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HR Class 101: Your Guide to Hiring, Insurance, and Pensions in Taiwan

 

First Time Being an Employer?

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Building a strong team is one of the most critical aspects of running a successful business, especially for first-time employers. Whether you’re a small startup or expanding your enterprise, having the right employees can make or break your operations. So, how do you find the right people? And once you've hired them, what are your responsibilities as an employer? Here's your beginner-friendly guide to navigating recruitment, insurance, and pension processes in Taiwan.

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How to recruit employees?

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Most companies utilize online human resource platforms. Below are some of the most popular job banks in Taiwan:

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Head Hunter

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If you're looking for more specialized or higher-level roles, head hunters can be an excellent resource. Companies like Adecco and Michael Page are well-known in Taiwan for matching employers with top-tier candidates. If your business requires Japanese-speaking staff, Reeracoen is a specialized recruiter for such roles.​​​

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Adecco

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​Michaelpage

Reeracoen  (specialized in Japanese-speaking workers)   ​

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To register a company on Job Bank while prioritizing the protection of job applicants, the following documents and information are required:

  1. Basic Company Information:

    • Full legal company name

    • Company registration number (Uniform Company Number)

    • Accurate company contact details (phone number, email, etc.)

    • Physical company address, ensuring transparency for applicants

  2. Verified Business License:

    • A verified and up-to-date scanned copy of the company’s business registration certificate or business license, to demonstrate that the company operates legally and ethically.

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The minimum salary

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As of January 1, 2024, the minimum monthly wage in Taiwan will be NT$27,470 following a 4.05% increase from the previous rate of NT$26,400. This adjustment marks the eighth consecutive year that Taiwan has raised its minimum wage, reflecting ongoing efforts to improve living standards amid rising inflation and economic conditions. In addition to the monthly wage, the minimum hourly wage will also increase to NT$183 (about US$5.88) from NT$176. 

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The minimum Salary for a foreign professional worker

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Foreigners employed as Foreign professional workers whose monthly salary shall not be lower than the average monthly salary published by the central competent authority. Currently, the amount of the salary standard is NTD 47, 971.

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Leave - Sick, Maternity, Vacation, Absence, Holidays

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Sick Leave

  • Entitlement: Employees can take up to 30 days of sick leave per year.

  • Payment: For the first 30 days, sick leave is compensated at 50% of regular salary. Any additional sick leave beyond this period is unpaid.

  • Hospitalization: If hospitalized, employees can take up to 1 year of unpaid sick leave over a two-year period

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Maternity Leave

  • Duration: Female employees are entitled to a total of 8 weeks of paid maternity leave (4 weeks before and 4 weeks after childbirth).

  • Eligibility for Pay: To receive full pay during maternity leave, an employee must have worked for the employer for at least 6 months. If employed for less than 6 months, the employee receives 50% of wages.

  • Miscarriage: In cases of miscarriage within the first three months, the employee is entitled to 4 weeks of maternity leave.


Public Holidays

Employees are entitled to time off for designated public holidays, which include:

  • New Year’s Day

  • Chinese New Year (Lunar New Year)

  • Peace Memorial Day

  • Children’s Day

  • Tomb-Sweeping Day (Qing Ming Festival)

  • Labor Day

  • Dragon Boat Festival

  • Mid-autumn Festival

  • National Day.

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Annual Leaves and used annual leaves

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Annual leave entitlement in Taiwan is based on an employee's length of service and increases incrementally:

  • 3 days for employees who have worked for more than 6 months but less than 1 year.

  • 7 days for employees who have worked for 1 year but not more than 2 years.

  • 10 days for employees who have worked for 2 years but not more than 3 years.

  • 14 days for employees who have worked for 3 years but not more than 5 years.

  • 15 days for employees who have worked for 5 years but not more than 10 years.

  • After 10 years of service, 1 additional day is added for each subsequent year, up to a maximum of 30 days of annual leave.

