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Starting a Business In Taiwan

Employment Law In Taiwan: Guide For Employers

Taiwan, officially the Republic of China, is newly industrialized and presents ample opportunities for entrepreneurs and global companies to invest and expand here. The country is also one of the fewest economies with well-developed semiconductor manufacturing capacities. 

The availability of highly-skilled human resources in Taiwan and its strategic location linking the Asia-Pacific region makes Taiwan the first choice for setting up operational headquarters. 

Doing so, a good understanding of Taiwan’s labor law helps companies and entrepreneurs hire the best talents without legal liabilities. The employment law in Taiwan guides employers to negotiate suitable workplace rights, including working hours, leave entitlements, social security benefits, fair terms of employment, salary payments, and employee privacy. 

It is implicit that employers must meet or exceed the employment terms and conditions set under the labor act rules in Taiwan. Some noteworthy employer obligations include 

  • 12 hours a day, including overtime, capped at 46 hours in a month
  • 3-30 days of annual vacation leave based on years of service with the same employer
  • Eight weeks of maternity leave in Taiwan for foreigners and citizens
  • Up to 17.152% of employee salary in statutory employer contributions towards social security schemes
  • 10-30 days of advance notice period for termination of employment contracts.

Applicability of the Act

The labor act rules in Taiwan cover almost all industries, occupations, and employee categories. Taiwan’s employment laws are equally applicable to foreign residents working in Taiwan. 

However, statutory employment rights like working hours or overtime compensation do not apply to employees with substantial managerial authority. Also, the labor regulations in Taiwan do not oblige employers to extend labor welfare support to any independent contractor (including freelancers). 

Employment Contract

An employment contract forms the basis of a legal agreement between employer and employee about terms and conditions of employment. While employers may or may not conclude a written contract before employing local talents, a written employment contract is a must for foreign residents in Taiwan.  

A written agreement in Chinese or English must contain the following details per the Taiwan labor law: 

  • Identities of the parties
  • Place of work and work duties
  • The hours of work expected and leave entitlements
  • The wages or salary payable to the employee
  • Rules of Conduct in the Workplace 

Even though employees with substantial managerial authority and independent contractors are outside the scope of Taiwan’s labor law, we recommend employers negotiate a contract defining business targets to achieve, pay rate, and likewise.  

Key Provisions of the Act

Taiwan’s employment law mostly depends on the Labor Standards Act (LSA). Here’s an account of LSA and its provisions governing workplace rights and employer obligations, including working hours, leave schemes, dismissal rules, employee privacy, managing payroll & reporting. 

Working hours 

  • Employers may extend working hours per Taiwanese labor law for eight hours a day or 40 hours a week. 
  • Employers must provide one mandatory rest day and one flexible rest day every seven days a week. 
  • Employers with more than 30 employees may reduce daily working time by one hour without pay for employees on maternity leave in Taiwan. 
  • Employers must also ensure one hour of additional rest period for lactating employees.  

Overtime compensation

  • Overtime working hours per Taiwanese labor law are capped at 12 hours per day. 
  • Additionally, the labor act rules in Taiwan allow employers to calculate the maximum permissible overtime over a consecutive three-month period 
  • Cannot go beyond 54 hours in one month or 
  • 138 hours over three months (in other words, employers must ensure an average of 46-hour limitation on overtime per month over the three months) 
  • The employment law in Taiwan guides employers to mention the mode of overtime compensation in writing – either provide compensatory leave or overtime pay. 
  • While employers must not influence their employees’ choices, Taiwan’s labor regulations provide guidelines to set overtime compensation
  • 1.34 times the regular hourly wage for overtime work up to two hours
  • 1.67 times the regular hourly wage for overtime work between two to four hours
  • 2.67 times the regular hourly wage for overtime work on flexible rest days 
  • An equivalent amount of overtime pay must be provided against unused compensatory leave upon its expiration or end of an employment contract. 
  • The expiration terms of compensatory leave are negotiated between the employee and employer but cannot fall beyond the expiry of annual leave. 

Minimum wage

  • The employment law in Taiwan guides employers to pay salaries over and above the minimum wage set yearly. 
  • The minimum wage in Taiwan for 2023 is ​​NT$26,400 (US$842) monthly or NT$176 (US$5.62) hourly wage.  

