Hire employees in Taiwan using an Employer of Record

You've been interviewing for weeks. Finally found the right person in Taiwan. Now you need to actually hire them legally. This is where most companies hit a wall.

Taiwan's employment laws aren't forgiving to companies that wing it. Get the contract wrong and you're facing potential back payments for mandatory bonuses (yes, 13th month pay is required). Miss the labor insurance registration and you'll owe penalties plus retroactive coverage. Most companies don't realize Taiwan requires joining the National Health Insurance system within three days of hiring - not three weeks, three days.

Here's the reality: you've got three ways to hire in Taiwan, and each comes with trade-offs you need to understand upfront.

Option 1: Set up your own entity

• Cost: €15,000-40,000 upfront, €8,000-15,000 annual maintenance
• Timeline: 4-6 months minimum
• Complexity: Company registration, tax setup, labor insurance enrollment, payroll infrastructure
• Makes sense when: Hiring 15+ people long-term, permanent Taiwan operations

Option 2: Hire contractors

• Cost: None upfront, but limited control over work methods
• Timeline: Immediate
• Risks: Misclassification fines up to €50,000, back taxes, mandatory employee reclassification
• Makes sense when: Short projects under 6 months, specialized consulting work
• Note: Hire with Columbus also handles compliant contractor agreements and payments

Option 3: Use an employer of record (Recommended for most)

• Cost: $179/month per employee
• Timeline: 2-3 days to hire
• Complexity: None - we handle everything from contracts to compliance
• Makes sense when: 1-20 employees, testing the Taiwan market, multi-country teams

If you're hiring 1-8 people, entity setup costs more than four years of EOR fees ($179/month = $2,148/year per employee vs €15,000+ entity setup). An EOR handles employment contracts, monthly payroll, tax filings, mandatory insurance enrollment, and keeps you compliant with Taiwan's frequent labor law updates. For example, hiring 3 people costs $537/month with an EOR versus €20,000+ for entity setup plus ongoing compliance headaches.

Ready to hire in Taiwan without the legal complexity? Get started with Hire with Columbus.

What employment types can you use?

You've got three ways to bring someone onboard in Taiwan. Here's how the costs and risks compare.

How can you hire in Taiwan?

Most companies jump straight to thinking about contract types, but the bigger question is how you'll legally employ someone in the first place. Taiwan doesn't let you just hire people without a legal presence.

Setting up your own entity means incorporating a Taiwan subsidiary, registering for taxes, setting up payroll systems, and handling all compliance yourself. You'll need a local registered address, minimum capital requirements, and ongoing legal obligations. The math only works if you're planning to hire 20+ people long-term.

Hiring contractors seems cheaper upfront, but Taiwan's labor authorities are strict about misclassification. If someone works set hours, uses your equipment, or follows your processes like an employee, they probably are one legally. Fines can reach $50,000 per misclassified worker, plus back taxes and benefits.

Using an employer of record like Hire with Columbus means we become the legal employer in Taiwan while you manage the day-to-day work. We handle contracts, payroll, taxes, and compliance. You get the control of having employees without the entity setup costs or legal headaches.

Employment contract types in Taiwan

Once you've decided how to hire, you'll need to pick the right contract type. Taiwan recognizes several employment arrangements, each with specific rules.

Permanent contracts (indefinite-term)

This is your standard full-time employment contract with no end date. Most companies use these for core team members they want to keep long-term.

• No maximum duration
• Standard notice periods apply (10-30 days depending on tenure)
• Full benefits required
• Strongest job protection for employees

Fixed-term contracts

These have a specific end date and work well for project-based roles or temporary needs. But Taiwan limits how you can use them.

• Maximum 3 years initially
• Can renew once for up to 3 more years
• After 6 years total, must convert to permanent or end employment
• If the work becomes ongoing/permanent in nature, authorities may require conversion to permanent contract

Part-time contracts

Employees working less than Taiwan's standard full-time hours (40 per week). They get prorated benefits and protections.

• Same hourly wage protections as full-time workers
• Prorated vacation and sick leave
• Still eligible for labor insurance
• Popular for customer service or specialized consulting roles

Probationary periods

Not a separate contract type, but you can include probation clauses in any employment contract.

• Maximum 3 months for most roles
• 6 months allowed for specialized or senior positions
• Shorter notice periods during probation (3 days)
• Same wage and benefit requirements apply

Which contract type should you use?

For most international hires, permanent contracts make the most sense. Taiwan's employment laws already give you flexibility to manage performance and terminate for cause with proper documentation.