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  • 公司股東、董事、監察人、經理人有年齡限制嗎?
    1. 無論是有限公司或股份有限公司的股東都沒有年齡限制，但未滿20歲的股東應該經父母或監護人同意才能擔任。 2. 未滿20歲不得擔任公司的董事、監察人、經理人。
  • 負責人的資格限制以及應該注意事項？
    1. 需要年滿二十歲之成年人 。 2. 依公務員服務法第 13 條，公司負責人不能為公務人員。
  • 公司的資本額要有無最低金額?資本額的多寡跟課稅金額有關嗎?
    1. 除特別規定的行業以外(如旅行社、營造業、建設業等)依行業特性有另外規定外，目前並無最低資本額限制。 2 .一般社會的觀感是資本額越大的公司似乎公司規模越大，廠商或客戶對公司的信任度也會有影響。但不建議設立時設立過多公司不會用到的資本額。合適的資本額建議至少營業後能夠維持3~6個月以上的營運而不需要增資。 3. 課稅金額只跟稅前所得有關，與營業額無關。
  • 成立公司行號後，房屋稅、地價稅、水電費有何影響?
    房屋稅影響 1. 住家用住宅房屋稅率為現值百分之一點二。 2. 非住家用非營業用住宅房屋稅率為現值百分之二。 3. 營業用房屋稅率為現值百分之三。 註：房屋若同時作住家及營業使用，可於公司設立時或設立後主動向房屋所在地稅捐稽徵機關申請依住家及營業用之各自面積，分別適用不同稅率來核課房屋稅，以節省房屋稅。目前實務上，課稅面積最低不得少於全部面積六分之一。 地價稅影響 1. 自用住宅用地價稅率為現值千分之二。 2. 營業用住宅用地地價稅率為現值千分之十。 3. 公式：申報地價面積╳稅率＝應納土地稅額 註：可於公司設立時或設立後主動向稅捐稽徵機關申請依住家及營業用之各自面積，適用不同稅率來核課地價稅，當然房屋稅課稅面積等同地價稅課稅面積。 水電費影響 如果屋主或是房東向台電、自來水公司申請將帳單從「個人」改成「公司」，則水電費會由「住宅用費率」變成「營業用費率」。如果仍維持屋主個人名字，則水電費率不會有影響。台電通常不會主動更改，因此如果不主動提出申請，費率通常會維持原來的費率。

​​​​Labor Insurance and Retirement Benefits Programs

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All employers are required to enroll their employees in the following mandatory programs:

1. National Health Insurance Program, 2. Labor Insurance Program and 3. Retirement Benefits (Labor Pension).

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1. National Health premium(NHI)

  • Mandatory Enrollment: All Taiwanese citizens and foreign nationals with an Alien Resident Certificate (ARC) must enroll in the NHI program. This applies regardless of age, gender, or employment status.

  • Coverage: The NHI provides access to a wide range of medical services, including inpatient and outpatient care, prescription drugs, traditional Chinese medicine, and dental services.

  • Ratio for employees of private companies is currently: Employer 60% Employee 30% Government 10% and the latest rate is currently fixed at 4.69% of the insured monthly salary. 

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The formulas used to calculate National Health premium are as follows:

  1. The insured (employee): Salary x insurance premium rate 4.69% x 30% x(1 + number of dependents)

  2. Insurance unit(employer)t: Salary x insurance premium rate 4.69% x 60% x 1.61

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2. Labor Insurance premium

  • Coverage: This program covers various aspects such as work-related injuries, occupational diseases, maternity benefits, and unemployment insurance.

  • Benefits: Employees receive compensation for medical expenses related to work injuries, as well as a portion of their salary during periods of disability or unemployment.

  • Ratio for employees of private companies: Employer 70% Employee 20% Government 10% and the latest rate is presently fixed at 10.5% of the insured monthly salary. 

 

3. Retirement Benefits (Labor Pension)

 

  • Pension Scheme: Under the Labor Pension Act, employers must contribute a minimum of 6% of an employee's monthly salary to the pension fund. 

  • Withdrawal: Employees can access their pension funds upon retirement or under specific circumstances such as job termination or disability.

  • Ratio for employees of private companies: Employer 100% and the latest rate is currently fixed at 6% of the insured monthly salary. In addition to the mandatory employers' contribution, employees may contribute voluntarily additional sums, a maximum 6% of their monthly wages to their pension accounts. 

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These mandatory programs aim to provide essential health care and financial security for employees in Taiwan, ensuring that both local and foreign workers have access to necessary services and support throughout their employment.

FAQ 2. Requirements for Full Pay During Maternity Leave in Taiwan?

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Full pay: to receive full pay during maternity leave in Taiwan, the employee must have worked for their employer for a minimum period of six months.

If this requirement is met, female employees are entitled to eight weeks of paid maternity leave, divided into four weeks before and four weeks after childbirth.

Important Note: The sources do not explicitly state if this six-month requirement applies to foreign workers as well, or if different rules exist for them.

50% pay: employees who haven't completed six months of service are still eligible for maternity leave but will receive 50% of their wages during this period.

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FAQ 3. We have hired an employee in Taiwan and designated him as the director of our Taiwan company. How do insurance and pension benefits change for an employee who becomes a director?

