Ch.5-01- Hiring in Taiwan

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After the incorporation of a company, employment and management of employees will become the main topics of a company. Particularly since 2016, the revision of the Taiwan’s Labor Standards Act has aroused widespread concern in the society, and thus the awareness of labor autonomy has risen, and requirements for the credential of labor authorities have also increased. In response to these demands, the labor authorities began to strictly inspect on whether the company has complied with relevant labor regulations. When the labor authorities receives reports, or when it’s considered necessary, the labor authorities will conduct labor inspection without warning. If the company refuses to cooperate, certain administrative fine will be imposed. Therefore, the company’s proprietor should always recognize the relevant labor regulations, and to avoid being punished for the sake of convenience. The important matters that companies should know are as follows:

Stipulating a labor contract

When stipulating a labor contract with the employee, the labor contract shall, in accordance with the Act, make stipulations for the following matters. There are a total of thirteen requirements, which are included in Article 7, Labor Standards Act.

  1. Matters relating to the workplace and the work to be performed in the workplace.
  2. Matters relating to time of starting and finishing work, rest periods, holidays, public holidays, rest days, leave and shift changes in the rotation system.
  3. Matters relating to the determination, readjustment, calculation, final settlement, the dates and the methods of wage payment.
  4. Matters relating to the entering and termination of a labor contract, and retirement.
  5. Matters relating to severance pay, pension and other allowances, and bonuses.
  6. Matters relating to the expenses for boarding, lodging and tools which the worker should bear.
  7. Matters relating to safety and health.
  8. Matters relating to labor education and training.
  9. Matters relating to welfare.
  10. Matters relating to compensation and remedy for occupational accident and subsidy for ordinary injury or sickness.
  11. Matters relating to work discipline that shall be observed.
  12. Matters relating to award and discipline.
  13. Other matters relating to rights and obligations of the labor and management.

It is worth noting that although the court in our country determines the labor relationship is judged by the actual situation, and it is not necessary to use a written contract. However, if there is a labor dispute ensues afterwards , the written evidence will stand as a higher proof,. Therefore a written labor contract is still recommended for the company to reduce potential disputes.

The company should insure relevant insurance plans for labor

According to the Labor Insurance Act, the Employment Insurance Act, and the National Health Insurance Act, employers are obliged to insure labor insurance, employment insurance, and national health insurance for the employees. If the employer fails to insure for the employees in accordance to the law, the authorities will impose fines on the company, and the company must compensate the worker’loss.
Nevertheless, in order to save up the insurance expenditure, some companies will draft another contract, indicating that the employee agrees the employer will not insure the above insurance for the employee. However, the insurances menti oned are mandatory to be insured, even if the employees agree not to. If the company does not insure for the employees, the company may still receive punishment.

Wages

● Definition of wages
What is the defini tion of wages?paragraph 3, Article 2 of the Labor Standards Act states: “Wage means the remuneration which a worker receives for his/her services rendered, including wages, salaries and bonuses, allowances and any other regular payments regardless of the name which may be computed on an hourly, daily, monthly and piecework basis, whether payable in cash or in kind."

The definition of wages involves severance pay and pensions, so it is often the controversy in labor disputes. The following indicates whether the money received by laborers is categorized as wages (this categorization was decided by collective data):

CategoryWhether is defined as wages or not
Long Term Service AwardO
Transport AllowanceX
Performance BonusO
Group BonusO
Attendance BonusO
Night Shift Allowance, Delayed Meal AllowanceO

In addition, Taiwan has passed the Labor Litigation Act on 9 November, 2018. According to the law, if the laborer and the employer has dispute over the wages, the payment received by the employer from the employer will be recognized as the worker’s remuneration unless One of the opponents can prove the overthrow of the evidence, but the current labor incident law has not yet been formally implemented.
In judging whether the payment of the labor received by the labor is still wages, it must be judged according to the judgments of the competent authorities and the courts over the years.

● Basic salary
Since January 1, 2021, the monthly basic salary has been adjusted to 24,000 TWO, and the hourly basic salary has been adjusted to 160 TWD.
In recent years, the frequency on basic wage adjustment is relatively fast, and those who fail to meet the regulation will receive administrative penalty. Companies should always pay attention to whether the wages meet the regulation.

