Hire in Taiwan: Payroll, Laws & Compliance Guide

Introduction

Hiring a remote workforce in Taiwan means operating under the Labor Standards Act (LSA), enrolling workers in Labor Insurance (LI), National Health Insurance (NHI), and the Labor Pension Program (LPP), and meeting working hour and leave obligations enforced by the Ministry of Labor.

Foreign companies can hire in Taiwan through a registered local entity, an Employer of Record (EOR), or an Agent of Record (AOR) for contractors.

Taiwan's LSA carries enumerated penalties for each violation type. Employing a foreign national without a valid Workforce Development Agency (WDA) permit before work begins draws fines between NT$150,000 and NT$750,000, and repeat violations within five years carry criminal liability.

In Taiwan's technology and semiconductor sectors, the volume of contractor work makes worker misclassification a real liability risk for foreign employers.

This guide covers hiring routes, contract requirements, key labor laws, payroll obligations, leave entitlements, compliance risks, and the cost of hiring in Taiwan.

How to hire in Taiwan?

Foreign companies have three main ways to engage workers in Taiwan: Set up a registered local entity, partner with an Employer of Record (EOR), or use an Agent of Record (AOR) for contractors. The right path depends on the type of engagement, how quickly you need to hire, and whether you are building a long-term operational presence.

How to hire by setting up a local entity?

Setting up a local entity is the appropriate structure for companies building a long-term presence in Taiwan. Common options include a subsidiary, a branch office, or a representative office. A subsidiary can conduct full business operations. A branch office can generate revenue but requires a registered agent in Taiwan.

A representative office is limited to liaison work and cannot sign employment contracts or generate local revenue. Once registered, you can hire directly and run payroll under the Labor Standards Act (LSA). The process requires proper management resources and can be time-consuming.

How to hire employees via EOR?

An EOR lets you hire full-time employees without registering a legal entity. The EOR acts as the legal employer on record and supports onboarding, employment contracts, payroll, tax filings, statutory contributions, and local compliance. You retain day-to-day management of the employee's work. This is the faster route for market-entry hires or distributed teams where a full entity setup is not yet warranted.

How to hire contractors via AOR?

An AOR is the appropriate route when engaging independent contractors rather than employees. The AOR helps in contractor onboarding, payments, classification, and compliance with local labor laws. This is particularly relevant in Taiwan, given the volume of project-based and specialist contractor work in the technology and semiconductor sectors.

What type of employment contract do you need?

Under Article 9 of the Labor Standards Act, labor contracts are either of definite or indefinite term. Continuous, ongoing roles must use a non-fixed-term contract. Definite contracts apply to temporary and short-term work (up to six months), seasonal work (up to nine months), or specific project-based work exceeding one year, which requires reporting to the competent authority.

If an employer misclassifies an ongoing role under a fixed-term contract, the contract converts to an indefinite contract by operation of law.

There is no universal statutory requirement for a written contract. Article 7 of the Enforcement Rules of the Labor Standards Act recommends that contracts cover the workplace, working hours, wage terms, leave entitlements, and termination conditions, among other matters. Written contracts are standard practice and strongly advisable to prevent disputes.

Whether you are bringing on full-time employees or specialist contractors in Taiwan's technology and semiconductor sectors, entity setup adds months of lead time and ongoing administrative overhead before a single hire is onboarded.

Skuad supports both hiring models from a single platform:

EOR for full-time employees

• Acts as the legal employer across 160+ countries, so your company can hire in Taiwan without registering a subsidiary, branch office, or representative office
• Supports employment contract generation aligned with local labor laws and statutory requirements across supported markets
• Facilitates statutory contribution workflows covering applicable social insurance and pension obligations
• Supports payroll processing in 70+ currencies with accurate tax withholding and statutory deductions
• Helps administer statutory leave entitlements and benefits in line with local requirements
• Assists with termination and offboarding, including notice periods and severance calculations as required locally

Contractor management (AOR)

• Helps onboard contractors with locally compliant agreements that reduce misclassification exposure
• Supports invoice generation, approval workflows, and payment processing
• Helps flag classification risk before it becomes a compliance issue with built-in worker classification checks
• Facilitates multi-currency payouts across 70+ currencies
• Helps manage contractor records, contracts, and payment history from a single dashboard alongside full-time employees

What are the key employment laws in Taiwan?

Taiwan's employment framework sits across four main statutes. The Labor Standards Act sets the baseline for contracts, hours, leave, termination, and severance. The Employment Service Act covers hiring practices and discrimination.

The Gender Equality in Employment Act adds specific protections for gender and sexual orientation. For most employees hired today, the Labor Pension Act determines how severance is calculated. The Ministry of Labor oversees compliance across all four.

Standard working hours

The standard is eight hours a day, forty hours a week. Employees get two days off every seven days; one fixed rest day and one flexible rest day.

Overtime

Overtime requires union consent or labor-management conference approval. The combined daily total cannot exceed twelve hours, and monthly overtime is capped at forty-six hours, which is extendable to fifty-four hours with the same consent, provided the three-month total stays within one hundred and thirty-eight hours.

