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Discover everything you need to know about Taiwan

Hire in Taiwan at a glance

Here ares some key facts regarding hiring in Taiwan

Taiwan Dollar
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GDP growth
GDP world share
Payroll frequency
Working hours
40 hours/week

Overview in Taiwan

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  • Geography and Climate: Taiwan is an island located about 180 km southeast of mainland China, characterized by diverse terrain with mountainous regions in the east and flat plains in the west. It has a varied climate ranging from subtropical in the north to tropical monsoon in the south.

  • Historical Background: Initially inhabited by Austronesian peoples, Taiwan has been under the rule of the Dutch, Qing Dynasty, and Japan before the Kuomintang retreated there in 1949 after the Chinese Civil War. This led to the authoritarian "White Terror" period, followed by rapid economic growth and political liberalization, transforming Taiwan into a vibrant democracy in the 1990s.

  • Socio-Economic Overview: With a population of 23 million and Taipei as its capital, Taiwan is a high-income economy known for its technological advancements and high global innovation rankings. The culture is a mix of indigenous, Chinese, Japanese, and modern influences. Challenges include an aging population and transitioning to a multicultural society with increasing foreign workers.

  • Education and Workforce: Taiwan boasts a well-educated population with a significant number holding tertiary degrees, aligning with its knowledge-driven economy. The workforce is skilled in engineering and technology, with an increasing focus on soft skills.

  • Economic Sectors: The service sector dominates Taiwan's economy, with significant contributions from ICT, finance, and healthcare. Taiwan is a key player in global electronics, especially semiconductors, with companies like TSMC leading in chip technology. SMEs are crucial, focusing on niche markets, while agriculture and tourism also provide employment.

  • Work Culture: Taiwanese work culture values long hours, loyalty, and hierarchical respect, though modern companies may exhibit flatter structures and more open communication styles. Building personal networks and maintaining face are important in professional settings.

  • Emerging Sectors: Taiwan is expanding into biotech, renewable energy, and aerospace, driven by global trends and domestic needs like an aging population. The services sector and SMEs remain the backbone of the economy, crucial for employment and innovation.

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Employer of Record in Taiwan

Rivermate is a global Employer of Record company that helps you hire employees in Taiwan without the need to set up a legal entity. We act as the Employer of Record for your employees in Taiwan, taking care of all the legal and compliance aspects of employment, so you can focus on growing your business.

How does it work?

When you hire employees in Taiwan through Rivermate, we become the legal employer of your staff. This means that we take on all the responsibilities of an employer, while you retain the day-to-day management of your employees.

You as the company maintain the direct relationshiop with the employee, you allocate them the work and manage their performance.
Rivermate takes care of the local payrolling of the employee, the contracts, HR, benefits and compliance.

Responsibilities of an Employer of Record

As an Employer of Record in Taiwan, Rivermate is responsible for:

  • Creating and managing the employment contracts
  • Running the monthly payroll
  • Providing local and global benefits
  • Ensuring 100% local compliance
  • Providing local HR support

Responsibilities of the company that hires the employee

As the company that hires the employee through the Employer of Record, you are responsible for:

  • Day-to-day management of the employee
  • Work assignments
  • Performance management
  • Training and development

Taxes in Taiwan

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Tax and Social Security Responsibilities for Employers in Taiwan

  • Income Tax Withholding: Employers in Taiwan must withhold income tax from employees' salaries. Residents are taxed on a progressive scale from 5% to 40%, while non-residents are taxed at a flat rate of 18%. Taxes must be remitted to the National Taxation Bureau by the 10th of the following month.

  • Social Security Contributions: Employers contribute to Labor Insurance, National Health Insurance (NHI), Labor Pension, and Employee Stabilization Fund (ESF). Rates vary and are shared between employer and employee.

  • VAT and Registration: The standard VAT rate is 5%, with exemptions for specific services like medical care and education. Businesses must register for VAT if they meet certain criteria, including foreign businesses providing electronic services exceeding 480,000 NTD annually.

  • Tax Incentives: Taiwan offers reduced corporate income tax rates and specific tax credits for R&D and investments in certain technologies and industries. Benefits also exist for businesses in Free Trade Zones and Science Parks, including import duty exemptions and reduced business tax rates.

  • Deductions and Standard Deduction: Employees can opt for a standard deduction or itemize deductions for expenses like charitable contributions and medical expenses.

These regulations and incentives are designed to streamline tax processes for employers and attract business investment in Taiwan.

Leave in Taiwan

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In Taiwan, employee annual leave entitlement increases with the length of service with the same employer, starting from 3 days for those who have worked between 3 months to 1 year, up to a maximum of 30 days for those who have served 10 years or more. Employees can carry over unused leave days or be compensated for them, with a minimum number of leave days retained.

