Taiwan

Contract Types 

Contracts can be Indefinite, Temporary or Fixed Term although the latter are rare and can only be used in specific situations and not by EOR employers. Contracts are governed by the Labour Standards Act (LSA).

Probation          

In Taiwan the probation period is typically 3 to 6 months.  It can be extended once only by mutual agreement.

Working Hours 

The normal working week is 40 hours, for 8 hours per day. A maximum of 12 hours per day can be worked including overtime.

Overtime            

Overtime has to be paid for hours above the standard 8 hour day and is paid at 134% for the first 2 hours and at 167% for the next 2 hours each day. Overtime is limited to 46 hours per month.

Other Financial

13th month salaries are not mandatory but a 13th and sometimes 14th month salary are often paid before Chinese New Year. It is also common for bonuses to be paid before the Dragon Boat Festival and the Mid Autumn Festival.

Tax rates valid for 2025

Corporation Tax              

20%

Consumption Tax

5%

Employers’ Social Security

c. 21.82%

Employees’ Contributions

4.25%

Income Tax Rates

Up to 560,000 TWD: 5%

560,000 to 1,260,000 TWD: 12%

1,260,000 TWD to 2,520,000 TWD: 20%

2,520,000 to 4,720,000 TWD: 30%

Over 4,720,000 TWD: 40%

Non Resident Income Tax is a flat rate of 18%

Notice  

After 3 months’ service the employee is entitled to 1 day’s written notice. Between 1 and 3 years’ service, this rises to 20 days’ notice, with 30 days’ notice being required thereafter. Should the contract state the notice period then this should be adhered to when calculating the compensation unless it is below the statutory amount of notice required.

Dismissal            

The employer can terminate the contract under Article 11 or 12 of the LSA. Article 11 covers suspension of business operations, redundancy, temporary closure, and if the employee is clearly unable to perform their duties, whilst Article 12 covers circumstances such as gross misconduct. Employment can also be terminated by mutual agreement or by the employee’s resignation.

Under Article 11 the employer must file notice of the termination with the government authority and pay severance pay. This is not necessary under an Article 12 termination and no notice or severance is required in such cases.

Payment in lieu of notice is allowed.

Employees who have been given notice of termination are entitled to 2 days of paid leave per week to look for another job.

Severance Pay  

Severance pay is due under an Article 11 termination and is 1 month’s salary for each year of service. 1 month’s salary is calculated as the average pay over the previous 6 months. Part years are pro rated, with the minimum being 1/12 of a year’s entitlement.

Probation

During the first 3 months no notice is required.

Annual Leave 2025

Public Holidays: 10 – 15

Republic Day – 1st January

Day Given in Lieu: Yes

Lunar New Year * – 27th January – 2nd February             

Day Given in Lieu: Yes

Peace Memorial Day – 28th February     

Day Given in Lieu: Yes

Children’s Day/Tomb Sweeping Day – 3rd – 4th  April

Day Given in Lieu: Yes

Labour Day – 1st May

Day Given in Lieu: Yes

Dragon Boat Festival* – 30th May           

Day Given in Lieu: Yes

Mid Autumn Festival* – 6th October

Day Given in Lieu: Yes

National Day – 10th October

Day Given in Lieu: Yes

*holiday moves each year with the lunar cycle. Public holidays falling at the weekend can be taken on another day.

Paid legal entitlement  

In Taiwan leave entitlement increases with length of service:

• 3 days for service between 6 months to 1 year;
• 7 days for service between 1 to 2 years;
• 10 days for service between 2 to 3 years;
• 14 days for service between 3 to 5 years;
• 15 days for service between 5 to 10 years;
• 1 additional day for each year beyond 10 years, up to a maximum of 30 days.

Carry over permitted

Employees in Taiwan can carry over any unused annual leave to the next year. If this leave remains unused in the subsequent year, the employer must convert the remaining days into wages. This payment should be made at the end of the second year or upon the employee’s termination, whichever comes first.

Payment in lieu allowed

Holidays can only be paid out on termination or in cases where the employee has not taken carried over leave after the year following the accrual.

Sick

Sick leave is governed by the LSA. Full-time employees are entitled to 30 days of sick leave per year for sickness which does not involve hospitalisation. Once this is exhausted, if the employee is still sick he can be suspended without pay for 1 year.

Should an employee be hospitalised he is entitled to leave for up to 1 year every 2 years.  The total of hospitalised and non hospitalised sick leave should not exceed 1 year in every 2 years.

The first 30 days of sick leave are paid at 50%. In cases where the benefits provided for sick pay are less than 50% of salary the employer has to make up the difference.

Female employees may additionally take 3 days of menstrual leave paid at 50%.

Maternity

Pregnant employees in Taiwan who have worked for at least six months are eligible for 8 weeks of fully paid maternity leave. This leave can start 4 weeks before the birth. If the employment duration is less than six months, maternity pay is reduced to 50%. Pregnant employees can also take 5 days’ paid leave for ante natal appointments. After maternity leave the employee is entitled to 1 hour each day of paid leave for breastfeeding.

If a pregnant employee suffers a miscarriage then paid leave is given according to the length of the pregnancy. 5 days is given for pregnancies under 2 months, rising to 7 days for pregnancies of 2 to 3 months and 4 weeks thereafter.

Paternity            

Employees in Taiwan can take 7 days of paid leave, called Pregnancy Check up Accompaniment and Paternity Leave. This can be taken to attend ante natal check ups and after the birth of the child. The employer receives a refund on 2 days of such pay.

Parental             

Parents in Taiwan can take up to two years of unpaid parental leave so long as both parents are employed, the employee has been employed for more than 6 months and the child is less than 3 years old. Benefits are available during this leave.

Bereavement    

Employees are able to take 8 days of paid leave for the death of a parent or spouse.  6 days’ paid leave are given for the death of children, grandparents or the parent of a spouse. On the death of a great grand parent, sibling or a spouse’s grandparent an employee is entitled to 3 days’ paid leave.

Other   

8 days’ paid leave is available on the occasion of an employee’s wedding. Employees are also entitled to 14 days’ unpaid personal leave.

Paid leave is given for National Service obligations.

Medical              

Private medical insurance is often provided for employees and dependents to supplement the state provision.

Life       

Many employers would offer life, accident and travel insurance.

Other

Meal allowances are a commonly offered benefit with TWD3,000 per month being tax free. Housing allowance is sometimes offered especially for senior employees and expatriates.