Hiring in Taiwan, China

Key Facts

Political System & Government

Taiwan operates as a multi-party democratic republic with a semi-presidential system. The government is divided into five branches (Yuan): Executive, Legislative, Judicial, Examination, and Control. The President, elected by popular vote for a four-year term, serves as the head of state and commander-in-chief of the armed forces. The Premier, appointed by the President, leads the Executive Yuan, which functions as the cabinet.

The Legislative Yuan is a unicameral body composed of 113 members elected for four-year terms. It is responsible for enacting laws, approving budgets, and overseeing the Executive Yuan. Taiwan's judiciary is independent, with the Judicial Yuan overseeing the court system. The Examination Yuan manages civil service examinations and personnel matters, while the Control Yuan functions as a government watchdog, auditing and investigating.

Taiwan maintains a high degree of autonomy with its own constitution, military, and foreign relations, despite the complex international status and limited formal diplomatic recognition. Domestic politics are characterized by competition primarily between the Kuomintang (KMT) and the Democratic Progressive Party (DPP).

Economic Overview

Taiwan has a dynamic, export-oriented economy driven by advanced manufacturing and technology sectors. It is a global leader in semiconductor production, with companies like TSMC playing a critical role in the global supply chain. Other major industries include electronics, machinery, petrochemicals, and information technology.

The economy has demonstrated steady growth, with a GDP growth rate of 2.7% in 2023 despite global uncertainties. Taiwan benefits from a highly skilled workforce, robust infrastructure, and strong trade relationships, particularly with China, the United States, and Southeast Asia. The government actively promotes innovation and investment in emerging sectors such as green energy and biotechnology.

Taiwan’s unemployment rate stood at 3.8% in 2023, reflecting a relatively tight labor market. The World Bank’s Ease of Doing Business Index ranked Taiwan 15th globally in 2023, highlighting its favorable business environment, efficient regulatory framework, and strong protection of property rights.

Business Culture & Etiquette

Business culture in Taiwan emphasizes respect, hierarchy, and relationship-building. Personal connections (guanxi) are important and often precede formal business dealings. Meetings typically begin with polite introductions and exchange of business cards, which should be presented and received with both hands as a sign of respect.

Communication tends to be indirect and high-context; maintaining harmony and avoiding confrontation are valued. Taiwanese professionals may use subtle language to express disagreement or concerns. Decision-making can be consensus-driven and may take time, reflecting the importance of group harmony.

Punctuality is expected, and formal attire is standard in business settings. Gift-giving is common but should be modest and culturally appropriate. Understanding local customs and demonstrating cultural sensitivity are critical for successful business interactions.

Currency & Banking

The official currency is the New Taiwan Dollar (TWD), issued by the Central Bank of the Republic of China (Taiwan). The currency is freely convertible, and Taiwan maintains a stable exchange rate regime with moderate fluctuations.

Taiwan’s banking sector is well-developed, comprising domestic and international banks offering comprehensive financial services. Foreign exchange controls are minimal, allowing relatively free capital movement. However, certain large transactions may require reporting to regulatory authorities. Online and mobile banking services are widely used, supporting efficient business operations.

Key Facts for International Employers

• Taiwan has a skilled, educated workforce with strong expertise in technology and manufacturing.
• Employment laws mandate written contracts, regulated working hours, and statutory benefits including health insurance and pension.
• Labor unions exist but have limited influence compared to Western countries.
• Work permits and residency visas are required for foreign nationals; processing times vary but typically take 1-2 months.
• Taiwan’s labor market is competitive, with low unemployment and increasing demand for specialized talent.
• Cultural emphasis on hierarchy and relationships should be considered in management and negotiation.
• Payroll and tax compliance require adherence to local regulations, including monthly social security contributions.
• Taiwan’s strategic location and trade links make it an advantageous base for regional operations.

Employment Contract Requirements

Employment contracts in Taiwan must be in written form when the employment period exceeds three months, as stipulated under the Labor Standards Act (LSA). Oral contracts are legally valid but not recommended due to evidentiary difficulties. The contract must be provided in Mandarin Chinese; if a foreign language version is used, the Chinese version prevails in case of discrepancies.

Mandatory clauses include:

• Employee and employer identification
• Job title and description
• Work location
• Commencement date and contract duration
• Working hours and rest periods
• Wage amount, payment method, and payment date
• Leave entitlements
• Termination conditions and notice periods
• Occupational safety and health provisions

Failure to provide a written contract when required can result in penalties and may affect dispute resolution.

Types of Employment Contracts

Taiwan recognizes several contract types:

• Fixed-term contracts: Used for a specific duration or project. The maximum term is generally three years, renewable. If renewed more than twice or total duration exceeds three years, the contract is deemed indefinite.
• Indefinite contracts: No fixed end date; provide greater job security. Termination requires just cause and statutory notice.
• Part-time contracts: Applicable when working less than full-time hours (typically under 30 hours per week). Part-time employees enjoy proportional labor rights, including leave and social insurance.

