Key Details about Taiwan's Labor Standards Act

When expanding a business into Taiwan, understanding the local labor laws is essential. The Labor Standards Act provides the legal framework that governs employment relationships, ensuring fair treatment for workers and clear guidelines for employers. This post will walk you through the key aspects of Taiwan's labor laws, helping you navigate compliance and build a strong foundation for your business operations.

Taiwan Labor Laws Explained: An Overview

Taiwan's labor laws are designed to protect workers' rights while balancing the needs of employers. The primary legislation is the Labor Standards Act, which covers employment contracts, wages, working hours, leave entitlements, and termination procedures. This act applies to most employees in Taiwan, including foreign workers, with some exceptions such as government officials and certain domestic workers.

The law aims to create a fair working environment by setting minimum standards. For example, it mandates minimum wage levels, regulates overtime pay, and requires employers to provide safe working conditions. Understanding these rules is crucial for businesses to avoid legal disputes and penalties.

Employers should also be aware of the importance of written employment contracts. These contracts must clearly state job duties, salary, working hours, and other essential terms. Having a well-drafted contract helps prevent misunderstandings and protects both parties.

Employment Contracts and Worker Rights

Employment contracts in Taiwan must comply with the Labor Standards Act. They should specify the nature of the work, salary, working hours, and other conditions. Contracts can be fixed-term or indefinite, but fixed-term contracts must be justified by the nature of the work.

Workers have the right to receive at least the minimum wage, which is reviewed periodically by the government. Employers must also provide overtime pay for work beyond standard hours, typically at 1.34 to 2 times the regular hourly rate depending on the time and day.

In addition to wages, employees are entitled to various types of leave, including:

• Annual paid leave based on length of service

• Sick leave with partial pay

• Maternity and paternity leave

• Public holidays recognized by the government

  
  

Employers must also contribute to labor insurance and health insurance programs, which provide social security benefits to employees.

Labor contract

What are the standard working hours in Taiwan?

Standard working hours in Taiwan are set at 8 hours per day and 40 hours per week. Typically, the workweek runs from Monday to Friday, with Saturday and Sunday off. However, some industries may have different arrangements based on operational needs.

Overtime work is permitted but strictly regulated. Employers must compensate overtime hours at higher pay rates:

• 1.34 times the hourly wage for overtime on weekdays

• 1.67 times for work on rest days

• 2 times for work on national holidays

  
  

Employers should keep accurate records of working hours to ensure compliance. Failure to comply with these regulations can result in fines and legal action.

Flexible working hours and shift work are allowed but must be clearly defined in the employment contract or company policies. This flexibility can help businesses adapt to varying workloads while respecting labor laws.

Leave Entitlements and Employee Benefits

The Labor Standards Act mandates several types of leave to support workers' well-being. Annual leave is granted based on the length of continuous service:

• 7 days for employees with 1 to 3 years of service

• 10 days for 3 to 5 years

• 14 days for 5 to 10 years

• 30 days for over 10 years

  
  

Unused annual leave can often be carried over or compensated, depending on company policy.

Sick leave is also protected, with employees entitled to up to 30 days of paid sick leave per year. Maternity leave includes 8 weeks of paid leave, and fathers are entitled to paternity leave as well.

Employers must also provide labor insurance and national health insurance contributions. These programs cover medical expenses, disability, unemployment benefits, and retirement pensions.

Understanding these benefits helps businesses create competitive employment packages that attract and retain talent.

Termination and Severance Rules

Terminating an employee in Taiwan requires careful adherence to legal procedures. Employers must provide valid reasons for dismissal, such as poor performance, misconduct, or redundancy. Unlawful termination can lead to legal claims and compensation.

Notice periods depend on the length of service:

• 10 days for employees with less than 3 months of service

• 20 days for 3 months to 1 year

• 30 days for over 1 year

  
  

Alternatively, employers can provide payment in lieu of notice.

Severance pay is required for employees dismissed without cause or due to company downsizing. The amount is calculated based on the employee's average monthly wage and years of service.

Proper documentation and communication during termination help minimize disputes and maintain a professional workplace environment.

Navigating Compliance with Local Expertise

Complying with Taiwan's labor laws can be complex, especially for businesses new to the market. Partnering with local experts who understand the nuances of the labor standards act taiwan can save time and reduce risks.

Songjer CPA offers comprehensive support for entrepreneurs and businesses expanding into Taiwan. Their expertise includes employment law compliance, payroll management, and human resource consulting. This partnership ensures your business meets all legal requirements while focusing on growth.

By staying informed and seeking professional guidance, businesses can build a strong foundation in Taiwan's competitive market.

Understanding Taiwan's labor laws is a critical step for any business planning to operate in the country. From employment contracts to working hours, leave entitlements, and termination procedures, the Labor Standards Act provides clear rules to protect both employers and employees. Leveraging local expertise can help navigate these regulations smoothly and position your business for success.