Hire in Taiwan through our Employer of Record (EOR)

An Employer of Record (EOR) is a third-party organization that takes on the legal and administrative responsibilities of employing workers on behalf of another company. This arrangement allows businesses to hire employees in countries where they don't have a legal entity, effectively expanding their global reach without the need to establish a local subsidiary or branch office.

In the context of Taiwan, an EOR can be particularly valuable for foreign companies looking to tap into the island's skilled workforce and thriving technology sector. By partnering with an EOR, businesses can navigate Taiwan's complex labor laws, tax regulations, and cultural nuances more efficiently, while focusing on their core operations and growth strategies.

How Does EOR Work?

The EOR model operates by creating a tripartite relationship between the EOR, the client company, and the employee. Here's a breakdown of how it typically functions:

1. The client company identifies a candidate they wish to hire in Taiwan.
2. The EOR legally employs the worker on behalf of the client company.
3. The EOR handles all administrative tasks, including payroll processing, tax withholding, and benefits administration.
4. The client company maintains day-to-day management and direction of the employee's work.
5. The EOR ensures compliance with local labor laws, tax regulations, and other legal requirements.

This arrangement allows the client company to quickly establish a presence in Taiwan without the need for extensive local knowledge or infrastructure.

Benefits of Using an EOR

Utilizing an EOR in Taiwan offers several advantages for businesses:

1. Rapid market entry: Companies can start operations in Taiwan quickly without the need to establish a legal entity.

2. Compliance assurance: EORs are well-versed in Taiwan's labor laws and regulations, ensuring that the client company remains compliant with local requirements.

3. Risk mitigation: The EOR assumes legal responsibility for employment-related matters, reducing the client company's exposure to potential liabilities.

4. Cost-effectiveness: By eliminating the need for a local subsidiary, companies can save on setup and ongoing administrative costs.

5. Flexibility: EORs allow businesses to scale their operations up or down more easily, adapting to market conditions without long-term commitments.

6. Local expertise: EORs provide valuable insights into Taiwan's business culture, helping companies navigate cultural differences and local practices.

7. Focus on core business: By outsourcing HR and administrative tasks, companies can concentrate on their primary business objectives and growth strategies.

8. Access to talent: EORs can help businesses tap into Taiwan's highly skilled workforce, particularly in technology and innovation sectors.

By leveraging an EOR's services, companies can effectively expand their operations into Taiwan while minimizing risks and maximizing opportunities in this dynamic market.

Taiwan's employment landscape is characterized by a highly educated workforce, strong technological focus, and a blend of traditional and modern work cultures. The country boasts a high labor force participation rate, including substantial female participation. However, like many developed nations, Taiwan faces challenges related to an aging population, which impacts workforce sustainability and social security systems.

Overview of Labor Laws

Taiwan's labor laws are designed to protect workers' rights and ensure fair employment practices. Key aspects include:

• The Labor Standards Act, which governs working hours, overtime, leave, and termination procedures
• Minimum wage regulations, reviewed and adjusted periodically
• Mandatory labor insurance and national health insurance for employees
• Regulations on occupational safety and health
• Laws prohibiting discrimination based on gender, age, or disability

Employers must be aware of these laws to ensure compliance and maintain positive employee relations.

Cultural Considerations

Understanding Taiwanese work culture is crucial for successful employment relationships:

• Respect for hierarchy and seniority is important in most workplaces
• Indirect communication is often preferred to maintain harmony and "save face"
• Building "guanxi" (personal relationships) is vital in business interactions
• Long working hours are common, though there's a growing emphasis on work-life balance
• Team consensus is valued, but major decisions typically come from superiors
• Younger generations may be more open to direct communication and challenging norms

Adapting to these cultural nuances can greatly enhance workplace dynamics and productivity.

Challenges of Direct Hiring

Direct hiring in Taiwan can present several challenges for foreign companies:

1. Language barriers: While English proficiency is improving, many legal documents and official processes are in Mandarin Chinese.

2. Complex regulations: Taiwan's labor laws are comprehensive and can be difficult to navigate without local expertise.

3. Administrative burden: Employers are responsible for various administrative tasks, including tax withholding and social insurance contributions.

