TALENT RECRUITMENT & EMPLOYMENT

A foreign startup can engage personnel to work in Taiwan before establishing a local entity. However, having a Taiwanese subsidiary or branch act as the employer and hire employees directly is the simplest and lowest-risk model. Two other approaches are common: having a local service provider named as the employer in the employment documentation, and using an outsourcing or contract-for-work arrangement. Under both of these, the foreign company is still often found in practice to be the legal employer, and the same employer obligations apply to it.

These two approaches often result in the foreign company being treated as the employer because a Taiwanese court does not decide who the employer is by looking at which company is named as the hiring party in the contract. It looks at who in fact directs and supervises the person doing the work. This is commonly described as the worker's degree of subordination to the company: the extent to which the worker is subject to that company's control over work assignments, source of remuneration, and position within the organization. If all three point to your company, then even where the contract names a local service provider or a contractor as the employer, a court may still find that the foreign company is the legal employer and require your company to meet employer obligations.

1. The best approach is to set up a subsidiary or branch office in Taiwan, have it act as the employer, and hire employees directly. This is the lowest-risk and simplest way to do it. The Taiwanese subsidiary or branch, acting as the employer, enrolls its employees in Labor Insurance and National Health Insurance as required by law. The condition for this model is that your business in Taiwan has reached the stage where establishing a branch or subsidiary is commercially warranted. 2. Before establishing a subsidiary or branch in Taiwan, you may engage a local service provider as the employer named in the employment documentation. In Taiwan this is sometimes described as using a "nominal employer"; foreign startups more commonly refer to the provider as an employer of record (EOR). The provider hires the employee and enrolls them in the required social insurance schemes on your behalf. The legal risk in this model is considerable. The employer named in the documentation and the company that actually assigns the work are not the same entity, so once a dispute arises, the foreign company that directs and supervises the employee may still be found to be the legal employer and required to meet employer obligations under the Labor Standards Act. 3. You can also use an outsourcing or contract-for-work arrangement and engage an independent individual or company to take on a defined piece of work. Whether your company ends up with employer obligations depends on whether the person you engage is in fact in a relationship of subordination to your company. Two things are worth checking first: whether this person has to clock in and out, and whether they have any room to judge or decide how the work is done. If the person has to clock in and out and performs the work entirely under your direction and supervision, then even where the contract is written as outsourcing or contract for work, a court may still find that an employment relationship exists between you and that person, which makes you the employer. Practitioners in Taiwan call this independent contracting in form, employment in substance. 4. Ask whether the first person you bring on in Taiwan has to take daily work assignments from you and has to work the hours you set. You know the answer better than anyone, and those are exactly the facts a court looks at.

Yes. Taiwan's Labor Standards Act generally applies when a person actually performs work in Taiwan. The test is where the work is performed, meaning where the person actually works, not their nationality and not the country in which the employment contract was signed.

Article 3, Paragraph 3 of Taiwan's Labor Standards Act states that the Act applies to all forms of employee-employer relationships. In principle, employment relationships carried on within the territory of the Republic of China fall within the Act's scope. Whether an exception applies is not for the employer to decide. An industry or category of worker can be excluded only where the application of the Act would genuinely cause undue hardship because of the types of management, the administration system and the characteristics of the work involved, and where that industry or category has been designated and publicly announced by the Central Competent Authority, which is the Ministry of Labor. The place where work is performed matters because, under an employment contract, that place is not only where the employee actually provides labor but also where the legal consequences actually arise. How wages are paid, how working hours are counted, and which occupational-safety requirements apply can only be determined by reference to where the employee actually performs the work.

What you need to know about the basic rules of Taiwanese labor law: 1. Wages are agreed between you and the employee, but they cannot fall below the minimum wage. From 1 January 2026, the monthly minimum wage is NT$29,500 and the hourly rate is NT$196. These figures change, so watch for announcements from the competent authority. 2. Employees may take leave for marriage, bereavement, personal matters, sickness and similar circumstances under the Regulations of Leave-Taking by Workers. Those regulations set a minimum standard, and where you offer better terms, your own terms apply. Taiwan has a distinctive practice commonly referred to as a "typhoon day" (颱風假). A day on which work is suspended because of typhoon conditions is not a statutory holiday under the Labor Standards Act. However, if an employee is genuinely unable to report to work because of the disaster, you may not treat the absence as unauthorized or force the employee to use personal leave or annual leave. If the employee has difficulty using their usual means of commuting to or from work and therefore needs to take a taxi, you must pay the related fare and specify the available commuting assistance in the employment contract, collective agreement, or work rules. 3. If an employee suffers illness, injury, disability or death as a result of an occupational accident, you must pay the necessary medical expenses and wage compensation, together with disability or survivors' compensation. Any amount already paid under Labor Insurance for the same accident may be offset against the compensation you are required to pay. 4. When you post someone from your home country to work in Taiwan on a long-term basis, Taiwan's Labor Standards Act applies as long as that person performs work in Taiwan, even if the employment contract was signed in your home country.