Taiwan celebrates a mix of traditional, national, and other holidays. Significant traditional holidays include the Chinese New Year, Tomb Sweeping Day, Dragon Boat Festival, and Mid-Autumn Festival. National holidays feature the Founding Day of the Republic of China, Peace Memorial Day, Taiwan Retrocession Day, and Armed Forces Day. Other holidays such as Children's Day and Labor Day are also observed.

Employees are entitled to various types of leave including annual, sick, maternity, paternity, family care, bereavement, menstrual, and marriage leave, with specific conditions and durations outlined in relevant labor laws like the Labor Standards Act and the Act of Gender Equality in Employment. These provisions ensure that employees have adequate time off for personal, family, and health-related needs.

Benefits in Taiwan

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In Taiwan, employees benefit from a robust social safety net that includes mandatory benefits such as Labor Insurance (LI) and Employment Insurance (EI), which cover various aspects from maternity and sickness leave to unemployment and vocational training benefits. Additional mandatory benefits include annual leave, national holidays, and labor accident insurance. Employers also often extend optional benefits like housing, meal, and transportation allowances, supplemental medical insurance, and employee assistance programs to enhance attractiveness and retention. Perks such as flexible working arrangements, mobile phone reimbursement, and education allowances are also common. All employees must enroll in the National Health Insurance (NHI) program, with contributions shared between employers, employees, and the government. Retirement security is supported by mandatory public pension schemes like the Labor Pension and National Pension, with options for supplementary plans through employers or individual retirement accounts. These comprehensive benefits contribute significantly to the financial security and well-being of employees in Taiwan.

Workers Rights in Taiwan

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In Taiwan, the Labor Standards Act (LSA) governs employee termination, specifying permissible reasons such as business closure, operational changes, and employee misconduct, among others. Employers must provide advance notice based on the employee's length of service, ranging from 10 to 30 days, and generally offer severance pay unless termination is due to serious misconduct or other specific exceptions.

Taiwanese law also protects against discrimination in the workplace, with the Constitution and various acts like the Act of Gender Equality in Employment and Employment Services Act prohibiting discrimination based on characteristics such as race, gender, and disability. Employers are required to create non-discriminatory workplaces, provide necessary training, and address harassment.

The LSA mandates a standard 40-hour workweek, with provisions for overtime and rest periods. Employers must ensure workplace safety as per the Occupational Safety and Health Act (OSHA), which includes providing safety equipment, conducting training, and implementing comprehensive safety management plans. Employees have rights to a safe work environment and can refuse unsafe work. The Ministry of Labor and its Occupational Safety and Health Administration enforce these regulations through inspections and accident investigations.

Agreements in Taiwan

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In Taiwan, employment agreements are regulated by the Labor Standards Act (LSA), which distinguishes between Indefinite Term Contracts and Fixed-Term Contracts. Indefinite Term Contracts are used for ongoing roles without a specified end date, providing job security for employees. Fixed-Term Contracts, on the other hand, are suitable for temporary or project-based roles with a defined duration and automatically convert to indefinite term contracts if the employment continues past the agreed period without objection.

Employment contracts in Taiwan must include essential details such as the identities of the parties involved, job description, start date, employment duration (fixed or indefinite), compensation, working hours, benefits, and termination conditions including notice periods and severance pay. They also cover confidentiality and intellectual property rights, ensuring that sensitive information and creations are protected.

Additionally, employment agreements may include probationary periods, which are not mandatory under the LSA but commonly last three months, allowing flexibility in employment termination during this period. Confidentiality and non-compete clauses are enforceable under specific conditions to protect legitimate business interests, with non-compete clauses requiring reasonable scope and possibly compensation for the employee.

Remote Work in Taiwan

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The COVID-19 pandemic has led to a significant increase in remote work in Taiwan, supported by legal and technological frameworks. The Labour Standards Act (LSA) ensures that remote workers receive the same protections as in-office employees, including adherence to a standard 40-hour workweek, clear employment contracts, and entitlements such as minimum wage and leave. Employers are responsible for ensuring the occupational safety of remote workers, including reasonable reimbursement for work-related expenses.

Taiwan's advanced technological infrastructure supports effective remote work, with widespread high-speed internet and essential cloud-based tools. Employers must prioritize cybersecurity to protect sensitive data.

Flexible work arrangements like part-time work, flexitime, and job sharing are available, each with specific benefits and governed by the LSA. Data protection is crucial, with the Personal Data Protection Act (PDPA) guiding data handling practices, ensuring transparency, and protecting employee rights regarding personal data.

Employers and employees must adhere to best practices for data security, such as using strong passwords, data encryption, and regular cybersecurity training. These measures help maintain a secure and efficient remote working environment in Taiwan.