Fixed-term contracts seem appealing but can backfire. If you keep renewing or the role becomes permanent in nature, you'll face conversion requirements anyway. Plus, good employees will prefer the security of permanent contracts.

Part-time works well if you genuinely need someone for limited hours. Just remember they still get most employment protections and benefits on a prorated basis.

When you work with Hire with Columbus, we help you choose the right contract type based on your specific situation and handle all the legal requirements. We'll draft compliant contracts in both English and Traditional Chinese, manage any probationary periods, and ensure you're following Taiwan's employment standards from day one.

The biggest advantage? You can start with one contract type and adjust as your needs change, without worrying about entity compliance or legal missteps.

How does payroll and taxation work?

Your €60,000 employee in Taiwan actually costs €78,600 per year once you add employer contributions. Taiwan's payroll system includes multiple social insurance schemes, labor pension contributions, and a progressive income tax that can catch budget planners off guard.

The good news? Taiwan's payroll runs on a predictable monthly cycle. The challenging part? You're looking at 6-8 different contribution types, strict payment deadlines, and penalties that start at NT$3,000 (about €90) for late filings.

Income tax brackets

Taiwan uses a progressive tax system with rates climbing from 5% to 40% for high earners. Here's what your employees will pay in 2025:

Taiwan also offers a standard deduction of NT$124,000 (€3,720) per person, plus additional deductions for dependents and special circumstances.

Social security contributions

This is where Taiwan gets expensive for employers. You'll pay much more than your employees across multiple insurance schemes:

The labor pension deserves special attention. While employees contribute 6% (which they can opt out of), employers must contribute at least 6% with no option to skip it. Many employers contribute more to stay competitive.

Payment schedule and bonuses

Taiwan follows a monthly payroll cycle with salaries typically paid by the 5th of the following month. But what catches most foreign employers off guard is the cultural expectation of year-end bonuses.

While not legally required, year-end bonuses equivalent to 1-3 months' salary are standard practice. Many employment contracts specify bonus amounts, making them legally binding. Budget for at least one month's salary as a year-end bonus to stay competitive.

Dragon Boat Festival and Mid-Autumn Festival bonuses (usually half to one month's salary each) are also common but less standardized than year-end payments.

Total employment cost breakdown

Let's break down the real cost of that €60,000 salary:

Employee earning €60,000 annually:

• Base salary: €60,000
• Labor insurance (employer): €3,360
• National health insurance (employer): €9,900
• Employment insurance (employer): €2,520
• Labor pension (employer): €3,600
• Estimated year-end bonus: €5,000

Total annual cost: €84,380

That's a 40.6% increase over base salary. For a €40,000 salary, you're looking at about €55,200 total cost. At €80,000, expect around €111,200.

Payroll processing timeline

Taiwan's tax authorities don't mess around with deadlines. Your monthly schedule looks like this:

• Salary payment: By 5th of following month
• Withholding tax filing: By 10th of following month
• Social insurance payments: By 15th of following month
• Labor pension contributions: By 15th of following month

Annual income tax filings happen in May, with final calculations due by May 31st. Miss any deadline and you're looking at penalties starting at NT$3,000, escalating quickly for repeated violations.

Common payroll mistakes

The biggest mistake? Underestimating the administrative burden. Taiwan requires separate filings for each insurance type, different calculation bases, and detailed employee records in Chinese.

Second most common error: miscalculating overtime rates. Taiwan requires 1.33x pay for the first two overtime hours, 1.67x after that, and 2x on holidays. Get this wrong and labor inspectors will audit your entire payroll history.

Third: forgetting about the 13th month salary expectation. While not legally mandated, failing to provide year-end bonuses will hurt retention and make future hiring difficult.

Setting up payroll in Taiwan yourself:

• Local accounting firm: €800-1,200/month
• Payroll software: €300-500/month
• HR expertise needed: €45,000+ annual salary
• Compliance risk: Fines up to €15,000 for serious violations

With Hire with Columbus: $179/month per employee, fully compliant payroll processing, zero penalty risk, and English-language support for all filings.

What benefits and leave are required?

Taiwan employees get a minimum 7 days annual leave in their first year, building up to 30 days after 25 years of service. But here's what catches companies off guard: you'll pay salary 14 times a year, not 12, thanks to mandatory year-end and Dragon Boat Festival bonuses.

Beyond those bonuses, three benefits are non-negotiable: National Health Insurance, Labor Insurance, and Labor Pension contributions. Skip these and you're looking at fines starting at NT$20,000 per violation, plus back payments with interest.

Annual vacation leave

Taiwan's annual leave system is surprisingly generous once you understand the progression. New employees start with 7 days after completing one year of service, then it jumps to 10 days after two years.

