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Employer Of Record In Taiwan

Employer Of Record In Taiwan

Skuad's Taiwan Employer Of Record (EOR) solution helps you hire employees in Taiwan without setting up a subsidiary unit. Our HR solutions help you to fast track the onboarding of your employees as well as manage their payroll, health benefits, insurance, etc. Our international network will make sure that you don’t face issues while expanding your business in Taiwan.

Taiwan At A Glance

Estimated Population: 23 Million

Currency: New Taiwan Dollar (TWD)

Capital: Taipei

Languages: Taiwanese, Mandarin, and Hakka

GDP Per Capita: $32,747

Employment In Taiwan

Taiwan employment laws cover most employees and apply to all industries and occupations, with a few exceptions. Employment in Taiwan is primarily covered by the Labor Standards Act (LSA). Workers employed by the state, including civil servants, are not covered under this act. The LSA applies differently to people with fixed-term employment contracts in Taiwan and those with indefinite-term contracts. 

Foreign nationals working in Taiwan are subject to the LSA as well. The choice of law in the employment contract makes no difference. Additionally, foreign nationals need a work permit to work in Taiwan. 

A person whose employment agreement in Taiwan is governed by the LSA will be governed by it even if he moves out of Taiwan. For the LSA not to apply to them, they will have to terminate their employment contracts in Taiwan. 

For a business looking to expand its operations internationally and employ workers in Taiwan, it is prudent to be aware of Taiwan’s relevant employment contract law and its coverage. Partnering with a local EOR like Skuad’s Taiwan EOR solution can help make these processes more manageable. Find out more. 

Here are some Taiwan labor laws to be aware of when hiring in Taiwan

Title Explanation
The Labor Standards Act This Act aims to maintain living conditions for workers, protect their interests, and help with their socio-economic development. It serves to strengthen the relationship between employers and employees. The act regulates several aspects of employment, such as working hours, overtime, sick leave, maternity leave, and the termination process.
Employment Insurance Act This Act ensures guaranteed training for workers to help improve their chances of getting employed. Employees between the ages of 15 and 65 can join the insurance program through their employers.
The Labor Union Act The Labor Union Act was enacted to promote solidarity between workers and help them fight against injustice and negotiate better working conditions. It provides unions the power to arrive at a collective bargaining agreement, settles disputes, helps fight for workers’ rights, and stipulates several other measures in the legislation.
Act of Gender Equality in Employment (AGEE) The AGEE was enacted to promote gender equality in the workplace. It prohibits employers from discriminating against their employees based on gender or sexual orientation. Additionally, the act provides women with three days of “menstrual leave” every year. The three days are not counted when calculating their 30 days of sick leave.
Entitlements Explanations
Minimum Wages The minimum wage in Taiwan is TWD23,800 per month and TWD158 per hour.
Statutory Working Hours Working hours in Taiwan are restricted to 8 hours per day and 40 hours a week. These working hours apply to most industries and occupations with only a few exceptions.
Overtime

Even with overtime, the work hours cannot be more than 12 hours a day and 46 hours a week.

If a worker works overtime, he/she is entitled to overtime pay of 134% (daily) for the first two hours above eight hours and 167% (daily) after the 10th hour.

Holidays Holidays are connected to the number of years of service in Taiwan.
Period of Service Paid Leave Allowed
6 months - 1 year 3 days
1 year - 2 years 7 days
2 years - 3 years 10 days
3 years - 5 years 14 days
5 years - 10 years 15 days

* After 10 years of service, an employee gets one extra day of annual paid leave for every year of service (maximum of 30 days).
* Vacation days that are not available are carried over to the following year. If the vacation days are not used within two years, they get converted into salary.

Public Holidays There are officially 12 public holidays in Taiwan:
  • New Year’s Day
  • Chinese New Year - 10th-16th February
  • Children’s Day - 5th April
  • Qingming Festival - 4th April
  • Labor Day - 30th April
Sick Leave
  • Employees are entitled to 30 days of ordinary sick leave per year, provided the employee is not hospitalized.
  • If hospitalized, the employee can take an unpaid sick leave of up to one year. However, over a period of two consecutive years, the combined sick leave cannot exceed one year.
  • Maternity Leave The statutory period for maternity leave is as follows:
    Period of Employment Maternity Leave
    Less than six months 8 weeks leave with half-pay
    At least six months 8 weeks of fully paid leave
    A male employee is also entitled to five days of paternal leave when his child is born.
    Parental Leave Parents can take parental unpaid leave of up to two years if:

    1. The employee has worked with the employer for at least six months.
    2. Their child is less than three years old.
    3. Their spouse is employed as well.