1. A one-year renewable arrangement is a fixed term contract, and in Taiwan only four kinds of work may be placed on one. An ordinary ongoing role is not among those four, and the law requires a non-fixed term contract. 2. You can end the employment of someone who does not work out during probation. In practice the ground relied on is that the worker is clearly not able to perform satisfactorily the duties required of the position held, but in law that is a termination based on a statutory ground that requires the dismissal procedures to be followed, and you need to deal with four sets of follow-up requirements.

1. On fixed term contracts: A Taiwanese court decides whether a contract is fixed term or non-fixed term not by what the contract says, but by whether the work itself is continuous. The test is whether the duties of the position arise from economic activity that the employer intends to maintain on an ongoing basis. Where the work itself has an end date and is not a function the company needs over the long run, a fixed term contract is available. One example is an employer contracted to operate a car park for a fixed period and hiring car park attendants for that period; another is a research institute hiring postdoctoral researchers for a specific research project. 2. On the probation period: When an employer decides not to keep someone on after probation, the ground relied on in practice is that the worker is clearly not able to perform satisfactorily the duties required of the position held. That is one of the statutory grounds for dismissal under the Labor Standards Act, so ending a probationary appointment means following the dismissal procedure.

1. First decide whether the role falls into one of the four kinds of work that may be placed on a fixed term contract. All four must be non-continuous work. (1) Temporary work: the end point cannot be foreseen, and the period is six months or less. (2) Short-term work: the end point can be foreseen and the work will be completed within six months. (3) Seasonal work: the work is affected by seasonal sources of raw materials or supplies, or by market sales, and the period is nine months or less. (4) Specific work: the work can be completed within a defined period, and where that period exceeds one year it must be submitted to the competent authority for approval or recordation. If none of the four applies, the contract has to be a non-fixed term contract. 2. Once you decide not to keep the person on, give advance notice according to their length of service. Where the person has worked continuously for three months or more but less than one year, the notice must be given ten days in advance. Where the person has worked less than three months, the law sets no notice period, but the rest of the dismissal procedure still applies. If you terminate without giving the notice required, you must pay wages for the advance notice period that should have been given. 3. Pay severance. For an employee under the new labor pension system, severance is due however short the probation was. It is calculated as half a month of average wage for each full year of service, with a proportional amount for any period of less than a year, and it must be paid in full within thirty days after the labor contract is terminated. 4. Ten days before the employee leaves, report the employee's name, address, telephone number, the work performed and other required information to the local competent authority and the public employment service institution. This is required by Article 33 of the Employment Service Act. The report goes to the government, not to the employee. This step has to be completed, and leaving it undone breaches the Employment Service Act. 5. A departing employee may ask you for two documents. The first is proof of service record, which you may not refuse when the employee requests it, and which records the period of employment and the job title. The second is a certificate of involuntary separation, which the employee needs to claim unemployment benefits, since separation on dismissal grounds counts as involuntary separation. Case: A startup hired an administrative assistant on a monthly salary of NT$30,000. During the probation period the company terminated the contract on the ground that the assistant was not able to perform the work. The assistant asked the company for a certificate of involuntary separation, was refused, and brought the matter to court. The company argued that the assistant had resigned and produced a resignation form giving unsuitability as the reason; the form carried no signature from the assistant and was only an internal document, and the court did not accept it. The court also found that the company's representative had said by messaging app that the probation period was thirty days and that the assistant had failed the basic training. The court held that the assistant had not resigned, and that the company had reviewed the assistant during probation, found the assistant unsuitable, and terminated the contract by exercising the termination right reserved for the probation period. The court also held that the termination itself was valid, because the agreed thirty-day probation period was not unreasonably long and the company had not abused that right. Even so, the company still could not refuse to provide the certificate of involuntary separation.

