Employment Laws in Taiwan: A Comprehensive Guide for 2026

What are the employment contracts in Taiwan?

Employment contracts in Taiwan establish the legal relationship between an employer and an employee. Governed by the Labor Standards Act (LSA), they define key employment terms, including job responsibilities, wages, working hours, leave entitlements, and the rights and obligations of both employers and employees.

What are the types of employment contracts in Taiwan?

The Labor Standards Act recognizes two primary types of employment contracts: definite contracts and indefinite contracts. The appropriate contract type depends on the nature and duration of the work.

• Definite contract: A definite contract is an employment agreement with a specified duration or completion date. It is generally used for temporary, seasonal, short-term, or specific work. Employment ends when the agreed term expires or the specified work is completed, unless the contract is renewed or converted into an indefinite contract.
• Indefinite contract: An indefinite contract does not specify an end date and is the standard form of employment for continuous work. It remains in effect until the employment relationship is terminated by either the employer or the employee in accordance with the Labor Standards Act.

How are working hours and overtime regulated?

Taiwan’s employment laws regulate standard working hours, overtime limits, and overtime compensation under the Labor Standards Act.

Regular working hours

The standard working time is eight hours per day and 40 hours per week. Employers may allow employees to adjust their regular starting and finishing times by up to one hour based on the employee’s need to care for family members, provided the arrangement complies with applicable working time requirements.

Overtime pay

Employees who work beyond the statutory working hours are entitled to overtime pay under Taiwan's Labor Standards Act.

• Employees who work up to 2 hours of overtime must be paid their regular hourly wage plus an additional one-third of the regular hourly wage for each overtime hour.
• Employees who work more than 2 hours and up to 4 hours of overtime must be paid their regular hourly wage plus an additional two-thirds of the regular hourly wage for each overtime hour worked during this period.
• Employees required to perform emergency overtime under the Labor Standards Act must be paid twice their regular hourly wage.
• Employees required to work on a designated rest day must be paid their regular hourly wage plus an additional one and one-third of the regular hourly wage for the first 2 hours worked. For work exceeding 2 hours, they must be paid their regular hourly wage plus an additional one and two-thirds of the regular hourly wage.

What are the minimum wage and compensation requirements?

The employment laws in Taiwan prescribe minimum compensation standards for employees.

The minimum wage rate in Taiwan

• The monthly minimum wage in Taiwan is NT$28,590.
• The hourly minimum wage in Taiwan is NT$190.

Factors affecting wage determination

Minimum wages in Taiwan are subject to periodic adjustments by the government. These represent the statutory minimum requirements, while employers may offer compensation packages based on factors such as experience, qualifications, job responsibilities, industry, and market conditions.

Employers may calculate wages based on different methods, including hourly, daily, monthly, or piece-rate arrangements, provided they comply with applicable labor laws.

What are the employee benefits and social security requirements?

Taiwan’s employment laws require employers to provide statutory employee benefits and enroll eligible employees in mandatory social security programs.

Statutory benefits

Employers must provide the following statutory benefits:

Social security requirements

Employers must enroll eligible employees in Taiwan’s mandatory social security programs and make the required contributions.

The main social security programs include:

Retirement and pension benefits

Taiwan provides statutory pension schemes, including the old pension scheme under the Labor Standards Act and the new defined contribution pension scheme under the Labor Pension Act.

Under the Labor Pension Program, employers must contribute at least 6% of an eligible employee’s monthly pensionable salary into the employee’s individual pension account. Employees may apply for pension benefits after reaching the statutory retirement age and meeting the applicable requirements.

What are the statutory public holidays in Taiwan?

Taiwan observes a number of statutory public holidays each year under its employment laws. Employees are generally entitled to paid leave on these holidays. If employees are required to work on a statutory public holiday, employers must provide compensation or a substitute day off in accordance with applicable labor laws.

What are the rules for termination and severance in Taiwan?

Taiwan's employment laws regulate the circumstances under which an employer may terminate an employment relationship and prescribe notice periods and severance pay for eligible employees. Employers must comply with the applicable requirements under the Labor Standards Act (LSA) and the Labor Pension Act (LPA).

Grounds for termination

An employer may terminate an employment contract for reasons permitted under the Labor Standards Act, including:

• Business suspension, closure, transfer, or operational losses.
• Workforce reductions resulting from business restructuring or force majeure.
• An employee's inability to perform assigned duties despite reasonable support or training.

An employer may terminate employment without prior notice in circumstances such as the following:

• Serious breach of the employment contract or company work rules.
• Intentional damage to the employer's property or disclosure of confidential information.
• Unexcused absence for three consecutive days or six days within a month.
• False representation during hiring, or conviction for a criminal offense that materially affects the employment relationship.

Notice period

Taiwan's employment laws do not prescribe a uniform notice period. The required notice depends on the employee's length of continuous service when the employer terminates employment under the Labor Standards Act.