Here's how vacation days build with tenure:

Unused vacation days must be paid out at termination, there's no "use it or lose it" policy. Employees can carry over unused days, but only up to the following year's entitlement.

Most companies allow vacation scheduling with reasonable notice, but you can require advance approval for leaves longer than 3 consecutive days.

Sick leave entitlements

Employees get 30 days of sick leave per year without needing a doctor's note for the first 3 days of any illness. After that, medical certification is required.

Here's how sick pay works: you pay full salary for the first 30 days of sick leave in a calendar year. After 30 days, Labor Insurance kicks in and covers 50% of the employee's average monthly salary for up to one year.

For occupational injuries or diseases, it's more generous. Employees get full pay for up to two years of medical leave, with Labor Insurance covering costs after the initial period.

Sick leave doesn't carry over to the following year, it resets annually on January 1st.

Parental leave breakdown

Taiwan offers some of the most progressive parental leave policies in Asia, though the pay rates might surprise you.

Maternity leave: 8 weeks at full pay, starting from 2-4 weeks before the due date. This is entirely employer-paid with no government reimbursement.

Paternity leave: 5 days at full pay, which must be taken within 15 days of the child's birth. Again, this comes straight from your payroll budget.

Parental leave: Both parents can take up to 2 years of unpaid leave (combined) until the child turns 3. During the first 6 months, parents receive 60% of their salary from Labor Insurance, capped at NT$18,900 per month in 2025.

Family care leave: 7 days per year for caring for family members, which can be taken as paid or unpaid depending on your company policy.

Public holidays in 2025

Taiwan has 12 national holidays, plus one flexible Memorial Day. If a holiday falls on a weekend, it's typically moved to create a long weekend through "bridge holidays."

Important note: Labor Day (May 1) applies only to employees under the Labor Standards Act. Government workers and some other categories don't get this holiday.

If employees work on national holidays, you must pay double time (200% of regular wages). Most companies simply close on these days to avoid the extra cost.

Mandatory benefits and contributions

Taiwan's social insurance system requires contributions to three programs, with costs split between employer and employee.

National Health Insurance (NHI):

• Employee contribution: 30% of premium
• Employer contribution: 60% of premium
• Government subsidy: 10% of premium
• 2025 rate: 5.17% of salary (capped at NT$182,000 monthly salary)

Labor Insurance:

• Employee contribution: 20% of premium
• Employer contribution: 70% of premium
• Government subsidy: 10% of premium
• 2025 rate: 11.5% of salary (capped at NT$45,800 monthly salary)

Labor Pension (new system):

• Employee contribution: 0-6% (voluntary)
• Employer contribution: 6% (mandatory)
• Applied to actual salary up to NT$150,000 per month

Employment Insurance:

• Employee contribution: 20% of premium
• Employer contribution: 70% of premium
• Government subsidy: 10% of premium
• 2025 rate: 1% of salary (same cap as Labor Insurance)

Total employer burden for social contributions typically runs 10-12% of gross salary, depending on the employee's salary level.

Competitive benefits beyond minimums

Most Taiwan companies offer these additional benefits to stay competitive:

Transportation allowances: NT$1,200-2,000 per month is common, especially in Taipei where commuting costs are high.

Meal allowances: Either subsidized company cafeterias or NT$2,400-3,600 monthly meal vouchers.

Health checkups: Annual complete health screenings beyond the basic occupational health requirements.

Performance bonuses: Beyond the mandatory festival bonuses, many companies add 1-3 months salary as year-end performance bonuses.

Supplemental insurance: Group life insurance and enhanced medical coverage to complement NHI.

Flexible work arrangements: Hybrid work policies became standard post-2020, with most tech companies offering 2-3 days remote work per week.

Common benefit administration mistakes

Bonus calculation errors: The mandatory year-end and Dragon Boat Festival bonuses must equal at least one month's salary each. Some companies mistakenly calculate these based on base salary only, excluding regular overtime or allowances.

Insurance enrollment delays: You have 3 days to enroll new employees in Labor Insurance and NHI. Miss this deadline and you'll face administrative fines plus potential liability for any medical costs incurred.

Overtime meal allowances: If employees work more than 2 hours of overtime, you must provide meal allowances or actual meals. The 2025 rate is NT$80 per meal period.

Foreign employee health insurance: Expat employees must enroll in NHI after 6 months of residence. Some companies incorrectly assume private international insurance is sufficient.

Pension contribution miscalculations: The 6% labor pension contribution applies to total monthly compensation, including regular bonuses and allowances, not just base salary.