Working Hours in Taiwan

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In Taiwan, the Labor Standards Act (LSA) regulates employee working hours, ensuring a maximum of 8 hours per day and 40 hours per week, with provisions for flexible schedules in certain industries. The LSA allows up to 48 hours per week under an "8-week flexible working hours" system, approved by the Ministry of Labor or through labor agreements. Overtime is restricted to 12 hours per day, with a monthly cap of 36 hours, extendable with union consent. Overtime compensation ranges from 133% to 200% of the regular pay rate, depending on the hours worked. Employees are entitled to daily and weekly rest periods, with at least one paid rest day per week. Night shifts must not exceed 7 hours, with enhanced pay rates for overtime. The LSA mandates accurate record-keeping of all work hours and emphasizes employee rights to breaks and overtime compensation.

Salary in Taiwan

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  • Market Competitive Salaries in Taiwan: Factors influencing salaries include job title, industry, experience, skills, and location. Higher salaries are generally found in technology, finance, and engineering sectors, and in metropolitan areas like Taipei.

  • Company Size and Reputation: Larger firms and multinationals often offer better compensation than smaller companies. Public sector jobs may offer lower salaries than private sector positions but come with better job security and benefits.

  • Foreign Language Skills: Proficiency in English or Mandarin can lead to higher salaries, especially in multinational environments.

  • Resources for Salary Research: Salary surveys, job boards, and government statistics are useful for researching competitive salaries in Taiwan.

  • Negotiation Strategies: Understanding market salaries helps employees negotiate better compensation. Taiwan also has a minimum wage system that is periodically reviewed and adjusted.

  • Minimum Wage in Taiwan: As of January 1, 2024, the monthly minimum wage is NT$27,470, and the hourly wage is NT$183. The Basic Wage Committees review these rates considering economic factors.

  • Enforcement of Minimum Wage: The Ministry of Labor ensures compliance with minimum wage laws, with penalties for non-compliance.

  • Bonuses and Allowances: Common bonuses include performance-based and year-end bonuses. Allowances for meals, transportation, and housing are also prevalent, especially in expensive cities.

  • Contract Clarity: Employees should review employment contracts to understand the specifics of bonuses and allowances.

  • Payroll Practices: The typical payment frequency for salaries in Taiwan is monthly. Payroll processing involves data collection, deductions, payslip generation, and salary payment. Proper adherence to payroll procedures is crucial to avoid legal issues.

  • Additional Pay Considerations: Overtime pay rates and practices around the 13th-month salary are important aspects of employee compensation in Taiwan.

Termination in Taiwan

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In Taiwan, the Labor Standards Act (LSA) outlines specific guidelines for employment termination, including statutory notice periods based on the length of service, exceptions, and provisions for severance pay. Notice periods vary from no statutory minimum for less than three months of service to thirty days for more than three years of service. Exceptions include fixed-term contracts and collective bargaining agreements which may override these periods. Employers can opt for payment in lieu of notice but must still notify labor authorities 10 days before termination.

Severance pay eligibility includes situations like business closure or workforce reduction, and it's calculated based on the employee's tenure and average monthly wage, with a requirement to pay within 30 days of termination. However, severance is not required for terminations due to employee misconduct.

For ordinary terminations, employers must adhere to notice requirements and severance calculations, while summary dismissals for serious misconduct do not require notice or severance. Employers are advised to consult legal counsel and ensure compliance with the LSA to avoid labor disputes.

Freelancing in Taiwan

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In Taiwan, the classification between employees and independent contractors is crucial due to its impact on rights, benefits, and social security contributions. The main criteria for this classification include control and direction, integration vs. independence, and remuneration and social security.

  • Control and Direction: Employees are under the employer's control regarding work methods and schedules, whereas independent contractors have autonomy in how they achieve their work results.

  • Integration vs. Independence: Employees are integral to the core operations of a business, directly contributing to business objectives. In contrast, independent contractors provide services that are supplementary to the core business activities.

  • Remuneration and Social Security: Employees typically receive a fixed salary and are covered by the employer's social security contributions. Independent contractors, however, are paid per project or task and must handle their own social security contributions.

The distinction is further emphasized in contract structures and negotiation practices. Contracts for independent contractors in Taiwan are recommended to clearly define the scope of work, payment terms, and responsibilities for tax and social security contributions to avoid misclassification.

In terms of intellectual property, the Copyright Act of Taiwan assigns ownership to the creator, but contracts can specify different terms, such as transferring rights to the client. It's important for freelancers to negotiate and clearly define ownership and usage rights in contracts.

Freelancers in Taiwan must also manage their tax obligations and may voluntarily enroll in National Health Insurance and other insurance programs to cover various risks. Consulting with legal and financial professionals is advised to ensure compliance and protection in freelance arrangements.

Health & Safety in Taiwan

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The Occupational Safety and Health Act (OSHA) of Taiwan, established in 1974 and amended in 2013, is the primary legislation governing workplace health and safety. It applies to nearly all workplaces and covers employers, employees, self-employed individuals, and volunteers under certain conditions.

Employer Responsibilities:

  • Employers must ensure a safe working environment by identifying and mitigating hazards, maintaining equipment, and providing safety training.
  • Establish a Safety and Health Committee in workplaces with over 50 employees.
  • Report occupational injuries, illnesses, or near-misses promptly.