    Contractors vs. Full-Time Employees

    The Labor Standards Act differentiates workers who have fixed-term contracts and indefinite-term contracts. A fixed-term employee will become an indefinite term employee if: 

    • The previous contract and the new contract cover more than 90 days, and the gap between the expiration of the previous contract and execution of the new one is less than 30 days. 
    • The employer does not object to the employee continuing to work even after the expiration date has passed on their fixed-term contract. 

    The LSA provides the same kind of benefits and rights to both kinds of workers. However, there are a few differences. Employers do not need to send an advance notice or pay severance to fixed-term employees. An employee who is aggrieved by being classified as a fixed-term worker or an independent one can file a claim against the employer. 

    Agency workers

    There was a legal loophole in Taiwan’s LSA, which enabled employers to classify employees as workers of agencies rather than their employees. Standard employees were forced to sign contracts with agencies to facilitate the scam. This was done to avoid the responsibilities and benefits that employers had to oblige under the LSA. 

    Taiwan has tried to plug this loophole by allowing employees who have been victims of this to file a claim with the authorities within 90 days of starting service as an employee. 

    Temporary workers

    Workers that do not serve for more than six months can be termed as temporary workers. They are entitled to the same benefits and rights as indefinite-term employees. 

    Scope of negotiating terms

    Taiwan is one of the most economically advanced countries in the world. Its GDP per capita adjusted to PPP is the 13th highest in the world. There is no shortage of employment opportunities in Taiwan. When negotiating terms of employment in Taiwan, employers should make sure that they are clear about the terms of employment from the outset. Disputes can lead to huge costs to companies and are a nightmare from a public relations perspective. The Taiwanese take their work seriously and prefer personal interaction over emails or phone calls. 

    Hiring In Taiwan

    The hiring process in Taiwan depends on the company and the job description. Many Taiwanese companies have a referral program where existing employees can suggest candidates for hire. Companies also hire fresh graduates straight from colleges. Those who have attended well-known colleges have a better chance of finding employment. 

    The typical hiring process involves shortlisting candidates after reviewing CVs. After shortlisting, companies often conduct aptitude and skill tests to make sure the candidates are equipped for the job. After the management interviews and shortlists them, there is an HR round where the department sees whether the potential employee’s values and ethics are aligned with that of the company. 

    Companies often hire with the help of job portal services like 104.com, Startupstadium, etc., and with the help of their employee network. Hiring is a cumbersome process and requires a lot of time and energy. There is no guarantee that the companies find the employees that are best suited for the job. This is true especially for companies that are just venturing into Taiwan. Being unaware of the social and cultural practices of the country is another advantage, and business practices often differ from country to country. As such, it becomes tedious and inefficient to hire employees. 

    There is a more straightforward way for hiring companies in Taiwan to get the best employees from the talent pool. Skuad’s EOR solution in Taiwan acts as an employee of record or a professional employee organization to take the hiring process off your plate so that you can focus on expanding your business. Skuad also handles all the regulatory hurdles and legal compliance that goes with hiring employees in Taiwan. Using their knowledge and experience in Taiwan, Skuad can help you expand your business in the international market. Explore Skuad’s solutions here.

    Probation And Termination

    Termination of employment in Taiwan

    Employers cannot fire employees at will in Taiwan. If an employer wishes to terminate a worker’s employment, they have to follow the guidelines stipulated in the Labor Standards Act. Employers have to serve notice and pay severance if they want to terminate employees. Moreover, they can do so only in the following cases: 

    • If the business operations cease or if there is a change in ownership
    • Business loss
    • If business operations are stopped for more than a month due to unforeseeable events
    • Reorganization or downsizing of the business
    • If the employee is incompetent

    Employers can fire employees without notice and severance pay in the following situations:

    • If the employee misrepresented facts at the time of signing the contract and if such misrepresentation can cause damage to the employer.
    • If the employee has committed an act of violence against the employer, his family or representatives, or any other employee.
    • If the employee has violated his employment contract or the rules of the organization.
    • If the employee has caused damage to the property of the employer.
    • If the employee has disclosed confidential information about the employer.
    • If the employee has remained absent from work for three days consecutively or more than six days in a month without intimation.

    Probation in Taiwan

    Probation isn’t explicitly mentioned in the Labor Standards Act. The Act mentions a trial period instead. The requirements for such a period are not stringent in Taiwan, unlike in other countries. 

    Probationary period in Taiwan

    There is no standard probation period in Taiwan. Instead, the Act allows employers and employees to negotiate the duration of probation. There is no upper limit to the period. However, the usual practice is that it goes on for 3 months, after which employers decide if they will retain the employee for good.

    EOR Solution In Taiwan

    Taiwan Employer Of Record (Taiwan EOR) solution makes it easier and faster for businesses to expand into Taiwan. The EOR way makes the employment process easy and smooth by handling all the employment responsibilities without setting up an establishment in Taiwan. Skuad can help you manage payroll processing and management, taxation matters, work permits, and all other employment-related hassles so that you can focus on expanding your business. 