Penalties for benefit violations start at NT$20,000 per employee and can reach NT$300,000 for repeated violations. The Department of Labor has stepped up enforcement considerably in 2025, particularly around proper insurance enrollment and overtime compensation.

Managing Taiwan's benefit requirements correctly involves:

• Local HR expertise: NT$1.8M+ annual salary for an experienced benefits manager
• Payroll software with Taiwan compliance: NT$50,000+ annually
• Legal review of benefit policies: NT$200,000+ per year
• Risk of calculation errors: NT$500,000+ in potential penalties and back payments

Hire with Columbus handles all benefit administration, from insurance enrollment to bonus calculations, for $179/month per employee. We ensure compliance with Taiwan's complex requirements while you focus on growing your team.

What are the compliance requirements?

Written contracts are mandatory in Taiwan. Verbal agreements don't count and expose you to claims. Every employment relationship must be documented with specific clauses, proper language, and government registration within strict deadlines.

Here's what you need to get right and what happens when you don't.

Employment contract requirements

Taiwan's Labor Standards Act requires all employment contracts to be in writing within 30 days of the employee's start date. Miss this deadline and you face fines up to NT$300,000 (about $9,400) plus the contract becomes void.

Your contract must include these mandatory clauses in Traditional Chinese:

• Job title and specific duties
• Work location and any travel requirements
• Start date and contract duration (if fixed-term)
• Working hours and rest periods
• Base salary and payment schedule
• Overtime compensation method
• Annual leave entitlement
• Termination notice periods
• Social insurance enrollment details

The contract also needs to reference Taiwan's Labor Standards Act and specify which labor union (if any) covers the position. Foreign companies often miss the union clause, which can invalidate the entire agreement.

You'll need to register the employment with Taiwan's Ministry of Labor within 15 days. Hire with Columbus handles all contract drafting, translation, and registration automatically - no missed deadlines or invalid clauses.

Probation periods

Standard probation in Taiwan runs 3 months, with a maximum of 6 months for senior positions. During probation, either party can terminate with 10 days' written notice instead of the standard notice periods.

After probation ends, full employment protections kick in immediately. You can't extend probation periods or create multiple probationary phases - Taiwan courts will treat these as attempts to avoid employment rights.

During probation, you still need just cause for termination. "Not a good fit" won't hold up in labor disputes. Document performance issues clearly with specific examples and improvement plans.

Working time regulations

Taiwan caps regular working hours at 8 hours per day and 40 hours per week. Employees can work maximum 12 hours daily including overtime, with mandatory 11-hour rest between shifts.

Overtime pays 1.33x regular rate for the first 2 hours, then 1.67x after that. Weekend work (if not part of regular schedule) pays 1.33x for the first 8 hours, 1.67x beyond that.

You must maintain detailed time records for all employees, including break times. Labor inspectors regularly audit these records. Missing or incomplete timekeeping data results in fines of NT$90,000 to NT$450,000 ($2,800 to $14,100) per violation.

Employees get 30 minutes unpaid break for shifts over 6 hours, 1 hour for shifts over 10 hours. These breaks are mandatory - you can't let employees skip them to leave early.

Notice periods

Notice requirements depend on tenure and who's initiating termination:

Employers need longer notice periods than employees for terminations after one year. You can pay in lieu of notice, but the payment must equal full salary plus benefits for the notice period.

During notice periods, employees can take up to 2 hours daily for job searching (with pay). They don't need to tell you when they're using this time.

Termination process

Taiwan requires "just cause" for all terminations outside of economic layoffs. Performance issues, misconduct, or role elimination all need proper documentation and process.

For misconduct terminations, you must:

1. Conduct internal investigation within 30 days of discovering the issue
2. Give employee chance to respond in writing
3. Issue termination letter within 30 days of investigation completion
4. Notify local labor bureau within 10 days

Economic layoffs need 60 days advance notice to employees and the labor bureau. You'll need to prove genuine business need and show you considered alternatives like reduced hours or unpaid leave.

Wrongful termination claims are common and expensive. Successful claims result in reinstatement plus back pay, or 6-15 months salary compensation if reinstatement isn't feasible.

Severance pay

Severance applies to most terminations, even resignations in some cases. The calculation depends on tenure and termination reason:

"Months salary" means average monthly earnings over the last 6 months, including overtime and bonuses. The calculation gets complex with variable pay.

Employees who resign due to employer violations (unpaid wages, unsafe conditions, contract breaches) also qualify for severance. This catches many foreign employers off guard.

Severance must be paid within 30 days of termination. Late payments incur 5% annual interest plus potential labor bureau fines.