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Answer: 
Here's how insurance and pension benefits change for an employee in Taiwan who becomes a director, according to the sources you provided:

 

●Change in Employment Relationship: In Taiwan, when an employee transitions to the role of a director, their relationship with the company is no longer classified as an employer-employee relationship1.

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●Impact on Pension Benefits: As a result of this change in relationship, directors are not covered under the Employment Insurance Act. This means they are no longer eligible to receive the company's contributions to their pension, which is typically 6% of their salary.

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●Changes in Insurance Contributions: While directors lose out on pension contributions, they are still covered under the Labor Insurance scheme. However, this shift also leads to an increase in their personal contributions for both National Health Insurance (NHI) and Labor Insurance. Their contribution rises from about 2% to 9% of their salary.

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●Financial Implications: In essence, the employee who becomes a director experiences a trade-off. They face increased personal insurance contributions and the loss of company pension contributions. To offset these financial drawbacks, companies sometimes offer a salary raise of over 15%.

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Example:

Let’s say David, a Taiwan employee, earns 100,000 per month. After being promoted to director, his salary is increased by 10,000, bringing it to 110,000.

  • Before promotion: David’s personal contribution to health and labor insurance is around 2% of his salary ( 2,000), while the company contributes around 18% ( 18,000).

  • After promotion: As a director, his personal contribution jumps to 9% ( 9,000), and he loses the company’s pension contribution of TWD 6,000.

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​​In total, David will have to pay an additional TWD 7,000 (TWD 9,000 - TWD 2,000) in personal insurance contributions, and he also loses TWD 6,000 in company pension contributions. Despite the TWD 10,000 salary raise, his total monthly loss is TWD 15,000.

In such cases, companies sometimes offer a raise of over 15% to compensate for the increased insurance burden and the loss of pension contributions.

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FAQ 4. : Michael is an American who set up a company in Taiwan. Michael is the director and also the manager of the company. The company pays a salary monthly. What kind of insurance plan and pension plan can he get for himself?

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Answer:

  1. Health Insurance: Michael, as an employee of the company, Michael is required to enroll in Taiwan's National Health Insurance (NHI) plan. This is compulsory for all residents, including company managers.

  2. Labor Insurance:

    • (A) Labor Insurance is designed for employees. If Michael is the only employee, he cannot enroll in the Labor Insurance plan.

    • (B) However, if the company has additional employees, Michael can enroll in the Labor Insurance plan.

  3. Labor Pension: As Michael is also the employer, the Labor Pension system does not apply to employers. This benefit is reserved for employees, he is not eligible for the pension plan.

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FAQ 5: Can a Representative Office(RO) enroll health insurance, labor insurance, and pension for its employees in Taiwan?

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Answer:

Yes, a Representative Office (RO) in Taiwan can enroll its local employees in health insurance, labor insurance, and the pension system. Here’s a breakdown of how each system applies:

  1. National Health Insurance (NHI):
    The National Health Insurance program is mandatory for all employees in Taiwan, including those working for Representative Offices. 

  2. Labor Insurance:
    Similar to health insurance, labor insurance is compulsory for all employees working in Taiwan. A Representative Office must register for labor insurance and ensure its employees are covered, which includes protections for work-related accidents, injuries, illness, and maternity benefits.

  3. Labor Pension System:
    Under Taiwan’s Labor Pension Act, companies, including Representative Offices, are required to contribute to employees’ pension funds. 

Thus, even though a Representative Office cannot engage in direct business activities, it is still considered an employer and must comply with Taiwan's labor and insurance laws for its employees.

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FAQ 5: David works at company ABC and makes NT$34,800 per month. His wife is a full-time housewife and they have no kids. What are the contributions for him and his employer? 

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Answer:

David's monthly salary is NT$34,800, and after the deductions for insurance, he will receive NT$33,090. Here is a breakdown of the insurance contributions and retirement benefits:

  1. National Health Insurance (NHI):

    • David’s contribution: NT$540 X 2 = 1,080 

    • Employer’s contribution: NT$1,684
       

  2. Labor Insurance:

    • David’s contribution: NT$836

    • Employer’s contribution: NT$2,924
       

  3. Labor Pension (Retirement Benefits):

    • Employer’s contribution: NT$2,088
       

Total deductions for David:

  • NHI + Labor Insurance = NT$1,080 + NT$836 = NT$1,916

Net salary after deductions:

  • NT$34,800 - NT$1,916 = NT$32,884

Total expense for the company:

  • Salary: NT$34,800

  • Employer’s contribution to NHI, Labor Insurance, and Retirement Benefits: NT$1,684 + NT$2,924 + NT$2,088 = NT$6,696

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More questions? Let us guide you further

You may find these useful guides in helping you make your decision:

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