4. Cultural differences: Misunderstandings can arise from differing work cultures and communication styles.

5. Talent acquisition: Despite a well-educated workforce, finding specialized skills in certain sectors can be competitive.

6. Visa and work permit processes: Hiring foreign workers involves navigating complex immigration procedures.

7. Termination difficulties: Taiwan's labor laws provide strong protections for employees, making termination processes potentially challenging and costly.

Given these challenges, many foreign companies opt to use services like Rivermate's Employer of Record solution to simplify their hiring process in Taiwan and ensure compliance with local regulations.

Taiwan's payroll and tax system is a comprehensive framework that ensures both employers and employees contribute to the country's social welfare and economic development. This system encompasses various elements, including income tax, social security contributions, and other mandatory payments. Understanding these components is crucial for businesses operating in Taiwan and for employees working in the country.

The Taiwanese government has established a structured approach to payroll and taxes, balancing the needs of workers with the responsibilities of employers. This system aims to provide social security benefits, healthcare coverage, and retirement savings while also funding public services through taxation. Let's delve deeper into the specific responsibilities of employers and employees within this system.

Employer Contributions

Employers in Taiwan play a significant role in the payroll and tax system, bearing several responsibilities:

1. Income Tax Withholding: Employers are required to withhold income tax from their employees' salaries. This withholding is based on a progressive tax rate system for residents, ranging from 5% to 40%. For non-resident employees, a flat tax rate of 18% applies to gross salary income. Employers must remit these withheld taxes to the National Taxation Bureau by the 10th of the month following the salary payment.

2. Labor Insurance: This mandatory insurance covers occupational accidents, injuries, and disabilities. Employers contribute a portion of the premium, with the exact rate varying depending on the industry's risk level.

3. National Health Insurance (NHI): Taiwan's universal healthcare system requires employer contributions. The amount is calculated as a percentage of the employee's monthly salary, subject to a cap.

4. Labor Pension: Employers are obligated to contribute 6% of an employee's salary to a mandatory pension fund. This contribution helps ensure financial security for employees in their retirement years.

5. Employee Stabilization Fund (ESF): This fund aims to protect employees in case of business closures or layoffs. Employers contribute to this fund based on a percentage of the employee's salary.

It's important to note that the specific contribution rates for these programs can change over time. Employers should regularly consult the latest information from Taiwan's Ministry of Labor or National Taxation Bureau to ensure compliance with current regulations.

Employee Contributions

Employees in Taiwan also have financial responsibilities within the payroll and tax system:

1. Income Tax: Taiwan uses a progressive income tax system. For the 2023 tax year, the tax brackets range from 5% to 40%, depending on the individual's income level. Residents are taxed on their worldwide income, while non-residents are only taxed on income sourced from within Taiwan.

2. Social Security Contributions: Employees are required to contribute to various social security programs:

   • Labor Insurance: A mandatory contribution that varies based on industry risk.
   • National Health Insurance (NHI): Employees contribute a percentage of their monthly salary, subject to a cap.
   • Labor Pension: While employer contributions are mandatory, employee contributions are optional.

3. Deductions: Taiwan's tax system allows for several deductions that can reduce an employee's taxable income:

   • Itemized Deductions: These include charitable contributions, insurance premiums (within limits), medical expenses, calamity losses, and home purchase interest or rental expenses (within limits).
   • Standard Deduction: Employees can opt for a standard salary deduction of up to 207,000 NTD or their total salary income, whichever is lower, instead of itemizing deductions.

Understanding these contributions and deductions is crucial for employees to manage their finances effectively and ensure compliance with Taiwan's tax laws.

In conclusion, Taiwan's payroll and tax system is a collaborative effort between employers and employees, designed to support the country's social welfare programs and economic growth. By fulfilling their respective responsibilities, both parties contribute to a robust system that provides essential benefits and services to the workforce while supporting the nation's fiscal health.

Taiwan offers a comprehensive benefits package for employees, combining mandatory and optional benefits to create a robust social safety net and attractive employment conditions. As an Employer of Record (EOR), Rivermate manages these benefits, ensuring compliance with local regulations while providing valuable support to both employers and employees. By handling the complexities of benefits administration, an EOR allows companies to focus on their core business activities while offering competitive packages to attract and retain top talent in Taiwan.

