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Compliance
Published:
January 13, 2026
Last updated:
January 13, 2026
Taiwan represents a strategic APAC market with advanced economy, highly skilled workforce, strong technology and manufacturing sectors, and strategic positioning for Greater China market access. However, employment regulations provide substantial employee protections through job security provisions, mandatory benefits, and strict working hour limits.
Organizations managing multiple employees across APAC markets face complexity when adding Taiwan. Unlike markets with simpler termination (Singapore, Hong Kong), Taiwan requires demonstrating legal grounds for dismissals with proper notice and severance.
Employment in Taiwan is primarily governed by the Labor Standards Act (LSA), establishing minimum labor standards and employee protections.
Key legislation:
Regulatory bodies: Ministry of Labor (MOL) establishes policy and conducts enforcement; local labor bureaus handle day-to-day inspections and complaints; Workforce Development Agency processes foreign worker applications.
Written contracts not strictly mandatory but strongly encouraged to document terms and prevent disputes.
Recommended provisions: Job title and duties, work location, employment start date and duration (fixed-term vs. indefinite), working hours and rest periods, wage structure, leave entitlements, probation period, notice periods, severance provisions, social insurance coverage.
Fixed-term vs. indefinite-term:
Fixed-term contracts: Permitted for specific projects, seasonal work, or temporary assignments. After continuous renewals or extended duration, courts may deem conversion to indefinite-term.
Indefinite-term contracts: Standard relationship without specified end date. Provides stronger protections requiring legal grounds for termination.
Probation periods: Permitted (typically 1-3 months) but employees retain full labor law protections. Cannot arbitrarily terminate without valid reasons.
Contract voidability: Any clauses reducing or eliminating employee rights guaranteed under Labor Standards Act are void.
Legal limits: Maximum 8 hours per day, 40 hours per week.
Flexible scheduling: Two-week flexible working hour system allowed where daily hours vary but total over two weeks cannot exceed 80 hours.
Rest days: Minimum 1 rest day per week plus 1 regular day off.
Breaks: Minimum 30-minute break for continuous work exceeding 4 hours.
Overtime limits: Maximum 54 hours overtime per month.
Overtime compensation:
Example: Employee earning NT$40,000/month (NT$238/hour) works 10 hours ordinary overtime, 6 hours rest day:
Work hour documentation: Maintain accurate attendance records. Retain minimum 5 years.
Penalties: Fines NT$20,000 to NT$1,000,000 for violations.
2025 minimum wage:
Payment frequency: At least once monthly on designated pay day.
Wage statement requirements: Must issue monthly statements showing basic salary, allowances, overtime, holiday premiums, bonuses, deductions, net salary.
Permitted: Statutory contributions (labor insurance, health insurance, labor pension, income tax), court orders, authorized deductions.
Prohibited: Arbitrary or excessive deductions.
Penalties: Fines NT$20,000 to NT$1,000,000 for late or incomplete payment. Repeat offenses may result in business license suspension.
Explore payroll compliance across APAC markets.
Labor Insurance covers occupational injuries, sickness, unemployment, maternity, disability, death benefits.
Contribution rate: Total ~10.5% (employer ~7%, employee ~2%, government ~1.5%)
Registration: Within 3 days of employment.
NHI provides universal health coverage.
Contribution rate: ~5.17% (employer ~60%, employee ~30%, government ~10% of total premium)
Registration: Within 3 days of employment.
Labor Pension requires employer contributions to individual accounts.
Contribution rate: Employer minimum 6% of monthly wages (up to NT$150,000 ceiling). Employee may voluntarily contribute up to 6% for tax benefits.
Vesting: Immediately vested—employees retain full balance upon separation.
Registration: Within 3 days of employment.
Combined contributions: Approximately 13-14% of monthly salary (labor insurance ~7%, NHI ~3%, labor pension 6%).
Example - NT$40,000/month employee:
Late payment penalties: Interest plus administrative fines.
Work permit categories:
Professional/white-collar: For specialized, technical, or managerial roles.
Blue-collar: For manufacturing, construction, long-term care, domestic work. Subject to quotas and nationality restrictions.
Submit work permit applications to Workforce Development Agency with business documents, job description, candidate credentials, employment contract, proof of minimum salary.
Penalties: Fines NT$150,000 to NT$750,000 for illegal employment; potential 3-5 year ban from hiring foreign workers; deportation of foreign workers.
Employer-initiated termination permitted for:
Employee fault: Serious contract violation, intentional damage to employer property, criminal conviction, serious misconduct.
Objective circumstances: Business closure or transfer, suspension of operations for 1+ month, significant losses requiring downsizing, force majeure, employee unable to perform after medical leave exhausted.
Advance notice by tenure:
Payment in lieu permitted.
Eligibility: Employees terminated for authorized causes (business reasons, not employee fault).
Calculation: One-half month average wage per year of service (maximum 6 months).
Example: Employee with 5 years earning NT$40,000/month terminated for redundancy:
If found unlawful: reinstatement, back wages, compensation for damages.
Learn more about employee termination challenges across APAC.
MOL inspections verify employment contracts, wage payment, working hours, social insurance enrollment, foreign worker documentation, leave compliance.
Employee complaints: Anonymous complaints to local labor bureaus trigger investigations.
Dispute resolution: Mediation through labor bureaus, arbitration committees, civil courts for unresolved cases.
Record retention: Minimum 5 years for employment, wage, attendance records.
Penalties: Fines NT$20,000 to NT$1,000,000; compliance orders; business license suspension for serious violations.
Strong job security: Requires legal grounds for termination with notice and severance. More protective than Singapore/Hong Kong, comparable to South Korea/Japan.
Mandatory severance: One-half month per year (max 6 months) for business-related terminations.
54-hour monthly overtime cap: Stricter than Hong Kong (no limit), comparable to Japan.
Comprehensive social insurance: Three mandatory schemes (~13-14% employer) comparable to Malaysia (~15%), South Korea (10-15%).
Immediate pension vesting: Employees retain full pension upon separation regardless of tenure.
Foreign worker minimums: NT$47,971/month professional threshold comparable to Singapore EP, South Korea E-7.
By partnering with AYP's EOR services, your organization enters Taiwan confidently while we manage local compliance complexity and ensure continuous regulatory adherence.
Explore AYP's EOR services across APAC markets, or learn about compliance challenges when hiring across Asia.
