In Taiwan, the Labor Standards Act (LSA) sets out the minimum notice periods that employers must give to employees when terminating their employment. The length of the notice period is determined by the duration of the employee's service with the company.

Statutory Notice Periods

According to the LSA, the following minimum notice periods are required based on an employee's tenure:

• Less than Three Months: No statutory minimum notice applies; however, a customary period of seven days' notice is recommended.
• Three Months to One Year: At least ten days' written notice is required.
• One Year to Three Years: At least twenty days' written notice is required.
• More than Three Years: At least thirty days' written notice is required.

It's important to note that the notice period must be provided in writing and begins the day after the employee receives the written notification.

Exceptions to Statutory Notice Periods

While the LSA provides the minimum notice periods, there can be exceptions:

• Fixed-Term Contracts: Fixed-term contracts may stipulate a specific termination clause that supersedes the statutory notice period, provided it is reasonable.
• Collective Bargaining Agreements: If a collective bargaining agreement exists between the employer and a union, it may establish different notice periods that take precedence over the LSA.

Payment in Lieu of Notice

Employers have the option to pay the employee an amount equivalent to their wages for the notice period instead of requiring them to work during that time. However, the employer must still file a separate notice with the labor authority and public employment service institution 10 days before the termination date, regardless of the payment option.

In Taiwan, the Labor Standards Act (LSA) stipulates that employees are entitled to severance pay under certain conditions when their employment is terminated by an employer.

Eligibility for Severance Pay

Employees become eligible for severance pay if their employment is terminated due to:

• Permanent closure of all or part of the business, or significant reduction in the workforce.
• The employee's inability to perform their work due to illness or injury and cannot be reassigned to a suitable position.
• Other reasons not attributable to the employee, such as the employer's breach of contract or violations of labor regulations.

Calculation of Severance Pay

Severance pay is calculated based on the employee's length of service and their average monthly wage over the last six months:

• One month's average wage for each year of service.
• Severance pay for any period less than a year is calculated on a pro-rata basis.

For example, an employee who has worked for five years with an average monthly wage of NT $40,000 would be entitled to five months of their average wage as severance pay. An employee who has worked for two years and eight months is entitled to 2.67 months of their average wage as severance pay.

Important Notes

• Employers must pay severance within 30 days of the employee's termination date.
• Severance pay is not required for employees terminated for cause, such as misconduct.
• Some collective agreements may specify severance provisions more favorable to employees than the LSA's minimum standard.

In Taiwan, the Labor Standards Act (LSA) provides a framework for the termination of employment, covering both ordinary termination and termination with cause. It's crucial for employers to understand these legal requirements to ensure compliance.

Ordinary termination typically refers to termination initiated by the employer for reasons not related to the employee's fault or misconduct. For ordinary termination, employers must comply with statutory notice periods, provide a written notice of termination, and if applicable, calculate and pay severance within 30 days of the termination date. The employer is also legally obligated to notify the labor authority about the termination at least ten days in advance.

On the other hand, an employer can terminate an employee with immediate effect (summary dismissal) in situations where the employee engages in serious misconduct or breach of contractual obligations. Valid grounds for summary dismissal include intentional violations of work rules, falsehoods during the hiring process, assault or violence in the workplace, serious neglect of duty, contagious illness concealed from the employer, and criminal conviction rendering continued employment untenable.

For termination with cause, employers must carefully document the evidence and reasons justifying the summary dismissal. In cases of justified summary dismissal, the employer is not obligated to provide notice or severance pay.

Before initiating termination, employers should thoroughly review individual employment contracts and any relevant collective agreements. It is advisable to consult with legal counsel, especially in complex termination scenarios, to ensure compliance and minimize the risk of labor disputes. Employers should respect the rights of employees and avoid unfair dismissals.