Worker Rights:

  • Workers have the right to be informed about workplace hazards and protective measures.
  • They can refuse work that poses imminent danger to their safety or health.
  • Participate in safety and health decision-making processes.

Key Focus Areas:

  1. Hazard Prevention and Control: Risk assessments and implementation of safety measures for machinery, chemicals, electrical safety, and fire prevention.
  2. Health Management: Mandatory health checkups for certain jobs and accommodations for workers with disabilities or health conditions.
  3. Emergency Preparedness: Development of emergency response plans and provision of first aid facilities.
  4. Training and Education: Safety training tailored to job functions, including orientation for new employees.
  5. Recordkeeping and Reporting: Detailed records of workplace injuries and illnesses must be maintained; serious incidents reported to the Occupational Safety and Health Administration under the Ministry of Labor.

Compliance & Enforcement:

  • Labor inspectors conduct workplace inspections, issue citations, and levy fines for non-compliance.
  • Workers can file complaints about safety concerns.

Regulatory Bodies:

  • The Occupational Safety and Health Administration under the Ministry of Labor is responsible for enforcing and promoting OHS regulations.

Inspection and Accident Response:

  • Various types of inspections are conducted based on routine checks, complaints, or accidents.
  • Immediate actions for workplace accidents include securing the scene, providing first aid, and notifying authorities.
  • Employers must report fatal accidents immediately, serious injuries within 8 hours, and occupational diseases.

Compensation Claims:

  • Workers are entitled to compensation for medical expenses, lost wages, disability benefits, and death benefits following workplace accidents or illnesses.

Overall, Taiwan's OSHA provides a comprehensive legal framework for ensuring workplace safety, outlining responsibilities and rights for both employers and workers, and establishing procedures for compliance and enforcement.

Dispute Resolution in Taiwan

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Taiwan has a robust system for resolving labor disputes, featuring both labor courts and arbitration panels. The labor court system is structured in three tiers: District Courts, High Courts, and the Supreme Court, handling a variety of labor-related issues including employment contracts and labor union activities. Labor arbitration, on the other hand, deals with disputes of interest such as contract negotiations and collective bargaining, with proceedings that are generally less formal than those of the courts and often involve mediation.

The country also emphasizes compliance through audits and inspections in various sectors including labor standards, environmental regulations, and taxation, conducted by respective governmental bodies to ensure adherence to laws. These audits can be routine or triggered by specific complaints or incidents.

Taiwan's labor laws align with international standards despite not being a member of the United Nations and hence unable to ratify International Labour Organization (ILO) conventions. The country references ILO conventions in its legislation, which covers a wide range of labor rights and standards. However, challenges remain, particularly in the treatment of migrant workers and the full exercise of collective bargaining rights in certain sectors.

Cultural Considerations in Taiwan

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Taiwanese business communication is characterized by indirectness, formality, and a strong emphasis on non-verbal cues, reflecting the cultural values of social harmony and respect. Professionals avoid direct confrontation to maintain "mianzi" or social standing, using suggestive language instead. Hierarchical structures influence communication, with junior employees expected to use respectful language towards superiors. Non-verbal communication is crucial, as body language and facial expressions often convey more than words.

Negotiations in Taiwan require patience and an understanding of local negotiation styles, which blend assertive tactics with a willingness to compromise for long-term relationships. Building "guanxi" or relationships is essential, and presenting logical arguments supported by data can aid in successful negotiations.

Taiwanese culture also impacts business operations through its collectivistic nature, leading to hierarchical decision-making and departmental silos which can affect employee satisfaction and collaboration. Leadership tends to be paternalistic, focusing on the well-being and development of employees.

Understanding Taiwanese holidays is important for planning business interactions, as many businesses close or operate minimally during these times. Major holidays include Chinese New Year, Dragon Boat Festival, and the Mid-Autumn Festival, among others. Regional observances and statutory holidays also influence business operations, necessitating flexibility in communication and planning during these periods.

Frequently Asked Questions for Employer of Record services in Taiwan

Who handles the filing and payment of employees' taxes and social insurance contributions when using an Employer of Record in Taiwan?

When using an Employer of Record (EOR) like Rivermate in Taiwan, the EOR handles the filing and payment of employees' taxes and social insurance contributions. This includes the following responsibilities:

  1. Income Tax Withholding and Filing: The EOR will withhold the appropriate amount of income tax from employees' salaries according to Taiwanese tax regulations. They will also ensure that these taxes are filed and paid to the Taiwanese tax authorities on time.

  2. Labor Insurance: The EOR will manage the enrollment of employees in Taiwan's labor insurance program, which provides coverage for work-related injuries, unemployment, and other benefits. They will handle the calculation, withholding, and payment of labor insurance premiums.

