Driving Innovation, Empowering Talent

Taiwan has established itself as a global leader in high-tech manufacturing and innovation, driven by a highly skilled workforce and strong industrial infrastructure. At the same time, the country enforces comprehensive labour protections that ensure fair treatment and stability for workers. From regulated working hours to mandatory benefits and leave entitlements, Taiwan’s employment laws reflect a balance between economic competitiveness and employee welfare. For businesses looking to hire or expand into Taiwan, understanding these local requirements is essential to operating compliantly and effectively.

Hiring in Taiwan

Navigate local labour laws with confidence
Taiwan has a well-established labour system that supports both employers and employees through clear statutory guidelines. For businesses looking to hire in Taiwan, understanding the country’s employment regulations is key to ensuring compliance and building a sustainable workforce. Employers must pay close attention to rules around contracts, working hours, minimum wage, leave entitlements, and probation periods.

Written Employment Contracts

In Taiwan, employment contracts may be verbal or written. However, written contracts are strongly recommended, particularly when hiring foreign nationals. A clear, written agreement helps define job responsibilities, working hours, wages, leave entitlements, and termination terms. Notably, a written contract is mandatory for obtaining a work permit for foreign employees. Ensuring both parties are aligned from the start reduces the risk of disputes and ensures compliance with Taiwan’s Labour Standards Act.

Working Hours and Overtime

Taiwan’s standard working hours are capped at 8 hours per day and 40 hours per week. Employers may request overtime work, but limits apply to protect employee wellbeing. Overtime should not exceed 46 hours per month. With a formal labour-management agreement, this limit may extend to 54 hours per month or a total of 138 hours over three months. Overtime must be compensated according to government-mandated tiered pay rates, with increased compensation for work done on weekends and public holidays.

Minimum Wage

As of 1 January 2025, the minimum monthly wage in Taiwan is set at NT$28,590, while the minimum hourly wage is NT$190. Employers must ensure that all compensation packages meet or exceed these minimums, regardless of the nature of the employment relationship. Staying updated on minimum wage adjustments is crucial for maintaining compliance and attracting top talent.

Leave Entitlements

Taiwan’s leave entitlements are clearly outlined under its labour laws. Paid annual leave is based on the employee’s length of service, starting with 3 days after six months and increasing progressively, up to 30 days for those with over ten years of service. Additional leave includes up to 30 days of sick leave per year (with 50% pay if hospitalised), 8 weeks of paid maternity leave, and 7 days of paternity leave. Unpaid parental leave is also available until the child turns three years old. Unique to Taiwan, female employees are entitled to 1 day of menstrual leave per month, with up to 3 days counted as part of sick leave. Employees may also take bereavement leave ranging from 3 to 8 days, depending on their relationship to the deceased, and eight days of marriage leave.

Probation Periods

While not legally required, probation periods are commonly practiced in Taiwan and typically last between one to three months. During probation, employees enjoy the same legal protections under the Labour Standards Act as permanent staff. This includes rights related to wages, working hours, and fair termination practices. Employers should clearly define probation terms in the employment contract to ensure transparency and avoid legal disputes.

In Taiwan, employment termination is regulated under the Labour Standards Act. Employers must follow specific legal procedures and provide valid reasons for dismissal, such as redundancy, employee misconduct, or inability to perform duties. Termination without legal cause may lead to legal challenges.

Notice periods are required unless dismissal is for serious misconduct. The minimum notice depends on length of service—3 days (under 3 months), 10 days (3–12 months), and 30 days (over 1 year). Employers can also offer payment in lieu of notice.

Severance pay applies when an employer initiates termination. Under the post-2005 Labor Pension Act, it is calculated at half a month’s average wage per year of service. Employees under the previous pension system may be subject to different calculations based on seniority.

Certain employees are protected from termination, including those on maternity leave, medical treatment, or recovering from occupational injuries. Dismissals under these circumstances are only allowed under strict legal conditions.

All terminations should be documented in writing to ensure compliance and reduce the risk of labour disputes. Taiwan’s labour authorities actively enforce employment regulations, and non-compliance can result in penalties.

