Challenges Faced While Hiring Employees in Taiwan

19 November 2020

If you have a business that is planning to make a foray into the Taiwanese market, it may be a good idea to test the Taiwan market first before going for the establishment of your business. Here, we will learn about the significant aspects of hiring employees in Taiwan to try and make the process as straightforward as possible.

Business owners need to remember that their business must be a legal entity in Taiwan to be able to hire staff. If a foreign business wants to set up as a legal entity in Taiwan they can hire the staff via PEO (Professional Employment Organization) or employment solutions available.

Hiring staff by using PEO or employment solutions

By using the employment solutions you can outsource the employment liabilities to the local recruiters and the foreign business is responsible only for managing the workforce. The employment solutions empower the businesses to enter the Taiwan market for business cost-effectively because they make hiring in Taiwan without a company possible. There are fewer risks involved because the liabilities are taken up by a Professional Employer Organization (PEO) to which HR services are outsourced.

The employment solutions make it possible for the businesses to hire employees in Taiwan by outsourcing all the liabilities associated with the process such as,

• Payroll and tax compliance.
• Locally compliant labor contract.
• Mandatory benefits.
• Visa processing if needed.
• Administration of expenses claims.

There are experienced service providers available for the purpose that make the entry into the Taiwanese market for foreign businesses quite simple by offering services they may need at various stages of the entry. The services provided by these firms include payroll, employment solutions, tax, and mandatory benefits contribution.

Mandatory benefits for Taiwanese residents

Employers of staff in Taiwan are required to provide certain benefits to their employees by law. These include setting them up with social security and making arrangements for their employment insurance, health insurance, and labor insurance. Here are the statutory benefits you are required to provide to the Taiwanese employees.

• Social security.
• Labor insurance.
• National health insurance (NHI).
• Employment insurance.

Time away from employment

Employers in Taiwan are required to provide a day off every week apart from a rest day to their employees. The Taiwanese employees were known for working all 7 days of the week in the past however, 5 days per week is becoming a normal way in Taiwan. According to the new rules the employers are required to pay a high amount to the employees for overtime. The employees are allowed to work overtime for 54 hours a month, however; they cannot work for more than 138 hours within 3 months. Employers are also required to provide additional leaves as a kind of compensation for the overtime work. They are also required to prove the staff with annual leaves and maternity leaves.

Employment termination 

Any employment relationship will be terminated when it complies with the terms and conditions of LSA. The employers are required to provide advance notices and may be required to severance payments in some specific conditions. The employees that wish to leave a certain position are not required to provide a notice to the employers a certain period in advance. It depends on the conditions set in the labor contract at the time of employment. But in most cases, one month's notice is required in the contract.

Severance

According to the severance pay rules, a notice must be provided in advance with the notice period according to that mentioned on the contract at the time of employment. For the staff that has served more than 3 months in the company and less than one year, this advance notice can be 10 days. For the employees serving for more than one year and less than 3 years, the advance notice has to be served 20 days earlier. Finally, for the employees serving for more than 30 days, this advance notice period needs to be 30 days.

Conclusion

For all businesses entering the competitive Taiwanese market, it is necessary to be well-informed about the government policies for hiring staff in Taiwan. Keep in mind that the island nation has a complicated set of rules and for hiring staff here there are two main alternatives. First is setting up a company in the country and hiring the staff under this entity or the second alternative is using the recruitment services of a PEO to outsource the employment requirements and procedures.