Employers must clearly specify contract type and terms. Fixed-term contracts converted to indefinite after repeated renewals are protected under the LSA.

Probation Period

Probation periods are permitted but strictly regulated. The maximum probation period is three months. During probation, either party may terminate the contract with three days’ notice or payment in lieu.

Probation terms must be clearly stated in the contract. Employees on probation are entitled to all statutory protections except some dismissal restrictions.

Work Permits & Visa Requirements

Foreign nationals require a work permit and appropriate visa to work legally in Taiwan. The employer must apply for the work permit through the Ministry of Labor before the employee enters Taiwan.

Key points:

• Work permits are generally valid for one year and renewable.
• Foreign workers must hold a valid Alien Resident Certificate (ARC) after arrival.
• Certain professions require additional licensing or qualifications.
• Dependents may apply for dependent visas but cannot work without separate permits.

Employers must comply with quotas and restrictions on foreign workers, including salary thresholds and labor market tests.

Background Checks & Onboarding

Background checks are limited by privacy laws. Employers may verify:

• Educational qualifications
• Employment history
• Criminal records (with consent)

Medical examinations are commonly required for certain industries.

Mandatory registrations include:

• Enrollment in the Labor Insurance and National Health Insurance systems within 30 days of hire
• Registration with local labor authorities if applicable

Onboarding procedures typically involve:

• Signing the employment contract
• Providing labor rights information
• Safety training

Anti-Discrimination Laws

Taiwan’s Employment Service Act and related regulations prohibit discrimination on grounds of gender, age, ethnicity, religion, disability, and political affiliation during hiring and employment.

Employers must ensure:

• Equal opportunity in recruitment and promotion
• Reasonable accommodations for disabilities
• No discriminatory questions or tests

Violations can lead to administrative penalties and reputational damage.

EOR Considerations

Using an Employer of Record (EOR) in Taiwan involves:

• Ensuring the EOR complies with local labor laws and social insurance requirements
• Confirming the EOR’s registration and licensing status
• Understanding that the EOR is the legal employer responsible for contracts, payroll, and compliance
• Clarifying liability for termination, benefits, and disputes

Employers should conduct due diligence on the EOR’s operational capacity and legal standing to mitigate risks associated with foreign employment.

Minimum Wage

Taiwan enforces a national minimum wage applicable to all regions without regional variations. The minimum wage is set by the Ministry of Labor and is reviewed annually.

Salary Structure & Payment

The typical salary structure in Taiwan consists of a base monthly salary plus potential performance bonuses or allowances. Salaries are usually expressed as monthly amounts.

Payroll is generally processed on a monthly basis, with payment made by the end of each month. Employers commonly pay salaries via bank transfer directly to employees’ bank accounts.

Additional components may include:

• Performance bonuses
• Overtime pay calculated according to statutory rates
• Allowances such as transportation or meal subsidies, if applicable

Mandatory Bonuses & Allowances

Taiwan mandates a 13th month bonus, commonly referred to as the year-end bonus, which is typically equivalent to one month’s salary. This bonus is usually paid before Lunar New Year but is not legally required to be exactly one month’s salary; however, it is a widespread practice.

Other statutory bonuses or allowances include:

• No mandatory 14th month pay or other statutory bonuses beyond the 13th month
• Mandatory allowances are limited; however, employers often provide transportation or meal allowances as customary practice

Income Tax (Employee)

Taiwan employs a progressive income tax system for individuals. The tax brackets for resident employees in 2024 are as follows:

Taxable income is calculated after deductions and exemptions. Employees are responsible for filing annual tax returns, typically due by May 31 of the following year.

Employer Tax Obligations

Employers in Taiwan must contribute to several social insurance programs on behalf of their employees. The main contributions include Labor Insurance, National Health Insurance (NHI), and the Labor Pension.

• Labor Insurance covers benefits such as injury, disability, and unemployment.
• National Health Insurance provides universal health coverage.
• Labor Pension contributions are mandatory for employees under the new pension system.

Tax Filing & Compliance

Employees must file annual income tax returns by May 31 of the year following the income year. Employers are required to withhold income tax monthly and submit withholding tax statements to the tax authorities.

Compliance requirements include:

• Monthly withholding of income tax based on employee salary
• Submission of withholding tax returns by the 10th of the following month
• Annual reconciliation and filing of income tax returns by employees

Penalties for non-compliance can include fines ranging from NTD 20,000 to NTD 200,000 and potential legal action for serious violations. Employers are advised to maintain accurate payroll records and ensure timely tax filings to avoid sanctions.

Standard Working Hours

Standard working hours in Taiwan are regulated under the Labor Standards Act. The typical work schedule is designed to balance productivity with employee welfare.