No. In Taiwan an employer may end someone's employment only on a ground that appears on the list set out in the Labor Standards Act. You cannot terminate at will, as permitted under the U.S. employment-at-will doctrine, without giving a reason. The list falls into two categories, and the procedure and the cost are completely different: one is dismissal with notice and severance, the other is disciplinary dismissal.

The first category is dismissal with notice and severance. The grounds include the business ceasing operations or being transferred, an operating loss or business contraction, force majeure that suspends the business for more than one month, a change in the nature of the business that makes a reduction in workforce necessary where the affected workers cannot be reassigned to other suitable positions, and a worker being clearly not able to perform satisfactorily the duties required of the position held. On this route you must give advance notice according to length of service, and you must pay severance. The second category is disciplinary dismissal. It requires serious misconduct by the worker, for example committing violence against the employer or a fellow worker, absence from work for three consecutive days without good cause, or a breach of the labor contract or of the working rules where the breach is serious. On this route you may terminate without advance notice and without paying severance. Even where the ground you rely on does sit on the statutory list, Taiwanese courts also consider a further question. In deciding whether a dismissal is lawful, courts place particular weight on the principle that dismissal is the last resort: before dismissing a worker, the employer must first exhaust the other measures that would do less harm to that worker's interests. Only where every corrective measure has failed, and there is no other suitable position in which the worker could be placed, will a court treat the dismissal as lawful.

1. As your headcount approaches thirty, have your working rules ready. Article 70 of Taiwan's Labor Standards Act requires an employer hiring thirty or more workers to set up working rules in accordance with the nature of the business, and to display them publicly after submitting them to the competent authority for approval and record. (1) The rules must cover working hours, recess and holidays, the standards, method of calculation and payment dates of wages, overtime hours, allowances and bonuses, the rules of conduct to be observed, rules for attendance and leave-taking, rewards and disciplinary measures and promotions, recruitment, discharge, severance and retirement, compensation for accident, injury or disease, and welfare measures. (2) Once headcount reaches thirty, you have thirty days to submit the working rules to the local competent authority for approval and record, and any later amendment has to go through the same step. (3) The working rules take legal effect only after the competent authority has approved and recorded them and you have displayed them publicly; working rules that have not completed the approval-and-record process are generally held not to bind your workers. (4) Failing to set up the working rules, or failing to complete the approval-and-record process, carries a fine of between NT$20,000 and NT$300,000. 2. If you want to rely on a worker being unable to perform the duties of the position, the performance-management process and performance improvement plan must be properly designed and documented in advance. Set performance standards that follow from the company's own goals and that match the worker's grade. Where the worker falls short over a long period and shows no improvement after a coaching program, a court is more likely to find that the worker is genuinely unable to perform the duties. A properly structured performance improvement plan covers three things. (1) Substantive support: training, help from a supervisor, or other resources for improvement. (2) A reasonable period: enough time for the worker to demonstrate improvement. (3) A redeployment review: before dismissing, consider a transfer, a demotion or a pay cut as alternatives, and confirm that the other less damaging measures have all been tried. 3. For a dismissal with notice and severance, give advance notice according to the worker's length of service and pay the severance. During the notice period the worker may take time off during working hours to look for a new job, and you must continue to pay wages for that time. 4. For a disciplinary dismissal, watch a very short deadline. The company must terminate the employment contract within thirty days after becoming aware of the misconduct. After thirty days the company can no longer rely on that incident to terminate. 5. Assess the potential consequences of an unlawful dismissal in advance. Where the procedure is defective or the dismissal is disproportionate, the court will rule that the employment relationship still exists. You then have to reinstate the worker, pay the wages from the day of dismissal to the day of reinstatement together with statutory interest, and make the required retroactive labor pension contributions. Given the cost and the risk of litigation, these matters are often settled in practice. Note, though, that a settlement clause requiring the worker to waive severance or notice pay in advance is void, because it conflicts with a mandatory provision. Case: Company A dismissed an engineer on the ground that the way he performed his duties seriously breached the labor contract and the working rules. The engineer sued for a ruling that the employment relationship still existed and for payment of wages. Company A argued that he had indeed violated the working rules and that the violation was serious. The court found, however, that before the dismissal the company had not put the matter to its personnel review committee, the internal body that decides on personnel actions, and had not given the engineer any opportunity to be heard. It simply notified him of the dismissal and ended the contract. Because that procedure did not match Company A's own rules for its personnel review committee, the procedure was seriously defective, and the dismissal therefore lacked procedural fairness.

