Taiwan is emerging as a strategic destination for international businesses looking to expand into Asia. With a highly educated workforce, strong infrastructure, and business-friendly environment, the country attracts global companies seeking to scale operations or hire remote employees. However, understanding and complying with Taiwan’s labor laws is critical to success.

For foreign employers, navigating employment contracts, statutory benefits, termination procedures, and regulatory compliance can be challenging. This article provides a comprehensive overview of labor laws in Taiwan and how working with a trusted partner—such as a Professional Employer Organization (PEO) or an Employer of Record (EOR)—can streamline your hiring process.

Understanding Taiwan’s Employment Framework

Taiwan’s labor laws are governed primarily by the Labor Standards Act (LSA), which outlines key aspects of employment such as wages, working hours, leave entitlements, severance pay, and employee protection. These laws applies to both local and foreign employees working in Taiwan.

Employers are also expected to adhere to the Act of Gender Equality in Employment, Labor Insurance Act, and Employment Service Act, which further regulate issues such as workplace discrimination, labor insurance, and foreign worker hiring practices.

For foreign companies, ensuring compliance while trying to establish operations or hire remote employees can be complex, especially without a local legal entity. This is where global employment solutions like an Employer of Record (EOR) become incredibly useful.

Employment Contracts and Working Hours

In Taiwan, employment contracts must be written and clearly define job duties, wages, working hours, leave entitlements, and termination clauses. While verbal agreements are recognized, written contracts are preferred for legal clarity.

The standard working hours in Taiwan are:

• 8 hours per day
  
• 40 hours per week
  

Overtime must be compensated at premium rates. Additionally, employees are entitled to one regular day off and one flexible rest day each week. Employers must comply with these standards, or risk penalties.

An Employer of Record can help foreign businesses navigate these obligations by managing compliant employment contracts and monitoring local labor standards.

Wages, Taxation, and Social Security Contributions

Taiwan mandates a monthly minimum wage (adjusted periodically by the government), and salaries must be paid at least once a month. Beyond that, employers are required to deduct income tax at source and remit it to the tax authority.

Employers must also contribute to:

• Labor Insurance
  
• National Health Insurance
  
• Employment Insurance
  
• Pension funds
  

These contributions are mandatory and must be calculated based on government guidelines. Missing deadlines or misreporting these deductions can result in fines and reputational damage.

This is where payroll outsourcing plays a vital role. By engaging a local provider or an international payroll services firm, companies can ensure timely, accurate payroll processing and compliance with Taiwan’s tax laws.

Employee Leave and Benefits

Taiwanese employees are entitled to several types of statutory leave:

• Annual leave: Based on years of service (e.g., 7 days for 1–2 years, increasing with tenure)
  
• Sick leave: Up to 30 days per year (partially paid)
  
• Maternity leave: 8 weeks for female employees
  
• Paternity leave: 5 days
  
• Family care leave: Up to 7 days annually
  

Additionally, employers must provide labor insurance and national health insurance coverage. Offering competitive benefits beyond the statutory minimum—such as flexible work arrangements, bonuses, or additional medical insurance—can make a big difference when trying to attract and retain top Taiwanese talent.

A PEO or Employer of Record in Taiwan can help structure benefit packages that comply with legal requirements while also appealing to the local workforce.

Termination and Severance Pay

Terminating an employee in Taiwan must be handled carefully and lawfully. Terminations can occur for several reasons, including redundancy, misconduct, or performance issues. However, employers must follow the proper procedures, which typically include:

• Notice periods (3 to 30 days depending on tenure)
  
• Written termination notice
  
• Severance pay (1 month’s salary for each year of service)
  

Failure to follow lawful termination procedures can lead to labor disputes, fines, or lawsuits. A trusted Employer of Record assumes these compliance responsibilities and can help foreign businesses navigate employee exits in accordance with Taiwanese laws.

Why Use an Employer of Record or PEO in Taiwan?

For global companies, setting up a local entity in Taiwan can be time-consuming and expensive. Legal registration, banking setup, compliance monitoring, and HR infrastructure require significant resources.

That’s why many businesses choose to partner with an Employer of Record or Professional Employer Organization. These partners:

• Become the legal employer on your behalf
  
• Handle employment contracts, payroll, and benefits
  
• Ensure labor law compliance
  
• Provide HR guidance for local practices
  
• Support lawful hiring and terminations
  
• Help you hire remote employees without setting up a branch
  

Essentially, an EOR offers a low-risk, high-compliance solution for market entry and workforce expansion.

How Global Employment Solutions Simplify Hiring in Taiwan

Working with a provider of global employment solutions or international payroll services makes hiring in Taiwan far more manageable for foreign companies. These partners help you:

• Remain compliant with evolving labor laws
  
• Attract talent with locally competitive compensation packages
  
• Avoid penalties or audits related to payroll and taxation
  
• Scale operations faster, without a legal entity
  
• Focus on core business growth while HR and admin tasks are managed locally
  

At Team APAC, our Employer of Record services in Taiwan are tailored to meet the needs of international businesses. Whether you want to hire remote employees or expand a distributed workforce across APAC, we help simplify HR, payroll, and compliance.

Final Thoughts

Navigating labor laws in Taiwan is essential for any foreign company looking to operate in this dynamic and highly skilled market. From employment contracts to termination processes, every step of the employee lifecycle must comply with stringent regulations.

Rather than risking non-compliance, foreign businesses can benefit immensely from working with a trusted Employer of Record, PEO, or payroll outsourcing partner. These services allow you to hire remote employees, manage payroll, and offer benefits without needing to establish a local entity.

As a leader in global employment solutions, Team APAC provides the tools, expertise, and infrastructure you need to succeed in Taiwan and across the Asia-Pacific region.

Ready to explore your hiring options in Taiwan? Let Team APAC help you expand with confidence.