Employees are entitled to at least one full rest day every week, commonly Sunday, during which they are not required to work. Any work beyond the standard hours is subject to overtime regulations.

Overtime Regulations

Overtime work is strictly regulated to protect employees from excessive working hours. Employers must compensate overtime work at legally mandated premium rates.

Overtime work must be voluntary and cannot exceed 46 hours per month. Employers are required to keep accurate records of overtime hours.

Annual Leave

Annual leave entitlement increases with the length of continuous service. Employees must be granted paid leave according to the following schedule:

Unused annual leave can generally be carried over for up to three years unless otherwise agreed.

Public Holidays

Taiwan observes several statutory public holidays. The following table lists all official public holidays for the year 2026:

When a holiday falls on a weekend, the following weekday is typically observed as a holiday.

Sick Leave

Employees in Taiwan are entitled to sick leave with pay, subject to certain conditions. Sick leave entitlement is as follows:

• Entitlement: Employees accrue sick leave at a rate of 30 days per year.
• Pay Rate: Sick leave is compensated at 100% of the employee's regular wage for the first 30 days.
• Medical Certificate: A medical certificate issued by a licensed physician is required for sick leave exceeding 3 consecutive days or when requested by the employer.

Unused sick leave can be accumulated up to a maximum of 30 days.

Maternity & Paternity Leave

Taiwan provides statutory leave entitlements for maternity, paternity, and parental care to support family welfare.

Maternity leave includes a compulsory 8 weeks leave period, with at least 4 weeks before and 4 weeks after childbirth. Paternity leave must be taken within 30 days after childbirth.

Other Statutory Leave

Taiwan labor law also provides for other statutory leaves to accommodate significant life events and personal development:

• Bereavement Leave: Typically 3 days paid leave for the death of immediate family members.
• Marriage Leave: Employers may grant 3 days paid leave for employees’ marriage; this is customary but not mandated by law.
• Study Leave: No statutory entitlement; however, some employers may provide unpaid leave or flexible arrangements for education.

Employers are encouraged to comply with these provisions to maintain good labor relations and employee welfare.

Grounds for Termination

Termination of employment in Taiwan can occur under several grounds: with cause, without cause, and by mutual agreement. Termination with cause involves serious employee misconduct such as gross negligence, criminal acts, or breach of contract that justifies immediate dismissal without severance pay. Examples include theft, fraud, or repeated violation of company rules. Termination without cause occurs when the employer ends the contract for reasons unrelated to employee fault, such as business restructuring or redundancy. In such cases, statutory notice and severance pay obligations apply. Termination by mutual agreement is when both employer and employee consent to end the employment relationship, often documented in a written settlement agreement specifying terms.

Notice Period Requirements

Taiwanese labor law mandates specific notice periods for termination depending on employee tenure. Employers must provide written notice or pay in lieu of notice. Employees are also required to give notice when resigning. The following table summarizes the notice requirements:

Employers may provide pay in lieu of notice. Failure to comply may result in liability for damages.

Severance Pay

Severance pay in Taiwan is calculated based on the employee's average monthly wage and years of continuous service. The formula is:

• For employees with less than one year of service: no severance pay is required.
• For employees with one year or more: severance pay equals one month's average wage per year of service.

The average wage is calculated based on the employee’s salary in the six months preceding termination. Partial years are counted proportionally. The following table summarizes severance entitlements:

Severance pay is mandatory unless termination is for cause.

Unfair Dismissal Protections

Taiwanese labor law protects employees against unfair dismissal. Termination without just cause or failure to follow procedural requirements may be challenged. Employees may file complaints with the local labor standards inspection office or pursue civil litigation.

Remedies include reinstatement, compensation for lost wages, or severance pay if applicable. Employers must provide valid reasons and evidence for dismissal. Arbitrary or discriminatory dismissals are prohibited.

Data Protection & Privacy

Taiwan’s Personal Data Protection Act (PDPA) governs employee data handling. Employers must:

• Collect and process employee personal data lawfully and transparently.
• Limit data use to employment-related purposes.
• Ensure data security and confidentiality.
• Obtain employee consent where required.

Employees have rights to access, correct, and request deletion of their personal data. Violations of PDPA can result in administrative fines and civil liability.

Workplace Safety & Unions

Taiwan’s Occupational Safety and Health Act mandates employers to maintain safe working environments, conduct risk assessments, and provide safety training. Employers must report occupational accidents and implement preventive measures.

Trade unions have the right to organize, bargain collectively, and represent employees. The Trade Union Act protects union activities and prohibits employer interference or retaliation.

Dispute Resolution

Labor disputes in Taiwan are resolved through a tiered system:

• Mediation: Initial step via local labor dispute mediation committees.
• Arbitration: If mediation fails, parties may agree to arbitration.
• Litigation: Final recourse through labor courts.

This system aims to resolve disputes efficiently while protecting employee rights. Employers and employees are encouraged to seek mediation before pursuing litigation.