Public holidays 

Taiwan labor law prescribes 10-15 public holidays per year, including Memorial holidays and Designated holidays based on the lunar calendar: 

  • Founding Day of the Republic of China (1 January)
  • Peace Memorial Day (28 February)
  • Labor Day (1 May)
  • National Day (10 October)
  • Lunar New Year 
  • Women and Children’s Day (the day before Tomb Sweeping Day)
  • Tomb Sweeping Day 
  • Dragon Boat Festival 
  • Mid-Autumn Festival 

However, the labor regulations in Taiwan allow employers to adjust some public holidays to working days. 

Leave schemes

Maternity leave:

  • The employment law prescribes eight weeks of maternity leave in Taiwan 
  • Taiwan’s paid maternity leave is for employers who have worked with the same employer for a minimum of six months. 
  • Employers may grant half-pay employees with less than six months of service during maternity leave in Taiwan.
  • Taiwan’s paid maternity leave between five days to up to four weeks is also applicable in the unfortunate event of miscarriage. 


Paternity leave:

  • Taiwan’s labor laws prescribe seven days of paid leaves to eligible employees to accompany their spouses for prenatal checkups. 
  • Further, employers must grant three days of paid paternity leave in Taiwan after birth. 
  • The employment rules also include provisions for unpaid shared paternity leave in Taiwan. 
  • Employers must grant at least two years of unpaid paternal leave to employees in service for more than six months, along with their spouse and a child of three years old. 


Annual leave:

  • Taiwan’s labor act rules prescribe up to 30 days of annual leaves based on the period of service for the same employer. 
  • The employment law in Taiwan guides employers to calculate minimum paid annual leave as per the following
    1. Employees working for more than six months may be granted three days 
    2. Employees with a service period of more than one year may be given seven days 
    3. Ten days can be given to employees with service of more than two years 
    4. 14 days for service of more than three years
    5. 15 days for employees with more than five years of service
    6. Employers with more than ten years of service may be given up to 30 days 
  • The labor regulations in Taiwan oblige employers to carry unused annual leave to the next year. However, convert any remaining annual leave into wages at the end of the second year or upon the end of the employment contract. 

Other leaves 

Sick leaves: 

  • Taiwan’s labor law mandates employers to grant 30 days of paid sick leave if not hospitalized. 
  • In the case of hospitalization, the labor regulations in Taiwan prescribe employers provide one year of sick leave within two years. 
  • However, employers must extend paid occupational sickness leave until recovery if the injury arises from an accident at work. 
  • Employers may extend 50% of their salary or cover the deficit insurance amount during the period. 


Menstruation leaves: 

  • Employers must grant one day of paid time off each month to all eligible employees having difficulties performing their work during menstruation. 
  • However, employers may calculate all menstrual leaves exceeding three days a year towards sick leave entitlements. 
  • Employers may extend 50% of their salary during the period. 


Bereavement leaves:

  • Employers may grant bereavement leave to employees who have worked continuously for over six months. 
  • Taiwan’s employment rules provide 3-8 days of paid leave per bereavement. 


Wedding leaves:

  • Employers in Taiwan must grant a minimum of eight days of paid leave in case of marriage. 


Personal time-off:

  • Taiwan’s employment law obliges employers to provide up to 14 days of unpaid leave in a year for other personal reasons. 

Payroll taxes & obligations

Taiwanese labor laws mandate every registered employer in Taiwan deduct social security contributions, withhold taxes from the salaried employee, and report to the concerned authorities annually. 


Income taxes deduction

  • Taiwan levies progressive income tax on residents and non-residents on income sources from the country. 
  • Taiwan’s current income tax deduction rate (5% – 40%) 
  • The employers of non-tax residents must also withhold income tax on income generated in Taiwan.


Social security contributions

Taiwan labor law mandates employers to deduct premiums from the salary payments of each employee for 

  • Labor insurance (7.35% employer’s contribution, 2.10% from the employee)
  • Health insurance (3.102% employer’s contribution, 1.551% from employee) 
  • Employment insurance (1% each from employer and employee)
  • Pension Fund (6% employer’s contribution) 


A payslip is an employer-generated document that is provided to employees after each salary disbursal. The labor act rules in Taiwan obliges employers to provide written payslips to employees containing the following information: 

  • Identity of the employee (Name, Tax ID, Address, Workplace ID)
  • Employer details 
  • Taxable income
  • Social Security details (Insurance No.)
  • Payment made for unused leaves 

All payslips must be affixed with ‘chop’, a special stamp in Taiwan that contains unique details about the company. Employers in Taiwan may contract a payroll provider for such purposes. 