  3. National Health Insurance (NHI): The EOR will also enroll employees in Taiwan's National Health Insurance program, ensuring that both employer and employee contributions are accurately calculated and paid. This ensures that employees have access to healthcare services.

  4. Pension Contributions: The EOR will manage contributions to the Labor Pension Fund, which is mandatory for employees in Taiwan. This includes calculating the contributions based on employees' salaries and ensuring timely payments to the pension fund.

By taking on these responsibilities, an EOR like Rivermate ensures compliance with local laws and regulations, reduces administrative burdens for the client company, and provides peace of mind that all statutory obligations are being met accurately and punctually.

What is HR compliance in Taiwan, and why is it important?

HR compliance in Taiwan refers to the adherence to the local labor laws, regulations, and standards that govern employment practices within the country. This includes a wide range of legal requirements related to hiring, wages, working hours, employee benefits, termination procedures, workplace safety, and more. Ensuring HR compliance is crucial for several reasons:

  1. Legal Obligations: Taiwan has a comprehensive set of labor laws, including the Labor Standards Act, the Labor Pension Act, and the Employment Service Act, among others. These laws set forth specific requirements that employers must follow. Non-compliance can result in legal penalties, fines, and potential lawsuits.

  2. Employee Rights and Protections: Compliance ensures that employees' rights are protected. This includes fair wages, proper working hours, safe working conditions, and appropriate benefits. Protecting these rights helps in maintaining a motivated and productive workforce.

  3. Reputation Management: Companies that comply with local labor laws are seen as responsible and ethical employers. This enhances the company's reputation, making it more attractive to potential employees, customers, and business partners.

  4. Risk Mitigation: Non-compliance can lead to various risks, including financial penalties, legal disputes, and damage to the company's reputation. By adhering to HR compliance, companies can mitigate these risks and avoid potential disruptions to their operations.

  5. Operational Efficiency: Understanding and implementing local HR compliance requirements can streamline HR processes and improve overall operational efficiency. This includes proper documentation, timely payroll processing, and effective management of employee relations.

  6. Cultural Sensitivity: Compliance with local labor laws also demonstrates respect for the local culture and business practices. This can foster better relationships with local employees and stakeholders, contributing to a more harmonious and productive work environment.

Using an Employer of Record (EOR) like Rivermate can significantly simplify the process of achieving HR compliance in Taiwan. An EOR takes on the responsibility of ensuring that all employment practices adhere to local laws and regulations. This includes managing payroll, benefits, taxes, and other HR functions, allowing companies to focus on their core business activities without worrying about compliance issues. Rivermate's expertise in local labor laws ensures that companies can operate smoothly and legally in Taiwan, reducing the risk of non-compliance and its associated consequences.

Is it possible to hire independent contractors in Taiwan?

Yes, it is possible to hire independent contractors in Taiwan. However, there are several important considerations and potential risks that employers should be aware of when engaging independent contractors in Taiwan.

  1. Legal Classification: The distinction between an employee and an independent contractor in Taiwan is crucial. Misclassification can lead to significant legal and financial consequences. Independent contractors are generally considered self-employed and are responsible for their own taxes and social security contributions. In contrast, employees are entitled to various protections and benefits under Taiwanese labor laws.

  2. Contractual Agreement: When hiring an independent contractor, it is essential to have a clear and comprehensive contract that outlines the scope of work, payment terms, duration of the contract, and other relevant conditions. This contract should explicitly state that the individual is an independent contractor and not an employee to avoid any ambiguity.

  3. Control and Supervision: One of the key factors that differentiate an independent contractor from an employee is the level of control and supervision exercised by the employer. Independent contractors should have more autonomy in how they complete their work, without being subject to the same level of oversight and direction as employees.

  4. Tax Implications: Independent contractors in Taiwan are responsible for their own income tax filings and payments. Employers do not withhold taxes on behalf of independent contractors, unlike employees. It is important for both parties to understand their tax obligations to ensure compliance with Taiwanese tax laws.

  5. Social Security and Benefits: Independent contractors are not entitled to the same social security benefits as employees, such as health insurance, pension contributions, and other statutory benefits. Contractors must arrange their own social security coverage.

  6. Risk of Misclassification: If an independent contractor is found to be misclassified and is deemed to be an employee by Taiwanese authorities, the employer may be liable for back payments of taxes, social security contributions, and other employee benefits. Additionally, the employer could face penalties and legal action.

To mitigate these risks and ensure compliance with local laws, many companies choose to use an Employer of Record (EOR) service like Rivermate. An EOR can help manage the complexities of hiring and classifying workers correctly, ensuring that all legal and regulatory requirements are met. This can be particularly beneficial for companies that do not have a legal entity in Taiwan or are unfamiliar with the local employment landscape.

What options are available for hiring a worker in Taiwan?