The pay rate increases the longer someone works past their regular hours:

• First two overtime hours are paid at the regular rate plus at least one-third extra
• Hours three and four are paid at the regular rate plus at least two-thirds extra

Working on a rest day is compensated at a higher rate, with at least one and one-third extra for the first two hours, and at least one and two-thirds extra beyond that.

How does termination work in Taiwan?

You can terminate with notice for legitimate business reasons like restructuring, sustained operating losses, or where an employee genuinely cannot perform the role. For serious misconduct, immediate termination without notice is permitted. The distinction matters because it determines whether notice and severance are owed.

Notice periods scale with tenure:

• Ten days for service between three months and one year
• Twenty days for one to three years
• Thirty days beyond three years

Under the current default pension system, severance is half a month's average wage per full year of service, capped at six months, and must be paid within thirty days of termination.

What anti-discrimination protections apply?

The Employment Service Act covers a broad set of protected characteristics such as race, age, gender, religion, disability, marital status, and several others. The Gender Equality in Employment Act adds dedicated protections for gender and sexual orientation across every stage of employment, from recruitment through to promotion. Both apply to foreign employers operating in Taiwan.

If you are working through Taiwan's employment requirements, Skuad's Taiwan hiring guide walks through key areas, including contracts, working hours, leave entitlements, and termination rules.

Read the Skuad Taiwan hiring guide here

What are the payroll and tax rules in Taiwan?

As an employer in Taiwan, three mandatory programs sit on top of every salary: Labor Insurance (LI), National Health Insurance (NHI), and the Labor Pension Program (LPP). Each has a defined split between employer, employee, and government. You're responsible for enrolling employees, calculating contributions, withholding the employee share, and remitting everything on schedule.

Mandatory social insurance contributions

Every employee enrolled through a Taiwan employer is subject to three mandatory programs. Here is how contributions break down:

The Labor Insurance rate has been 12% since January 2023 and adjusts automatically under the Labor Insurance Act. Always check the Bureau of Labor Insurance (BLI) for the current rate before running payroll. The NHI rate of 5.17% applies specifically to employees of public and private enterprises.

If an employee earns bonuses exceeding four times their monthly insured salary, a supplementary NHI premium of 2.11% applies to the excess.

How is income tax calculated?

Tax residency is based on physical presence. Employees who spend 183 or more days in Taiwan in a calendar year are tax residents and pay progressive income tax:

Employees who spend fewer than 183 days in Taiwan are taxed at a flat 18% on their Taiwan-sourced taxable income. Employers withhold income tax from the monthly salary and remit it to the National Taxation Bureau (NTB).

When is payroll processed?

Under the Labor Standards Act, wages must be paid at least twice a month unless both parties agree to monthly payment. Monthly payroll is the standard practice for salaried employees. Withholding amounts such as income tax, LI, NHI, and LPP contributions are remitted to the respective government agencies on the prescribed monthly schedule.

Running payroll in Taiwan involves three separate mandatory contribution programs, each with its own contribution rate, employee-employer split, and monthly remittance deadline. Combined with income tax withholding obligations for both resident and non-resident employees, there are multiple moving parts that need to stay aligned every pay cycle.

Skuad's Global Payroll platform helps teams process payroll across 160+ countries from a single system, supporting statutory contribution workflows, payroll processing in 70+ currencies, and tax withholding across supported markets, without requiring separate local payroll infrastructure in each country.

For benchmarking salaries across roles before making an offer, the Skuad Salary Insights tool helps in understanding compensation data by role and seniority level across supported markets.

Explore salary benchmarks here

What are the leave benefits in Taiwan?

Taiwan's leave framework spans several statutes. The Labor Standards Act (LSA) covers annual leave, sick leave, and maternity leave. The Gender Equality in Employment Act (GEEA) covers maternity, paternity, parental, and menstrual leave. The Regulations of Leave-Taking by Workers govern marriage and bereavement leave.

Annual leave

Paid annual leave accrues by length of service:

Unused annual leave must be compensated in wages if not taken by year-end or upon contract termination.

What other leave are employees entitled to?

Bereavement leave breakdown:

• 8 days: Death of a parent, foster-parent, step-parent, or spouse
• 6 days: Death of a grandparent, son or daughter, parent of spouse, foster-parent, or step-parent of spouse
• 3 days: Death of a great-grandparent, brother or sister, or grandparent of spouse

How many public holidays are there in Taiwan?

Taiwan observes 12 national public holidays. All are paid days off. If a public holiday falls on a Saturday, the preceding Friday is observed; if on a Sunday, the following Monday is observed.

What are the compliance risks of hiring in Taiwan?

Taiwan has well-enforced labor protections with real financial consequences for non-compliance. The risks below are the ones that most commonly catch foreign employers off guard, such as missed enrollment deadlines, work permit gaps, and invalid terminations, each of which carries specific, statutory penalties.

Key compliance risks and their consequences:

When is a non-compete agreement enforceable?