Regular working time is no more than eight hours a day and no more than 40 hours a week. Before requiring an employee to work overtime you must first obtain their consent, and there is a cap on overtime hours. On top of that, a worker must have two days off every seven days: one day designated as "regular leave" (例假) and one rest day (休息日). The two days have different names, and the rules that apply when a worker works on them are also different.

Article 36 of Taiwan's Labor Standards Act splits the two days off in every seven into two kinds, a regular-leave day and a rest day, and the rules for each are different. 1. As a rule, an employee may not be required to work on a regular-leave day. Only where there is an act of God, an accident or an unexpected event may you have an employee work on a regular-leave day. Outside those three situations you may not do so even if the employee consents. If the employee has in fact worked on a regular-leave day, the competent authority will require you to correct the practice, and the wages for that day must still be paid at double the regular rate. 2. An employee may be required to work on a rest day, but at a higher rate. You may have an employee work on a rest day, but the premium on the wage has to be higher than for overtime on a working day. Work is permitted on a regular-leave day only in narrowly defined circumstances, while a rest day allows work but at a higher premium. Which day of the seven is designated as the regular-leave day and which is the rest day is agreed between you and the employee. If you need to move them within the week, you must consult the employee and obtain agreement, and one condition still applies: you may not have the employee work for more than six consecutive days.

1. Start by keeping to Taiwan's three levels of working-time limits. (1) Regular working time is no more than eight hours a day and no more than 40 hours a week. (2) Before extending working hours you must first obtain the employee's consent. Total working time, including regular working time and overtime, may not exceed twelve hours a day, and total overtime may not exceed 46 hours a month. (3) If you need more flexibility, you may, with the consent of the labor union or, where there is no labor union, with the approval of a labor-management conference, move to a three-month aggregate cap. Under that arrangement overtime may not exceed 54 hours in any single month or 138 hours over a three-month period. Separate exceptions apply in the event of an act of God, an accident or an unexpected event. 2. Overtime pay is calculated on two sets of rates, one for overtime on a working day and one for work on a rest day. (1) For the first two hours of overtime on a working day, the employee must receive, in addition to the regular hourly wage, at least an additional one-third of the regular hourly rate. For overtime beyond the first two hours and up to four hours in total, the employee must receive at least an additional two-thirds of the regular hourly rate. (2) Work on a rest day carries a higher premium. For the first two hours, the employee must receive, in addition to the regular hourly wage, at least an additional one and one-third of the regular hourly rate. For work beyond the first two hours, the employee must receive at least an additional one and two-thirds of the regular hourly rate. 3. The choice between overtime pay and compensatory leave belongs to the employee. After working overtime or working on a rest day, the employee may choose to take compensatory leave instead of overtime pay. It may be used only with the employer's agreement, and it is granted hour for hour based on the overtime actually worked. The deadline for taking compensatory leave is agreed between the employer and the employee. If the compensatory leave has not been taken by that deadline or by the time the employment contract ends, the unused hours must be paid out as wages at the rate that applied on the day the overtime or rest-day work was performed. 4. Plan work on days off according to the type of day involved. (1) Which days are the regular-leave day and the rest day is agreed between you and the employee. Moving them within the week requires consultation and agreement, and you may not have the employee work for more than six consecutive days. (2) To schedule work on a national holiday you must obtain the employee's consent, and the wages for that day are paid at double the regular rate, that is, the day's ordinary wage plus one more day's wage. There is also another option: if you reschedule a national holiday to another working day by agreement with the employee, then after the change the original holiday has become a working day, and work on that day does not give rise to double wages. 5. Annual paid leave accrues with length of service, and the employee has the right to arrange the dates. (1) The entitlement is as follows: three days for service of six months or more but less than one year, seven days from one year up to two years, ten days from two years up to three years, fourteen days from three years up to five years, fifteen days from five years up to ten years, and one additional day for each year of service beyond ten years, up to a maximum of thirty days. (2) The dates are arranged by the employee. Only where the business has an urgent operational need, or the employee has personal circumstances, the dates may be adjusted by agreement between the employer and the employee. (3) Where annual paid leave is unused at the end of the leave year or when the employment contract ends, the employer must pay wages for those unused days. Unused days at the end of the year may also be carried over to the following year by agreement with the employee, but if they are still unused at the end of that following year or when the contract ends, the employer must pay wages for those unused days.