Hiring Employees in Taiwan

Expanding a business into Taiwan can be a strategic move for foreign companies seeking to tap into one of Asia’s most dynamic economies. With a highly educated workforce, robust infrastructure, and a strategic location, Taiwan offers many advantages for international businesses. However, hiring employees in Taiwan as a foreign company involves navigating a range of legal, regulatory, financial, and cultural considerations. This blog explores these factors in depth to help businesses establish a successful workforce in Taiwan.

1. Legal and Regulatory Considerations

Labor Laws

Taiwan has a comprehensive set of labor laws designed to protect employees. Foreign companies must familiarize themselves with these regulations to ensure compliance:

• Labor Standards Act (LSA): This is the cornerstone of employment law in Taiwan, covering aspects like working hours, wages, overtime pay, and termination.

• Minimum Wage: As of 2024, the monthly minimum wage is NT$27,470, and the hourly rate is NT$183. Foreign employers must adhere to these standards.

• Working Hours and Overtime: The standard workweek is 40 hours, with overtime capped at 46 hours per month. Employers must pay overtime rates according to statutory requirements.

Employment Contracts

Employment contracts in Taiwan can be verbal or written, but written contracts are strongly recommended. Contracts must include essential terms such as job description, salary, working hours, and termination clauses. Both fixed-term and indefinite-term contracts are permissible.

Foreign Worker Permits

If hiring non-Taiwanese employees, companies must obtain a work permit for each foreign hire. The employer must ensure the position qualifies under Taiwan’s regulations for hiring foreign talent, typically in specialized fields such as IT, engineering, or managerial roles.

Social Insurance and Labor Insurance

Employers must enroll all employees in Taiwan’s social security systems:

• Labor Insurance: Covers injury, illness, disability, and unemployment benefits.

• Occupational Insurance: Provides protections for workers in case of work-related injuries, illnesses, disabilities, or fatalities.

• National Health Insurance (NHI): Provides medical coverage to employees and their dependents.

• Pension Contribution: Employers must contribute to employees' pension funds under the Labor Pension Act.

Payroll Management

Setting up a payroll system in Taiwan involves several steps:

• Tax Withholding: Employers must withhold income tax based on the employee's salary bracket and remit it to the tax authorities.

• Bonuses: Many Taiwanese companies follow the tradition of providing a "13th-month bonus" as part of annual compensation, usually before the Lunar New Year.

Corporate Tax Obligations

Employers are required to file taxes related to payroll, including withholding taxes and employer contributions to social insurance. Non-compliance can result in fines and reputational damage.

2. Financial Considerations

Salary Expectations

Taiwanese professionals often expect competitive salaries, especially in sectors like technology, finance, and manufacturing. Researching industry benchmarks and offering attractive compensation packages is crucial to attract top talent.

Costs of Benefits

Benefits such as health insurance, pension contributions, and allowances for meals or transportation are standard. These costs must be factored into your budget.

Workplace Hierarchy and Communication

Taiwan’s work culture is influenced by Confucian values, emphasizing hierarchy, respect for seniority, and collective harmony. Understanding this dynamic is essential for foreign employers:

• Hierarchy: Employees often expect clear instructions from managers and are less likely to challenge authority openly.

• Indirect Communication: Taiwanese professionals may use indirect language to avoid conflict or disagreement. Reading between the lines and fostering an open-door policy can help bridge communication gaps.

3. Cultural Considerations

Work-Life Balance

Work-life balance is gaining importance in Taiwan, especially among younger generations. Offering flexible working hours, remote work options, and generous leave policies can set your company apart as an employer of choice.

Local Holidays

Taiwan observes numerous public holidays, including Chinese New Year, Dragon Boat Festival, and Mid-Autumn Festival. Employers must accommodate these holidays and be mindful of cultural sensitivities surrounding them.

Talent Preferences

Taiwanese professionals value job stability, opportunities for growth, and a positive workplace culture. Foreign companies can appeal to this by emphasizing career development, training programs, and a collaborative environment.

Language Barriers

While many Taiwanese professionals are fluent in English, especially in urban areas, Mandarin is the primary language of business. Providing language training for expatriate employees and using bilingual communication can improve workplace integration.

Local Partnerships

Collaborating with local recruiters, HR consultants, or government agencies can streamline the hiring process. These partnerships also provide insights into the local talent pool and labor market trends.

Employer Branding

Building a positive employer brand is crucial in Taiwan’s competitive job market. Highlight your company’s commitment to employee welfare, innovation, and social responsibility.

4. Navigating Cultural Integration

1. Leverage Professional Networks

Utilize platforms like LinkedIn, local job boards, and recruitment agencies to source talent. Partnering with a recruitment firm familiar with Taiwan’s labor market can significantly simplify the hiring process.

5. Hiring Best Practices

2. Offer Competitive Benefits

In addition to mandatory benefits, consider offering perks like additional vacation days, performance bonuses, or wellness programs. These incentives help attract and retain top talent.

3. Understand Termination Policies

Taiwan’s labor laws impose strict requirements for terminating employees. Dismissals must be justified, and employees are entitled to notice periods and severance pay based on tenure.

4. Invest in Training and Development

Providing opportunities for professional growth, such as leadership training and skill development, can enhance employee satisfaction and productivity.

Hiring employees in Taiwan as a foreign company requires a thorough understanding of the country’s legal, regulatory, financial, and cultural landscape. Compliance with labor laws, competitive compensation, and respect for cultural nuances are critical to building a successful workforce. By taking the time to navigate these factors thoughtfully, foreign businesses can establish a strong presence in Taiwan and leverage its highly skilled talent pool for sustainable growth.

Need expert guidance for hiring employees in Taiwan? Contact us to learn how we can help you navigate the complexities of expanding your business into the Taiwan market using our Employer of Record (EOR) service.