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Home >> HR Issues >> Termination of employment / notice days / severance pay
Termination of employment
Under what circumstances can an employer terminate an employee?
How many days in advance should the employer notify the worker?
How to calculate severance pay in Taiwan?
According to the Labor Standards Law, the employer can terminate the labor contract when the employer "cannot continue to hire the worker" or "the worker causes harm to the employer". As long as the statutory reasons for termination described below are met, and the statutory termination procedures are followed, it is a legal dismissal; if there is no legal reason for termination but the employee is dismissed without authorization, it is an illegal dismissal.
1. Situations in Which an Employer Is Allowed to Dismiss an Employee even by advance notice to employees
Employers can dismiss workers without advance notice for the following reasons:
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Business Suspension or Transfer:
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If the employer's business is suspended or transferred to another company (e.g., through acquisition).
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Operating Losses or Contraction:
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If the employer's business faces significant operating losses or contraction (e.g., continuous losses over several years).
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Force Majeure:
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If a natural disaster or other uncontrollable event (e.g., a major earthquake or flood) causes the business to suspend operations for more than one month.
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Business Restructuring:
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If the nature of the business changes, requiring a reduction in labor, and no suitable positions are available for reassignment.
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Incompetence:
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If the employee is no longer competent for the job or unable to perform the required duties effectively.
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- Article 11 of the Labor Standards Law
(2) When an employer terminates a labor contract pursuant to the above reasons that can attribute to the employer, the employer should give the below minimum period of advance notice:
-According to Article 16 of the Labor Standards Law,
Termination notice
10 days notice in advance where an employee has worked continuously for 3 ~12 months.
20 days notice in advance where an employee has worked continuously for 1 ~3 years.
30 days notice in advance where an employee has worked continuously for more than 3 years.
In addition to the notice period, the employer is also required to pay severance pay when the dismissal can be attributed to the employer.
Severance pay
According to article 17 of the LSA, an employer is liable to pay severance pay after the employment contract has been terminated:
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Severance pay is equal to one month’s average wage for each year of service;
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If an employee has worked for less than a year, the severance pay is calculated proportionally;
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If an employee has worked for less than one month, the work time is considered as one month.
Example: Worker A has an average wage of NTD 30,000 and has worked for 3 years 6 months and 15 days. The severance pay is about NTD 53, 125.
Formula: 30,000($)×1/2×{3+〔（6＋15/30）÷ 12 〕}＝30,000 × (1+37/48) ≒53,124.9
Online Severance Pay Calculator
Provided by Ministry of Labor
2. In any of the following situations, an employer may terminate a labor contract without advance notice
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Misrepresentation During Contract Signing:
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If the employee misrepresented any information when signing the labor contract, misleading the employer and causing damage.
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Violence or Insult Toward Employer or Colleagues:
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If the employee commits violence or seriously insults the employer, the employer’s family, an agent of the employer, or a co-worker.
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Imprisonment:
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If the employee is sentenced to temporary imprisonment in a final judgment without suspension or the option to pay a fine.
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Serious Breach of Contract or Work Rules:
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If the employee seriously breaches the labor contract or violates work rules.
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Damage to Employer's Property or Disclosure of Confidential Information:
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If the employee deliberately damages or misuses the employer’s property, machinery, or tools, or discloses confidential or technical information, causing harm to the employer.
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Unjustified Absence:
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If the employee, without valid reason, is absent from work for three consecutive days or a total of six days in a month.
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If the dismissal is based on the above 1~ 6, no prior notice is required and no severance pay is required.