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Termination of employment

Under what circumstances can an employer terminate an employee?

How many days in advance should the employer notify the worker?
How to calculate severance pay in Taiwan?

    According to the Labor Standards Law, the employer can terminate the labor contract when the employer "cannot continue to hire the worker" or "the worker causes harm to the employer". As long as the statutory reasons for termination described below are met, and the statutory termination procedures are followed, it is a legal dismissal; if there is no legal reason for termination but the employee is dismissed without authorization, it is an illegal dismissal. 

1. Reasons attributable to the employer

(1) According to Article 11 of the Labor Standards Law [1], employers can dismiss workers for the following reasons:

1. the employers' business are suspended, or have been transferred (e.g. the business is acquired by another company).
2. the employers' business suffer operating losses or business contractions. (e.g. continuous losses for years).
3. the employers' business force majeure necessitates the suspension of business for more than one month (Ex: a major earthquake, major flood and other disasters cause business suspended).
4. the nature of the business changes, and it is necessary to reduce labor, and there is no suitable job available for placement.
5. The employee is not competent for the work.

(2) According to Article 16 of the Labor Standards Law, when an employer terminates a labor contract pursuant to the above reasons that can attribute to the employer, the employer should give the below minimum period of advance notice:

Termination notice

10 days notice in advance where an employee has worked continuously for  3 ~12 months.
20 days notice in advance where an employee has worked continuously for  1 ~3  years.

30 days notice in advance where an employee has worked continuously for more than 3 years.

In addition to the notice period, the employer is also required to pay severance pay when the dismissal can be attributed to the employer.

Severance pay

According to article 17 of the LSA, an employer is liable to pay severance pay after the employment contract has been terminated:

  1. Severance pay is equal to one month’s average wage for each year of service;

  2. If an employee has worked for less than a year, the severance pay is calculated proportionally;

  3. If an employee has worked for less than one month, the work time is considered as one month.

Example: Worker A has an average wage of NTD 30,000 and has worked for 3 years 6 months and 15 days. Then the severance pay is about NTD 53, 125.

Formula: 30,000($)×1/2×{3+〔(6+15/30)÷ 12 〕}=30,000 × (1+37/48) ≒53,124.9

serverance pay cal.jpg

Online Severance Pay Calculator

Provided by Ministry of Labor 

2. Reasons attributable to the employer

In any of the following situations, an employer may terminate a labor contract without advance notice:
1. Where a worker misrepresents any fact at the time of signing of a labor contract in a manner which might mislead his/ her employer and thus caused him/her to sustain damage therefrom.
2. Where a worker commits a violent act against or grossly insults the employer, his /her family member or agent of the employer, or a fellow worker.
3. Where a worker has been sentenced to temporary imprisonment in a final and conclusive judgment, and is not granted a suspended sentence or permitted to commute the sentence to payment of a fine.
4. Where a worker is in serious breach of the labor contract or in serious violation of work rules.
5. Where a worker deliberately damages or abuses any machinery, tool, raw materials, product or other property of the employer or deliberately discloses any technical or confidential information of the employer thereby causing damage to the employer.
6. Where a worker is, without good cause, absent from work for three consecutive days, or for a total six days in any month.

Where an employer desires to terminate a labor contract pursuant to the above 1, 2, 4, 5, and 6, the employer shall do so within thirty days from the date he/she becomes aware of the particular situation.

If the dismissal is based on the above 1~ 6, no prior notice is required and no severance pay is required. 

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