    Outsourcing employment through an EOR

    To expand into Taiwan, you need to decide whether you want to build an in-house team or use an EOR solution to manage all employment-related matters. Partnering with a local EOR will save precious time that would have been spent in the time-consuming hiring process. Skuad’s Taiwan EOR provides tailor-made contracts, establishes all processes in compliance with local laws, and provides easy and convenient e-signing of documents through its high-tech Global Platform.

    Types of Visas In Taiwan

    Visa Category Explanation Duration
    Taiwan Work Visa

    The application for a work visa needs to be submitted to the Taiwan Bureau of Consular Affairs. An employer with a visitor visa or a business visa can get it converted into a work visa by applying to the Bureau of Consular Affairs.

    Taiwan Work Visa Requirements:

    1. A valid passport
    2. Two passport-sized photographs with a white background.
    3. Approved work permit
    4. Health certificate that should not be older than three months.

    And any other documents that the Bureau demands.

    3 months at first. But it can be extended.
    Taiwan Student Visa International students who wish to pursue an education in Taiwan need a student visa to do so. Only after students have been accepted into a college or a University can they apply for such a visa. The duration depends on the course the student studies.
    Taiwan Entrepreneur Visa To encourage entrepreneurship, Taiwan provides this visa to business people looking to set up their operations in Taiwan. This visa allows you to get a one-year residency with multiple entries. One year.

    Work Permit In Taiwan

    Skuad’s partners in Taiwan can sponsor work permits for foreign workers. As an EOR platform in Taiwan, Skuad takes care of all the responsibilities and compliances related to employment. Taiwan work permits for foreigners are a necessity for hiring a workforce in Taiwan. Being an advanced economy, Taiwan has a high standard of living, and there are many business opportunities in Taiwan. To work in Taiwan, you will need a work permit. However, Taiwan only allows highly skilled workers to work in their country. A job offer is mandatory before applying for the work permit. Additionally, the applicant will need to have at least 5 years of experience in the field he/she is applying for. It is not possible to have a Taiwan work permit without a job offer.

    Particulars Explanation
    Can Skuad Sponsor Work Permit in Taiwan Yes
    Processing Time Two weeks
    Work Permit Process

    Step 1: Skuad’s local partner in Taiwan applies for the Employment Pass.

    Step 2: The Ministry of Labour gives the approval for the work permit.

    Step 3: The worker applies for a work visa.

    Step 4: After the worker gets the visa, he/she can come to Taiwan and start working.

    Work Permit Validity One year
    Work Permit Process for Different Countries For most countries, the process of applying for a work permit is quite similar.
    Change of Sponsor Within Taiwan An application needs to be submitted to change the sponsor.
    Where Is The Application processed? The application may be processed in either Taiwan or the employee’s home country.
    Work Permit Requirements A person needs five years of experience in the relevant field.
    When Can An Employee Travel To Taiwan Once an employee gets a work permit and visa clearance, he can travel to Taiwan.
    What’s The Cost of A Business Visa? It depends on how fast you want your visa to be processed. Here are the details of the costs involved:
    Processing Time Cost
    7 business days - Standard US$25
    5 business days - Rush US$45
    3 business days - Super Rush US$70
    Duration of Business Visa Processing 7 business days.
    Switching Business Visa to Work Permit No.
    Can Spouses Work on Dependent Visas? No, a spouse needs their own work permit to work in Taiwan.
    Special Requirements for Work Permit Cancellation The work permit must be canceled by the employer or appointed employment agent.

    Payroll And Taxes In Taiwan

    Employers have to withhold certain payments for obligations such as social security payments, income tax, etc. The income tax in Taiwan is progressive and ranges from 5 to 40%. Additionally, the social security payments consist of health insurance and labor insurance schemes. Employers and employees have to contribute to these schemes together. 

    It’s crucial to know Taiwan employer payroll taxes. Employers often find it tough to manage payroll, especially when operating remotely. That is why we see a growing trend of payroll outsourcing in Taiwan.  An EOR company like Skuad can make payroll management seamless and easy. Skuad helps you make payments quickly in local currency. Moreover, it takes away any concerns about complying with the local laws and regulations as Skuad will take care of the compliance issues. Among Employer Of Record companies in Taiwan, Skuad is the most efficient and effective. Talk to us. 