Data protection

Taiwan's Personal Data Protection Act follows GDPR principles with similar penalties - up to NT$50 million ($1.6 million) or 5% of annual revenue for serious violations.

For employee data, you need explicit consent for collection and clear purposes for use. Employees can request data deletion after employment ends, with some exceptions for legal compliance.

HR data must stay within Taiwan unless you have adequate protection measures and employee consent for transfers. Many foreign companies struggle with this when using global HRIS systems.

You'll need a local data protection officer if processing large volumes of personal data. Background checks, performance monitoring, and health screenings all trigger additional consent requirements.

Common compliance mistakes

Invalid employment contracts top the list. Missing mandatory clauses, wrong language, or late registration can void the entire agreement. You'll owe back payments and face reinstatement claims.

Wrong termination processes cost even more. Companies often fire employees without proper documentation or notice, leading to wrongful termination suits. Average settlements run 6-12 months salary plus legal fees.

Overtime violations are frequent during labor inspections. Incorrect rates, missing records, or forcing employees to work excessive hours result in back pay plus penalties of 2-30 times the unpaid amount.

Probation period extensions seem innocent but create major liability. Courts treat extended probations as permanent employment with full rights from day one.

Penalties for violations

Taiwan doesn't mess around with employment law violations. Here are the common penalties:

• Invalid employment contract: NT$300,000 fine + contract void + back payments owed
• Wrong termination process: 6-15 months salary compensation + legal fees + potential reinstatement
• Missing mandatory contract clauses: Contract deemed invalid, full employment rights from start date
• Overtime violations: 2-30x unpaid amounts + NT$90,000-450,000 administrative fine
• Late severance payment: 5% annual interest + NT$300,000-1,500,000 penalty
• Working time violations: NT$90,000-450,000 per violation + back pay for affected employees
• Data protection breaches: Up to NT$50 million or 5% annual revenue

Common compliance failures in Taiwan:

• Invalid employment contract: NT$300,000 fine + contract void
• Wrong termination process: 6-15 months severance + legal fees + potential reinstatement order
• Missing mandatory clauses: Contract deemed invalid, back payments owed
• Improper dismissal: NT$2-15 million in compensation + reinstatement

Hire with Columbus ensures every contract and termination follows Taiwan law exactly. Our local legal team handles all compliance requirements, from contract drafting to termination procedures, so you never face these penalties.

What has changed recently?

Taiwan's job market got a major shake-up in 2025, with several big updates that'll affect how you hire there. The most immediate change? Minimum wage jumped to NT$28,590 per month (about $890 USD) in January 2025. That's a 4.56% increase that caught plenty of employers off guard.

The Labor Standards Act got completely rewritten in March 2025, and the new overtime rules have real teeth. Companies now face automatic penalties of NT$20,000 to NT$1 million for overtime violations. No warnings, no grace period. The new rules also cap overtime at 46 hours per month (down from 54), which has forced many tech companies to completely rethink their project timelines.

New digital nomad visa requirements

Taiwan launched its "Gold Card Plus" program in April 2025 for remote workers and digital nomads. But there's a catch. Companies hiring these workers must now register with Taiwan's National Development Council and pay a NT$50,000 annual fee per foreign remote employee. This has made contractor arrangements way more complicated for international companies.

Updated tax withholding rules

Starting July 2025, Taiwan requires all employers to withhold 20% income tax from foreign employees' first three months of salary. This applies to everyone now, regardless of their tax residency status. Previously, this only hit non-residents. The withholding gets refunded during annual tax filing, but it creates serious cash flow problems for new hires.

Mandatory ESG reporting for foreign employers

Companies with more than 50 employees in Taiwan must now file quarterly ESG reports starting September 2025. We're talking about detailed breakdowns of employee demographics, compensation equity, and environmental impact. These aren't simple forms either. You're looking at 40+ page documents with specific metrics and data requirements.

Foreign companies using local entities face NT$500,000 fines for missing deadlines. Companies using an EOR like Hire with Columbus have these requirements handled automatically as part of our compliance package.

Enhanced data protection penalties

Taiwan's Personal Data Protection Act penalties went through the roof in 2025. Data breaches now carry fines up to NT$50 million (previously NT$5 million). Companies must notify authorities within 72 hours of discovering a breach. This especially impacts HR systems and payroll processing, making secure, compliant platforms more critical than ever.

The silver lining? These changes have actually made EOR solutions more attractive. At $179/month per employee, Hire with Columbus handles all these new compliance requirements automatically. That includes the ESG reporting, updated tax withholding, and data protection measures. It's honestly become the simpler path for most international companies.