In Taiwan, employers have several options for hiring workers, each with its own set of legal, administrative, and financial considerations. Here are the primary options available:

  1. Direct Employment:

    • Local Entity: Establishing a local entity, such as a subsidiary or branch office, is a common approach for companies looking to hire employees directly in Taiwan. This involves registering the business with the relevant Taiwanese authorities, complying with local labor laws, and handling payroll, taxes, and benefits administration.
    • Compliance: Employers must adhere to Taiwan's labor laws, including the Labor Standards Act, which governs working hours, wages, overtime, and termination procedures. Additionally, employers must provide statutory benefits such as health insurance, labor insurance, and pension contributions.
  2. Independent Contractors:

    • Freelancers: Hiring independent contractors or freelancers is another option. This approach can be more flexible and cost-effective, as it typically involves fewer legal obligations compared to hiring full-time employees. However, it is crucial to ensure that the contractor relationship is genuinely independent to avoid misclassification issues.
    • Contracts: Clear and comprehensive contracts should be drafted to outline the scope of work, payment terms, and other relevant conditions to mitigate risks and ensure compliance with Taiwanese laws.
  3. Temporary Staffing Agencies:

    • Staffing Firms: Engaging a temporary staffing agency can be a practical solution for short-term or project-based needs. These agencies handle the recruitment, payroll, and compliance aspects, allowing the hiring company to focus on core business activities.
    • Flexibility: This option provides flexibility in workforce management and can be particularly useful for seasonal or fluctuating workloads.
  4. Employer of Record (EOR) Services:

    • Rivermate and Similar Providers: Utilizing an Employer of Record (EOR) service like Rivermate is an increasingly popular option for companies looking to hire in Taiwan without establishing a local entity. An EOR acts as the legal employer on behalf of the client company, managing all employment-related responsibilities.
    • Benefits of EOR:
      • Compliance: EOR services ensure full compliance with Taiwanese labor laws, including employment contracts, payroll, taxes, and statutory benefits.
      • Speed and Efficiency: EORs can expedite the hiring process, allowing companies to onboard employees quickly and efficiently.
      • Cost-Effective: Avoiding the need to set up a local entity can result in significant cost savings, particularly for companies testing the market or with a smaller workforce.
      • Risk Mitigation: EORs assume the legal risks associated with employment, reducing the potential liabilities for the client company.

In summary, companies looking to hire workers in Taiwan have multiple options, including direct employment, independent contractors, temporary staffing agencies, and Employer of Record services. Each option has its advantages and considerations, but for many businesses, especially those without a local presence, using an EOR like Rivermate can offer a streamlined, compliant, and cost-effective solution.

What are the costs associated with employing someone in Taiwan?

Employing someone in Taiwan involves several costs that employers need to consider. These costs can be broadly categorized into direct compensation, statutory benefits, and administrative expenses. Here is a detailed breakdown:

  1. Direct Compensation:

    • Base Salary: The primary component of employment costs is the employee's base salary. This varies depending on the industry, role, and experience level.
    • Bonuses and Incentives: Many companies in Taiwan offer performance-based bonuses and incentives, which can be a significant part of the total compensation package.
  2. Statutory Benefits:

    • Labor Insurance: Employers are required to contribute to the Labor Insurance program, which covers various benefits such as maternity leave, injury compensation, and unemployment benefits. The contribution rate is typically around 10% of the employee's monthly salary, with the employer covering 70% of this amount.
    • National Health Insurance (NHI): Both employers and employees must contribute to the NHI, which provides comprehensive health coverage. The contribution rate is approximately 5.17% of the employee's monthly salary, with the employer responsible for 60% of this amount.
    • Pension Contributions: Under the Labor Pension Act, employers must contribute at least 6% of the employee's monthly salary to their pension fund.
    • Employment Insurance: This insurance covers unemployment benefits and vocational training. The contribution rate is around 1% of the employee's monthly salary, with the employer covering 70% of this amount.
  3. Other Mandatory Costs:

    • Severance Pay: In the event of termination, employers may be required to provide severance pay, which is calculated based on the employee's length of service and average monthly salary.
    • Annual Leave and Public Holidays: Employers must provide paid annual leave and observe public holidays, which can affect productivity and operational costs.
  4. Administrative Expenses:

    • Payroll Processing: Managing payroll, including calculating salaries, taxes, and benefits, can incur administrative costs.
    • Compliance and Legal Costs: Ensuring compliance with local labor laws and regulations may require legal consultation and additional administrative efforts.
    • Recruitment and Training: The costs associated with recruiting, onboarding, and training new employees should also be considered.

Using an Employer of Record (EOR) like Rivermate can help manage these costs more efficiently. An EOR handles all employment-related responsibilities, including payroll, benefits administration, and compliance with local labor laws. This can reduce administrative burdens and ensure that all statutory obligations are met, allowing companies to focus on their core business activities while maintaining a compliant and cost-effective workforce in Taiwan.

What is the timeline for setting up a company in Taiwan?