Employee termination

Dismissal rules:

  • Taiwan’s employment law on termination allows employers to dismiss employers in two ways 
  • Termination with notice and severance pay: 
  • Common reasons may include the transfer of ownership, business losses, or employee performance issues. 
  • Termination without notice and severance pay:
  • Common reasons may include employee misconduct, a severe breach of the employment contract, or excessive absence from work for three consecutive days, or six days a month. 
  • However, the employment law in Taiwan on unilateral termination of employment contracts mandates employers to inform the competent labor authority at least ten days prior. 
  • While dismissing an employee of a foreign national, the employer must notify the National Immigration Agency, the police, and the competent labor authority within three days, following the termination. 


Notice period:

  • The labor act rules in Taiwan mandate employers to calculate the notice period based on the years of service, like
    1. Ten days of prior notice to employees for more than three months
    2. 20 days of prior notice to employees for more than one year
    3. 30 days of prior notice to employees for more than three years 
  • Employers may retrieve company properties like IT devices and conduct an exit interview during the notice period. 


Severance pay:

  • The employment law in Taiwan guides employers to calculate severance pay equal to one month of average wages for each year of service. 
  • Employers must transfer severance pay within 30 days of termination 
  • Taiwan’s labor law clearly states that employers cannot ask employees to waive their right to severance or retirement pay. 

Data protection and employee privacy

  • Employers may set up their privacy policy based on provisions for collecting, processing, and using employee data under Taiwan’s Personal Data Protection Act (PDPA). 
  • PDPA restricts employee data collection, processing, and use for the said purpose only. Employers must seek prior consent to use employee data for background checks, surveillance at the workplace, attendance records, etc. 
  • For instance, Taiwan’s employment rules allow employers to record employee’s work attendance using the following methods: 
    1. Attendance books
    2. Attendance cards
    3. Swipe card machines
    4. Entry access cards
    5. Biometric identification systems
    6. Computer attendance record systems
    7. However, PDPA prohibits employers from using such employee data for purposes other than attendance records. 


Employers may face penalty charges for not obliging to standard provisions under Taiwan’s labor law, such as joining unions, termination of employment contracts, workplace safety, etc. 

Generally, employers are charged administrative fines of between NT$100,000 (US$3,223) to NT$500,000 (US$16492.67) for curtailing the right to join unions or violating workplace safety under the Taiwan labor law. Employers may be charged higher penalties for repeated violations of Taiwan employment rules. 

Further, the Department of labor mediates any employment-related disputes before it is filled with the district courts. 

Compliance Strategies for Employers

The following strategies will ensure employers stay compliant with Taiwan’s labor law while hiring local talents: 

Hiring through employment contracts:

  • Employers may use standard templates and draft employment contracts with suitable working conditions and other statutory workplace rights.  
  • In doing so, employers must ensure strict compliance with prescribed employment terms under the labor code in Taiwan. 

Managing employees through an in-house HR team:

  • A dedicated HR team specializing in Taiwan labor codes helps employers negotiate suitable employment terms and conditions while staying compliant with the law. 
  • HR teams can manage payrolls, set workplace safety standards, and deal with structural changes, layoffs, employee appraisals, etc. 

Using third-party SaaS-based solutions for payroll management

  • Global companies and entrepreneurs these days prefer third-party solutions like Multiplier for managing payrolls and ensuring compliant hiring practices. 
  • Such SaaS-based solutions can auto-generate employment-related documents, manage payroll, or help with employee background checks. 

How Can Multiplier Help?

Multiplier is a leading PEO/EOR platform serving companies of all sizes, from startups to enterprises, in hiring, managing employees, and compliant global expansion. 

Using Multiplier, companies can automate employment contracts, file taxes online, calculate social security obligations, and enable salary payments simply at the click of a button. 

Hundreds of companies and entrepreneurs have already switched to Multiplier for compliance during business expansion in 150+ countries, including Taiwan. Employers can use Multiplier to generate multi-lingual employment contracts and related legal documents in Chinese to aid in hiring and managing local employees per Taiwan labor laws.

Frequently Asked Questions

The Ministry of Labor has held no rights for employers to approve or reject annual leave. Employees can grant leave on their own per the labor act rules in Taiwan. However, high court judgments allow employers to reject annual leaves for legitimate reasons. 

Taiwan’s labor laws allow employers to restrict employees from working for competitors after the termination of employment if the sufficient business interest is met. However, employers must compensate employees proportionally to align with the non-competition clause. 

Employers own any patent or trade secrets created or developed by employees as part of their work duties unless otherwise negotiated in the contract. At the same time, employees own the copyrights of any work created during employment.

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