Mandatory Benefits

Taiwan's mandatory benefits include:

• Labor Insurance (LI), covering:

  • Maternity leave (8 weeks at 100% salary)
  • Sickness and injury leave
  • Disability benefits
  • Old-age allowance
  • Death benefits

• Employment Insurance (EI), providing:

  • Unemployment benefits
  • Vocational training benefits

• Other required benefits:

  • Annual leave (3-30 days based on years of service)
  • Paid national holidays
  • Labor Accident Insurance

Optional Benefits

Employers in Taiwan often offer additional benefits to enhance their compensation packages:

• Financial and Allowance Benefits:

  • Housing allowances
  • Meal allowances or subsidized meals
  • Transportation allowances

• Health and Wellness Benefits:

  • Supplemental medical insurance
  • Employee Assistance Programs (EAPs)

• Perks and Lifestyle Benefits:

  • Flexible working arrangements
  • Mobile phone reimbursement
  • Education allowances
  • Shopping discounts
  • Company events and outings

These optional benefits can vary significantly between employers, depending on factors such as industry, company size, and corporate culture. By offering a mix of mandatory and optional benefits, companies in Taiwan can create attractive compensation packages that support employee well-being and job satisfaction.

The process of termination and offboarding in Taiwan is governed by specific legal requirements and best practices. Understanding these procedures is crucial for both employers and employees to ensure a smooth transition and compliance with local labor laws.

In Taiwan, the Labor Standards Act (LSA) provides the framework for employee termination. Employers must have valid reasons for dismissal, such as business-related factors or employee conduct issues. These may include business closure, operational changes, or serious misconduct by the employee.

When terminating an employee, employers must adhere to notice requirements based on the employee's length of service:

• 10 days' notice for 3 months to 1 year of employment
• 20 days' notice for 1 to 3 years of employment
• 30 days' notice for 3 or more years of employment

In cases of severe misconduct, immediate dismissal may be possible without notice.

Severance Pay

Severance pay is generally required when the termination is attributable to the employer. The amount is calculated based on the employee's average wage over the past six months, multiplied by their years of service. However, there are exceptions to this requirement, such as termination due to serious misconduct or the expiration of a fixed-term contract.

Offboarding Process

The offboarding process in Taiwan typically involves several steps:

1. Formal communication of termination
2. Exit interview
3. Return of company property
4. Knowledge transfer
5. Final paycheck and benefits settlement
6. Providing necessary documentation (e.g., certificate of employment)

Best Practices

To ensure a smooth termination and offboarding process:

• Document all reasons for termination thoroughly
• Communicate clearly and professionally with the employee
• Ensure compliance with all legal requirements
• Maintain confidentiality throughout the process
• Provide support for the transitioning employee

By following these guidelines and understanding the legal framework, companies can navigate the termination and offboarding process in Taiwan effectively while minimizing potential disputes and maintaining positive relationships with departing employees.

Taiwan offers a welcoming environment for foreign workers, but navigating the visa and work permit requirements can be complex. Here's a concise overview of what you need to know:

Work Visa Types

Taiwan primarily offers two types of work visas for foreign nationals:

1. Employment Gold Card: A special program for highly skilled professionals, combining work permit, resident visa, and alien resident certificate.

2. General Work Permit: For most foreign workers, obtained through their employer.

Work Permit Process

To work legally in Taiwan, you typically need:

1. A job offer from a Taiwanese employer
2. An approved work permit from the Ministry of Labor
3. A resident visa from a Taiwanese embassy or consulate
4. An Alien Resident Certificate (ARC) upon arrival

Key Requirements

• Valid passport with at least 6 months validity
• Proof of qualifications and work experience
• Health check certificate
• Criminal background check

Duration and Renewal

• Work permits are usually valid for up to 3 years
• Renewals can be applied for before the current permit expires

Special Considerations

• Certain professions may have additional requirements
• Quota systems exist for some industries
• Changing employers often requires a new work permit application

Understanding these requirements is crucial for a smooth transition to working in Taiwan. However, regulations can change, so it's always best to consult with the relevant Taiwanese authorities or seek professional assistance for the most up-to-date information.