Employment Contracts in Taiwan

A Comprehensive Guide to Employment Contracts in Taiwan
Employment laws in Taiwan are regulated under the Labor Standards Act (LSA). Whether hiring directly or through an Employer of Record in Taiwan, it’s crucial to ensure contracts comply with local laws. Here’s a step-by-step guide:

1. When Does the Employment Contract Start?
The employment contract in Taiwan takes effect once both parties agree and sign the document.
💡 Pro Tip: While verbal agreements can be valid in some cases, a written contract provides clarity and legal protection.

2. Key Components of a Taiwan Employment Contract
An employment contract in Taiwan must include the following essential elements:
Job Title and Responsibilities: Clearly outline duties to avoid misunderstandings.
Work Location: Specify if the role is on-site, hybrid, or remote.
Contract Type: Contracts are typically either fixed-term or indefinite-term.
Working Hours: Standard work hours are 8 hours per day, 40 hours per week, with overtime subject to legal limits.
Compensation and Benefits: Include salary details, bonuses, and allowances such as transportation or meal stipends.
Leave Policies: Ensure compliance with statutory requirements, such as:
Annual Leave: Starts with 3 days after one year of service and increases with tenure.
Sick Leave: 30 days unpaid or 15 days at half-pay per year.
Maternity Leave: Fully paid 8 weeks of maternity leave as per local laws.
Termination Terms: Define notice periods (10–30 days, depending on length of service) and severance pay.
💡 Why This Matters: A comprehensive and compliant contract helps reduce legal risks and ensures smooth employment relations.

3. Salary Structure in Taiwan
Employers must structure compensation transparently, including:
Base Salary: The primary taxable income.
Allowances: For housing, meals, and transportation.
Bonuses: Typically annual or performance-based.
Overtime Pay: Governed by law and must meet statutory requirements.
💡 Key Takeaway: A well-defined salary package ensures compliance and enhances employee satisfaction.

4. Legal Considerations: Protecting Your Business
a. Non-Compete and Confidentiality Clauses
Non-compete clauses are enforceable if they are reasonable in scope, duration, and compensation. Confidentiality agreements safeguard sensitive information.
b. Statutory Contributions
Employers in Taiwan must contribute to the following:
Labor Insurance: Covers work injuries and unemployment.
National Health Insurance (NHI): Mandatory healthcare coverage.
Pension Fund: Ensures retirement benefits for employees.
💡 Tip: Managing these contributions is essential for compliance and avoiding penalties.

5. Background Checks and Employee Protections
Background checks are permissible but must comply with data privacy laws. Written consent from candidates is mandatory before conducting checks, which can include criminal, academic, and employment history verifications.

6. The Importance of Written Contracts
Written contracts provide a clear legal framework, ensuring both parties are aware of their rights and obligations, thus reducing disputes.

7. Why Partner with GlobainePEO?
Managing employment in Taiwan can be complex. By partnering with GlobainePEO, you can:
Draft fully compliant employment contracts.
Simplify payroll and statutory contribution management.
Focus on business growth while we handle local labor law intricacies.

💡 GlobainePEO Advantage: As your trusted Employer of Record in Taiwan, we handle every aspect of employment, from onboarding to compliance.

at last it should be like this Drafting compliant employment contracts is the foundation of successful business expansion into Japan. Partnering with Taiwan EOR like GlobainePEO, allows you to focus on your core operations while ensuring legal and administrative requirements are met efficiently.