● Overtime Wages
Article 24, Labor Standards Act has regulated the overtime wages’calculated standards. The following is a collective chart of the overtime wages basis:

Overtime working hoursOvertime payment
Overtime work does not exceed two hoursIn addition to the regular hourly wage, at least an additional one-third of the regular hourly rate should to be paid.
Overtime work is over two hours, but the total overtime work does not exceed four hoursIn addition to the regular hourly wage, at least an additional two-thirds of the regular hourly rate should to be paid.
Overtime work due to the occurrence of an natural disaster, an accident, or an unexpected eventShould be paid two times the regular hourly rate.
Working on rest days, and the overtime work does not exceed two hoursIn addition to the regular hourly wage, at least an additional one and one-third of the regular hourly rate should be paid.
Working on rest days, and the overtime work is over two hours, but the total overtime work does not exceed four hoursIn addition to the regular hourly wage, at least an additional one and two-thirds of the regular hourly rate should be paid.
Working on national holiday and annual leaveDespite the number of working hours, one day worth of wages should be paid.
Working on regular leaveDespite the number of working hours, one day worth of wages should be paid, and an extra mandatory rest day should be compensated.

Due to the complexity in calculating overtime payment, the Ministry of Labor provides the overtime payment calculation system for use (https://labweb.mol.gov.tw/). Companies can set the conditions directly on the website to get the overtime payment figure. An example to calculate the overtime payment is provided here for the reader’s reference:

Assumption: The monthly salary of the worker is 43,200 TWD, so the daily salary is 1,440 TWD, and the hourly salary is 180 TWD.


Example 1 – Overtime payment on regular working days

Overtime working hoursOvertime payment calculation methodOvertime Payment
1180x(1 +1/3)=240$ 240
4The first 2 hours: The figure above multiply
by 2, which is 480
Another 2 hours: 180x(1+2/3)x2=600
$ 1,080

According to Article 32, Labor Standards Act, the employer has agreed to extend the working hours of the labors for no more than 12 hours a day. Therefore, the number of overtime hours for the example is only up to 4 hours.

Example 2 – Overtime payment on rest days

To begin, regarding the calculation of the overtime working hours, before the revision of the Labor Standards Act in 2018, it was calculated on the units of 4, 8, and 12 hours, but after the revision of the Act in 2018, the calculation is now based on the actual overtime hours. Please be aware that the following examples are only for overtime payment; the original wage still needs to be paid on a flexible rest day.

Overtime working hoursOvertime payment calculation methodOvertime Payment
1180x(1 +1/3)=240$ 240
5The first 2 hours: The figure above multiply
by 2, which is 480
Another 3 hours: 180x(1 + 2/3)x3=900
$ 1,380
9The first 2 hours: same as the figure above, 480
Another 7 hours: 180x(1+2/3)x7=2100
9th hour’s salary : 180×1=180
$ 2,760

According to Article 30 of the Labor Standards Act, the regular working hours of the labor shall not exceed 8 hours a day, and the overtime payment shall be “added to the daily wages;" that is, the overtime pay must be paid at the same time. If the overtime working hours is more than 8 hours, the employer should pay the salary starting from the 9th hour.

● Other Notice
In addition to the matters mentioned above, regarding wages, companies should pay attention to:

  1. If the employer terminates the labor contract with the laborer, wage still needs to be paid during the notice period, and the severance payment has to be paid.
  2. Gender discrimination leading to unequal pay is restricted.
  3. Wage pre-deduction for the use of liquidated damages and compensation are restricted.
  4. Wage is required to be paid on time, and a payroll sheet needs to be given to the labor.

Overtime working hours

According to Article 32 of the Labor Standards Act, When an employer has the consent of the labor union, or with the approval of a labor-management conference, the employer may extend the working hours.
However, the daily working hours cannot exceed 12 hours. The number of overtime hours per month shall not exceed 46 hours, but if agreed, it may be extended to no more than 54 hours per month and no more than 138 hours per three months.

Next Chapter: Ch.5-02- Hiring in Taiwan