Employees who resign generally must provide the same statutory notice periods based on their length of service. Instead of requiring the employee to work during the notice period, employers may provide payment in lieu of notice where permitted.

Severance pay

Employees who are terminated under qualifying circumstances may be entitled to statutory severance pay under Taiwan's Labor Standards Act or Labor Pension Act, depending on the applicable pension system.

• Employees covered by the Labor Pension Act (new pension system): Severance pay is half of one month's average wage for each completed year of service, with service periods of less than one year calculated proportionately. The total severance payment is capped at six months' average wages.
• Employees covered by the Labor Standards Act (old pension system): Severance pay is generally one month's average wage for each completed year of service, with partial years calculated proportionately.

Severance pay is generally payable when an employer terminates employment for reasons such as business restructuring, operational downsizing, or other statutory grounds. Employees dismissed for serious misconduct under the Labor Standards Act are generally not entitled to severance pay.

Employers may face compliance challenges when managing terminations in Taiwan, particularly where statutory notice periods, severance pay entitlements, and lawful grounds for dismissal apply. Skuad's Shield helps employers identify and address these obligations throughout the employment lifecycle.

Here is what Skuad helps with:

• Employment contract generation aligned with local labor requirements
• Administration of statutory benefits and paid leave throughout the employment lifecycle
• Payroll processing in 70+ currencies with automated tax withholding and statutory contribution management
• Termination and offboarding workflows, including statutory notice period and severance pay calculations

What are the anti-discrimination provisions under employment laws in Taiwan?

Taiwan's employment laws prohibit discrimination throughout the employment relationship, including recruitment, compensation, promotion, training, and termination. Employers must provide equal employment opportunities and comply with the anti-discrimination requirements set out under applicable labor laws.

Employers must not discriminate based on sex, gender, sexual orientation, race, ethnicity, age, disability, religion, marital status, or other legally protected characteristics. The Gender Equality in Employment Act also prohibits discrimination related to pregnancy, childbirth, maternity, and family care responsibilities.

What are the health and safety requirements under employment laws in Taiwan?

The Occupational Safety and Health Act (OSHA) requires employers to provide a safe and healthy working environment. Employers must implement workplace safety measures, identify and control workplace hazards, and provide employees with appropriate safety training and protective equipment.

Employers must also arrange health examinations and appoint occupational safety or occupational health personnel where required under applicable regulations. Serious occupational accidents must be reported to the competent authority within the prescribed timeframe, and non-compliance may result in administrative penalties under Taiwan's labor laws.

Stay compliant when hiring in Taiwan with Skuad

At this point, you have a solid understanding of Taiwan's employment laws, including employment contracts, working hours, employee benefits, leave entitlements, termination requirements, and workplace compliance obligations. Understanding these requirements helps employers manage employees in line with local labor laws.

Skuad helps businesses hire, onboard, pay, and manage employees in Taiwan while supporting compliance with local employment requirements. It supports compliant employment contracts, payroll administration, statutory benefits, social insurance contributions, and tax withholding throughout the employment lifecycle.

Whether you are hiring your first employee or expanding your team, Skuad helps you manage your workforce in Taiwan through a single global platform. This gives HR teams greater visibility into employment and payroll operations across countries.

Book a demo to learn how Skuad supports compliant hiring in Taiwan.

FAQs

1. What is an employer of record in Taiwan?

An employer of record (EOR) in Taiwan is a service arrangement where a local entity legally employs workers on behalf of a foreign company while managing payroll, employment contracts, and statutory obligations under Taiwan's Labor Standards Act. This allows businesses to hire employees without immediately establishing a local entity in Taiwan.

2. How can foreign companies hire employees in Taiwan without setting up an entity?

Foreign companies can hire employees in Taiwan through an employer of record arrangement, where the EOR manages local employment requirements. This typically includes employment contracts, payroll administration, and enrollment in mandatory programs such as labor insurance and national health insurance.

3. What employment compliance risks should employers consider when hiring in Taiwan?

Employers hiring in Taiwan must comply with the Labor Standards Act, including requirements relating to working hours, overtime pay, termination procedures, and severance. Non-compliance with regulations enforced by Taiwan's Ministry of Labor may result in administrative penalties and employment disputes.

4. What is the difference between using an EOR and setting up a company in Taiwan?

An EOR allows foreign companies to hire employees through a local employing entity, while establishing a Taiwan entity requires business registration and ongoing administrative responsibilities. Companies should evaluate their hiring plans, expansion timeline, and compliance obligations before choosing an approach.

5. How quickly can companies onboard employees in Taiwan through an EOR?

The onboarding timeline depends on documentation, employee requirements, and employment setup processes. Most EOR providers coordinate employment contracts, payroll arrangements, and registrations for labor insurance and national health insurance before employment begins.

6. How are termination and severance handled under employment laws in Taiwan?

Termination in Taiwan must comply with the Labor Standards Act, including applicable notice periods and severance obligations. For employees covered by the Labor Pension Act, severance is generally calculated at half a month's average wage for each completed year of service, subject to statutory limits.