Taiwan’s social security framework is robust and multifaceted, designed to protect employees through several key schemes. Employers are legally required to contribute to various programs, including Labour Insurance, Employment Insurance, Labour Pension, and National Health Insurance. Each serves a distinct purpose, ensuring financial stability, access to medical care, and support during employment transitions.

Labour Insurance

The Labour Insurance program provides coverage for employees in cases of injury, sickness, disability, maternity, old age, and death. Employers are required to contribute approximately 70% of the insurance premium, while employees contribute 20%, and the government subsidises the remaining 10%. The premium rate is currently set at 10.5% of the insured salary, with a maximum insured salary cap of TWD 45,800 per month. Labour Insurance is mandatory for most full-time employees and offers long-term security benefits to Taiwan’s workforce.

Employment Insurance

The Employment Insurance scheme aims to provide short-term income support to employees who become involuntarily unemployed. The contribution rate is 1% of the insured monthly salary, shared equally between employer and employee, with the government contributing an additional 0.1%. This program not only supports jobseekers but also encourages workforce participation by offering vocational training subsidies and re-employment assistance.

Labour Pension (New Pension System)

Under the Labour Pension Act, employers must contribute at least 6% of an employee’s monthly wage to an individual pension account managed by the Bureau of Labor Funds. This is separate from the Labour Insurance program and ensures that employees accumulate retirement savings over time. Employees may also choose to contribute voluntarily up to 6% of their monthly salary. The system is portable and belongs to the employee, even when they change jobs.

National Health Insurance (NHI)

National Health Insurance is a mandatory scheme providing universal healthcare coverage to all residents in Taiwan, including foreign employees with valid residency. The total NHI premium rate is 5.17% of the insured monthly salary, up to a cap of TWD 150,000. The cost is shared as follows:

• Employer: 60%
• Employee: 30%
• Government: 10%

In addition, employers are responsible for paying a supplementary premium of 2.11% on non-regular income such as bonuses and payments exceeding four times the monthly insured salary. This ensures that the healthcare system remains well-funded and equitable.

Income Tax Withholding in Taiwan

In Taiwan, employers are legally required to withhold individual income tax from employees’ monthly salaries and remit the amount to the National Taxation Bureau (NTB) by the 10th day of the following month.

For tax residents (individuals who stay in Taiwan for 183 days or more in a calendar year), income tax is calculated based on progressive rates ranging from 5% to 40%.

For non-residents (those staying less than 183 days), a flat withholding tax rate of 18% applies to Taiwan-sourced income.

Employers must also issue an Annual Withholding Statement to each employee by the end of January the following year and submit the Annual Withholding Tax Return to the NTB.

This monthly withholding mechanism ensures that individual income tax obligations are met in compliance with local tax laws.

Payroll Cycle and Reporting Responsibilities

In Taiwan, salaries are typically paid on a monthly basis, with payment dates commonly falling at the end of each month. Employers are responsible for ensuring accurate and timely salary disbursements, along with correct deductions for individual income tax, labour insurance, employment insurance, labour pension, and National Health Insurance (NHI).

In accordance with Taiwan’s Labour Standards Act and tax regulations:

• Payslips must be issued to employees, detailing gross pay, deductions, and net pay.
• Employers must maintain accurate payroll records for audit and compliance purposes.
• All required contributions and tax withholdings must be reported and remitted to the relevant government agencies within the prescribed deadlines.

Taiwan offers a generous number of public holidays each year, reflecting its rich cultural heritage and national observances. Employees typically enjoy days off for key holidays such as New Year’s Day, the Lunar New Year (a multi-day celebration), 228 Peace Memorial Day, Tomb Sweeping Day, Dragon Boat Festival, Mid-Autumn Festival, and National Day.

When these holidays fall on weekends, make-up days are often arranged to ensure employees still receive a proper break. This approach supports work-life balance and allows time for family gatherings and participation in traditional celebrations.

Below, we list the official national holidays. For observance-based or adjusted holidays (such as makeup working days), please refer to Taiwan’s official announcements from the Directorate-General of Personnel Administration (DGPA) from time to time.

Please find our Taiwan (China) office address below:

8F, Unit 8, No.155,
Keelung Road Section 1,
Xinyi District, Taipei 110,
Taiwan

Email: info@linkcompliance.com