination listed below, or without the employer’s agreement. Employees on indefinite-term contracts must give the same amount of notice as employers (see above, Notice periods).

Severance payments

Taiwanese employees who began their current jobs prior to 1 July 2005 are given a choice between the old retirement system under the Labor Standards Act (LSA) and the new Labor Pension Act (LPA). Foreign national employees are not eligible under the LPA. Employees who began their current jobs after 1 July 2005 will only be entitled to the LPA system. Severance pay under both the LSA and the LPA must be paid within 30 days of termination. Employees cannot waive their rights to severance or retirement pay.

For severance pay under the LSA, severance pay will be equal to one month of average wages for each year of service for an employee who has been continuously employed by the same entity. An employee who has worked for less than a year will be entitled to severance pay in proportion to months of service, with a fraction of a month deemed equal to one month.

Taiwan Tax

A resident alien is subject to the following progressive tax rates for 2019 IIT return filing:

 Social Security contributions

There are compulsory social security programs that require contributions from employers and employees based on monthly insured salary, which is capped at various amounts. Taiwan social security programs include the Labour Insurance Program (LIP), National Health Insurance Program (NHIP), and Labour Pension Program (LPP). However, foreign individuals are not eligible for participating in the LPP.

Under the Second Generation National Health Insurance Program, a supplementary premium of 1.91% is applicable on bonus or incentive payments exceeding the monthly insured salary by four times (capped at TWD 10 million) on an accumulated annual basis for the employee. In addition, Taiwan local employers are required to contribute a supplementary premium of 1.91% on the difference between total monthly taxable salaries and employees’ monthly total insured salaries.

Employer Burden

* Companies determine a percentage between 1% and 5% that will be allocated to an employee welfare fund

Health Insurance Benefits in Taiwan

Employees can take the following sick leave:

• 30 days ordinary sick leave a year where the employee is not hospitalised.
• One year of sick leave within a two-year period where the employee is hospitalised.

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.

However, in the event of disability, injury or sickness on account of an occupational accident, an employee will be entitled to occupational sickness leave during the period of medical treatment or recuperation. This period of sickness leave can exceed one year in a two-year period until the employee has recovered.

Additional Benefits in Taiwan

As a rule 13,14^th salaries are paid.

Taiwan Holidays

There are between ten to 15 public holidays a year. Some are observed on fixed dates, some according to the lunar calendar. Commemorative holidays include:

• Founding Day of the Republic of China (1 January).
• Peace Memorial Day (28 February).
• Labour Day (1 May).
• National Day (10 October).
• Designated holidays include:
• Lunar New Year (first three days of the lunar calendar).
• Women and Children’s Day (the day before Tomb Sweeping Day).
• Tomb Sweeping Day (based on the lunar calendar).
• Dragon Boat Festival (based on the lunar calendar).
• Mid-Autumn Festival (based on the lunar calendar).
• Lunar New Year’s Eve.
• Other public holidays as designated by the central government.

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.