Setting up a company in Taiwan involves several steps and can take a considerable amount of time, depending on the complexity of the business structure and the efficiency of the processes. Here is a detailed timeline for setting up a company in Taiwan:

  1. Pre-Registration Phase (1-2 weeks):

    • Business Name Reservation: The first step is to reserve a company name with the Department of Commerce. This process typically takes about 3-5 business days.
    • Preparation of Documents: Gather all necessary documents, including the Articles of Incorporation, identification documents of shareholders and directors, and other required forms. This can take about 1-2 weeks depending on the readiness of the documents.
  2. Company Registration (2-4 weeks):

    • Application Submission: Submit the application for company registration to the Ministry of Economic Affairs (MOEA). This includes the Articles of Incorporation, business plan, and other required documents. The review process usually takes about 1-2 weeks.
    • Capital Verification: Deposit the initial capital into a designated bank account and obtain a capital verification report from a certified public accountant (CPA). This process can take about 1 week.
  3. Post-Registration Procedures (2-3 weeks):

    • Tax Registration: Register for taxes with the National Taxation Bureau. This includes obtaining a tax code and registering for VAT if applicable. This process typically takes about 1-2 weeks.
    • Labor Insurance and Pension Fund Registration: Register with the Bureau of Labor Insurance and the Bureau of Labor Funds for employee insurance and pension contributions. This can take about 1 week.
    • Opening a Corporate Bank Account: Open a corporate bank account in Taiwan. This process can take about 1 week, depending on the bank's requirements and procedures.
  4. Operational Setup (2-4 weeks):

    • Office Lease and Setup: Secure office space and set up the necessary infrastructure, such as utilities, internet, and office equipment. This can take about 2-4 weeks depending on the availability of office space and the complexity of the setup.
    • Hiring Employees: Begin the recruitment process for hiring employees. This timeline can vary widely depending on the availability of talent and the specific hiring needs of the company.

In total, the process of setting up a company in Taiwan can take approximately 7-13 weeks, assuming there are no significant delays or complications. However, this timeline can vary based on the specific circumstances of the business and the efficiency of the involved parties.

Using an Employer of Record (EOR) service like Rivermate can significantly streamline this process. An EOR can handle many of the administrative and compliance-related tasks, allowing you to focus on your core business activities. This can reduce the setup time and ensure that all legal and regulatory requirements are met efficiently.

Do employees receive all their rights and benefits when employed through an Employer of Record in Taiwan?

Yes, employees in Taiwan receive all their rights and benefits when employed through an Employer of Record (EOR) like Rivermate. An EOR ensures compliance with local labor laws and regulations, which is crucial in a country like Taiwan where labor laws are comprehensive and employee rights are well-protected.

Here are some key aspects of how an EOR like Rivermate ensures that employees receive their rights and benefits in Taiwan:

  1. Compliance with Labor Laws: Taiwan has stringent labor laws that cover various aspects of employment, including working hours, overtime pay, minimum wage, and termination procedures. An EOR ensures that all these regulations are strictly followed, thereby protecting the rights of employees.

  2. Social Security and Insurance: Employees in Taiwan are entitled to social security benefits, including health insurance, labor insurance, and pension contributions. An EOR manages these contributions on behalf of the employer, ensuring that employees receive their entitled benefits without any administrative burden on the employer.

  3. Paid Leave: Taiwanese labor laws mandate various types of paid leave, including annual leave, sick leave, maternity leave, and parental leave. An EOR ensures that employees are granted these leaves as per the legal requirements, maintaining accurate records and ensuring compliance.

  4. Fair Compensation: An EOR ensures that employees are paid fairly and on time, in accordance with Taiwan's minimum wage laws and any applicable collective bargaining agreements. They also handle payroll processing, tax withholdings, and other related financial obligations.

  5. Workplace Safety: Taiwan has specific regulations regarding workplace safety and health. An EOR ensures that these standards are met, providing a safe working environment for employees and conducting necessary training and compliance checks.

  6. Dispute Resolution: In case of any employment disputes, an EOR provides support and ensures that the resolution process adheres to Taiwanese labor laws. This includes handling grievances, mediations, and any legal proceedings if necessary.

By partnering with an EOR like Rivermate, employers can be confident that their employees in Taiwan are receiving all their legal rights and benefits, while also reducing the administrative and legal complexities associated with international employment. This not only helps in maintaining employee satisfaction and retention but also ensures that the company remains compliant with local laws.

How does Rivermate, as an Employer of Record in Taiwan, ensure HR compliance?

Rivermate, as an Employer of Record (EOR) in Taiwan, ensures HR compliance through several key strategies and practices tailored to the specific legal and regulatory environment of the country. Here are the detailed ways in which Rivermate ensures HR compliance in Taiwan:

  1. Local Expertise and Knowledge: Rivermate employs local HR professionals who are well-versed in Taiwanese labor laws, regulations, and cultural nuances. This local expertise ensures that all employment practices are compliant with the latest legal requirements and best practices in Taiwan.