Under Article 9-1 of the Labor Standards Act, a post-resignation non-compete is enforceable only if all four of the following conditions are met:

• The employer has a legitimate business interest that requires protection
• The employee's role gives them access to, or use of, the employer's trade secrets
• The non-compete's period, geographic scope, and occupational scope are within a reasonable range
• The employer provides reasonable compensation to the employee for not competing

Any agreement that fails to meet all four conditions is automatically null and void. The maximum enforceable non-compete period is two years.

How much does it cost to hire in Taiwan?

The total cost of hiring in Taiwan is the employee's salary plus three mandatory employer contributions covered in the payroll section above. Use the figures below as your planning baseline.

Minimum wage

Taiwan's minimum wage is reviewed annually and applies to all employees covered under the Labor Standards Act. Current rates effective January 1, 2026:

• Monthly basis - NT$29,500
• Hourly basis - NT$196

Average salary

March 2026 national salary benchmarks from the Department of Census, Directorate General of Budget, Accounting & Statistics (DGBAS):

DGBAS updates these figures monthly. Technology and semiconductor roles command significantly higher compensation than the national average. For sector-level breakdowns, refer to the full DGBAS earnings statistics.

The figures above give you the statutory baseline, but your actual hire cost depends on the specific role, compensation level, and which contribution brackets apply at that salary. Skuad's hiring cost calculator helps you model the employer cost before you make an offer.

Estimate the hire cost

Customer story: How OpenSolar scaled its international workforce?

OpenSolar, a solar energy software company, needed to grow its team across Asia-Pacific (APAC) and Europe, the Middle East, and Africa (EMEA) markets without setting up legal entities in each location. The company used Skuad's EOR platform to support cross-border onboarding, locally compliant employment contracts, and payroll across supported markets, enabling international team growth without the overhead of local entity setup.

Skuad has been a key partner in our international expansion. Their support in the onboarding process and compliance has allowed us to focus on our core mission, which is to accelerate the world's transition from fossil fuels to solar energy.

- Lavinia Davison, Global Head of Talent & Operations, OpenSolar

Read the full case study

Ready to hire in Taiwan without setting up a local entity?

Building a compliant team in Taiwan involves more moving parts than most foreign employers expect. Four overlapping statutes, three mandatory contribution programs, and specific rules on overtime caps, notice periods, and protected leave categories all apply from day one. Getting any of these wrong, whether on enrollment timing, worker classification, or termination during a protected period, carries statutory consequences that apply from the date of the violation.

For companies building distributed teams, entity setup is rarely the right first move. An EOR helps in bringing on full-time employees and processing compliant payroll in Taiwan from day one, without registered capital, a local legal team, or months of administrative setup.

Skuad supports the operational complexity of hiring in Taiwan, covering employment contracts, statutory contribution workflows, payroll in 70+ currencies, statutory leave administration, and offboarding support, so your team can focus on building the business.

For technology, SaaS, and semiconductor teams, it's a practical route to hiring in Taiwan without standing up local HR infrastructure from scratch.

Book a demo to see how Skuad supports your first Taiwan hire without entity setup.

FAQs

1. Can a foreign company hire in Taiwan without setting up a local entity?

A foreign company can hire in Taiwan without a local entity by using an Employer of Record (EOR). The EOR acts as the legal employer, processes payroll, enrolls staff in Labor Insurance, National Health Insurance, and the Labor Pension Program, and handles tax filings, while you manage the employees' daily work.

2. What is the difference between an EOR and an AOR in Taiwan?

An Employer of Record (EOR) acts as the legal employer for full-time employees, and processes payroll and statutory contributions. An Agent of Record (AOR) is for contractors; it handles compliant contractor agreements, payments, and classification checks. The choice depends on whether the worker is an employee or a contractor.

3. How much do employer contributions add to salary in Taiwan?

On top of gross salary, an employer funds three mandatory programs: Labor Insurance, National Health Insurance, and the Labor Pension Program. Combined, these add roughly 17% to 20% of salary at lower pay levels, with the share falling at higher salaries because the contributions are capped.

4. What happens if a contractor is misclassified in Taiwan?

Taiwan enforces worker classification under the Labor Standards Act. If an employer puts an ongoing role on a fixed-term contract, the contract converts to non-fixed-term by operation of law, bringing full employee entitlements. Treating an employee as a contractor exposes the employer to back contributions, benefits, and penalties.

5. Is a written employment contract required in Taiwan?

Taiwan has no universal statutory requirement for a written employment contract, but written contracts are standard practice and strongly advisable. The Enforcement Rules of the Labor Standards Act recommend covering the workplace, working hours, wages, leave, and termination terms. A clear written contract is the simplest way to prevent disputes.

6. How long does it take to onboard a hire in Taiwan?

Onboarding time depends on the hiring route. Setting up a local entity, whether a subsidiary, branch, or representative office, adds months of registration and administrative lead time before the first hire. Through an Employer of Record that already holds the registrations, a new hire in Taiwan can be onboarded in days.