    Here is the list of payroll taxes in Taiwan that companies should know about: 

    Taiwan Payroll Tax Rates

    Employer Taxation

    Tax Explanation
    Financial Year for Tax 1st January - 31st December
    Corporate Tax Rate Companies with less than TWD 120,000 annual income are exempt from corporate tax. After TWD120,000, tax is chargeable at 20% on taxable income.
    Withholding Tax for Non-Residents A non-resident who stays in Taiwan for a maximum of 90 days in a calendar year and works with an entity registered in Taiwan is subjected to a withholding tax rate of 18%.
    Payroll Tax Depends on the salary of the person.
    Employer’s Contribution to Social Security Schemes Taiwan does not impose social security taxes on companies. However, they do have to pay a premium towards labor insurance and health insurance schemes of the government.

    National Health Insurance Scheme - 5.008%

    Labor Insurance Scheme - 6.35%

    Employee Taxation

    Tax Explanation
    Income Tax applied on an employee’s salary
    Gross Income Tax Rate (%)
    TWD 0 - 540,000 5%
    TWD 540,000 - 1,210,000 12%
    TWD 1,210,000 - 2,420,000 20%
    TWD 2,420,000 - 4,530,000 30%
    TWD 4,530,000 and above 40%
    Medical Insurance Employment health benefits Taiwan - Employees, even non-resident ones, are covered under the National Health Insurance Scheme.
    Public Pension The contribution rate is 7.15%. The employer and the government share 65% of the burden while employees bear 35%.
    Employees contribution towards Social Security Schemes

    Taiwan does not impose social security taxes on employees. However, they do have to pay a nominal sum towards the health and labor insurance schemes of the government.

    National Health Insurance Scheme - 1.4731%

    Labor Insurance Scheme - 1.8%

    Sales Tax Sales tax is known as Business Tax (BT) in Taiwan. It starts at 5% and differs from category to category.

    Bonuses

    Bonuses are commonly paid before Chinese New Year, with the 13th and 14th month of salary offered, but this isn’t a compulsion. Employers may also distribute a portion of net profits to employees if they wish, with all the terms and conditions documented.

    Up to NTD2,400 could be excluded from the employee’s income for tax purposes, if they are providing a meal allowance as an additional benefit.

    Incorporation: How to Set Up a Subsidiary in Taiwan

    Doing business in Taiwan opens up a lot of doors for companies. However, setting up a subsidiary company in another country is not an easy task. It’s advisable to take due diligence and be aware of the business practices of Taiwan to know if Taiwan is the right fit for you. Language is another factor to be considered. The most common language of Taiwan is Mandarin. Other than that, people also speak Hokkien and Hakka. It is advisable to hire a translator if you don’t know these languages. 

    The first step in incorporation is to obtain a Foreign Investment Approval (FIA) from the Investment Commission (IC) set up under the Ministry of Economic Affairs (MEA). The relevant subsidiary laws will differ based on the type of company being formed - a limited or unlimited company, limited by shares, or unlimited company with limited liability. When incorporating a company limited by shares, there are restrictions on the amount of capital, investments, loans, and guarantees.

    The process is similar while incorporating a holding company in Taiwan. Once the paperwork is done, you will be able to start operations in the country. 

    Setting up a subsidiary can be made easier by EOR solutions. Employer Of Record services like Skuad will take care of all the compliance needed to form a subsidiary in Taiwan. You can learn more here.

    Professional Employer Organization (PEO) Taiwan

    A professional employer organization can make life easier for companies to hire employees in Taiwan. A PEO is an outsourcing organization that takes care of compliance, payroll management, HR services, payroll taxes, health benefits, and all the other things that go with employing workers. They differ from Employers Of Record (EOR) companies in that with a PEO, employees are contracted to the employer rather than the EOR. 

    Organizations planning to expand into new territories are better suited with a global EOR which becomes the legal employer on behalf of the organization. Instead of associating with a PEO, a co-employment partner, organizations have more to gain by utilizing the services of a EOR solution. The EOR solution safeguards organizations from unexpected policy changes, loss of control, and potential risks as the EOR bears every legal liability for the organization. In addition to these, the EOR handles payroll, tax, and employment law compliances. To know more about Skuad's EOR solution, Contact Skuad today.

    Conclusion: Why You Should Choose Skuad For Your Taiwan Operations

    A thriving economy like Taiwan is the perfect spot for expanding your business. An organization like Skuad can help you hire from Taiwan without setting up a subsidiary. Not only that, Skuad can also help you with setting up a subsidiary if your business needs it. Skuad will help you manage your employees, their payments, payroll taxes, and other associated matters in both cases. 

    Taxation of a new country is a hurdle for most companies expanding to Taiwan. Understanding the local laws and the business practices of a foreign country is imperative for a company while operating there, and Skuad can take care of all these taxation matters for you.

    The change in culture, language, and customs can make it tough for new companies. Skuad can help you with the transition. With years of experience and a talented team, Skuad will ensure that you comply with the local laws and regulations. Book a demo now.

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