  2. Employment Contracts: Rivermate prepares and manages employment contracts that comply with Taiwanese labor laws. These contracts include all necessary clauses related to wages, working hours, benefits, termination conditions, and other statutory requirements, ensuring that both the employer and employee are protected under the law.

  3. Payroll Management: Rivermate handles payroll processing in strict accordance with Taiwanese regulations. This includes accurate calculation of salaries, tax withholdings, social security contributions, and other statutory deductions. By managing payroll, Rivermate ensures timely and compliant salary payments to employees.

  4. Tax Compliance: Rivermate ensures that all tax obligations are met, including income tax, labor insurance, and health insurance contributions. They stay updated with any changes in tax laws and ensure that all filings and payments are made accurately and on time.

  5. Benefits Administration: Rivermate administers employee benefits in compliance with Taiwanese laws, including mandatory benefits such as labor insurance, national health insurance, and pension contributions. They also manage additional benefits as per company policy, ensuring that all benefits are provided and documented correctly.

  6. Labor Law Adherence: Rivermate ensures adherence to Taiwanese labor laws, including regulations on working hours, overtime, leave entitlements, and occupational safety. They provide guidance on lawful practices and help mitigate risks associated with non-compliance.

  7. Employee Onboarding and Offboarding: Rivermate manages the entire employee lifecycle, from onboarding to offboarding, ensuring that all processes comply with local regulations. This includes proper documentation, orientation, and ensuring that termination procedures are legally compliant to avoid potential disputes.

  8. Regulatory Updates: Rivermate continuously monitors changes in Taiwanese labor laws and regulations. They proactively update their practices and inform their clients about any changes that may impact their business operations, ensuring ongoing compliance.

  9. Dispute Resolution: In the event of employment disputes, Rivermate provides support and guidance to resolve issues in accordance with Taiwanese labor laws. They help mediate conflicts and ensure that any resolutions are legally compliant and fair to all parties involved.

  10. Data Protection and Privacy: Rivermate ensures compliance with data protection and privacy laws in Taiwan, safeguarding employee information and maintaining confidentiality in all HR processes.

By leveraging these comprehensive strategies, Rivermate ensures that companies can operate in Taiwan with full HR compliance, minimizing legal risks and allowing businesses to focus on their core operations.

What legal responsibilities does a company have when using an Employer of Record service like Rivermate in Taiwan?

When a company uses an Employer of Record (EOR) service like Rivermate in Taiwan, the EOR assumes many of the legal responsibilities associated with employment. However, the company still retains certain obligations and should be aware of the following legal responsibilities:

  1. Compliance with Local Labor Laws: The EOR ensures that all employment practices comply with Taiwanese labor laws, including the Labor Standards Act, which governs working hours, wages, overtime, and other employment conditions. The EOR handles the complexities of these regulations, ensuring that the company remains compliant.

  2. Employment Contracts: The EOR is responsible for drafting and maintaining employment contracts that comply with Taiwanese law. These contracts must include specific terms such as job description, salary, working hours, and termination conditions. The company should review these contracts to ensure they align with its expectations and requirements.

  3. Payroll and Taxation: The EOR manages payroll processing, ensuring that employees are paid accurately and on time. This includes calculating and withholding the appropriate taxes, social security contributions, and other mandatory deductions. The EOR also handles the filing of necessary tax documents with Taiwanese authorities.

  4. Employee Benefits: The EOR administers employee benefits as required by Taiwanese law, such as health insurance, pension contributions, and other statutory benefits. They ensure that these benefits are provided in accordance with local regulations and that contributions are made correctly.

  5. Work Permits and Visas: If the company employs foreign nationals, the EOR assists with obtaining the necessary work permits and visas. This includes ensuring that all documentation is in order and that the employees are legally authorized to work in Taiwan.

  6. Termination and Severance: The EOR manages the termination process in compliance with Taiwanese labor laws, which include specific procedures and notice periods. They also handle the calculation and payment of any severance pay or other termination-related benefits.

  7. Health and Safety Compliance: The EOR ensures that the workplace complies with Taiwanese health and safety regulations. This includes implementing necessary measures to protect employees' health and safety and conducting regular inspections and risk assessments.

  8. Dispute Resolution: In the event of employment disputes, the EOR provides support in resolving issues in accordance with Taiwanese labor laws. This may involve mediation, arbitration, or legal proceedings, depending on the nature of the dispute.

  9. Data Protection and Privacy: The EOR ensures compliance with Taiwan's Personal Data Protection Act (PDPA), which governs the collection, processing, and use of personal data. They implement measures to protect employee data and ensure that it is handled in accordance with legal requirements.

While the EOR takes on many of the day-to-day responsibilities of employment, the company must still maintain oversight and ensure that the EOR is fulfilling its obligations. Additionally, the company should provide clear communication and support to the EOR to facilitate smooth operations and compliance with all relevant laws and regulations in Taiwan.

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