How to Use An Employer of Record in
Taiwan

Taiwan's Labor Standards Act (勞動基準法) requires foreign employers to register with the Bureau of Labor Insurance within seven days of hiring, maintain separate accounting for severance reserve funds, and comply with complex working time restrictions including a maximum 12-hour shift limit that applies even to managerial roles. An Employer of Record becomes your legal employer in Taiwan, giving you compliant payroll, statutory registrations, and the ability to hire without incorporating a local branch or subsidiary. You avoid the risk of unregistered employment penalties, which can reach TWD 90,000 per violation, and eliminate the need to navigate collective labor agreements that override statutory minimums in over 40 industry sectors.

What Is an Employer of Record in Taiwan?

An Employer of Record in Taiwan is a third-party organisation that becomes the legal employer of your staff under Taiwanese law, handling all statutory obligations, payroll processing, and compliance with the Ministry of Labor while you retain full operational control over day-to-day work, performance management, and business strategy. The EOR holds the employment contract, appears as the employer on all government filings, and assumes responsibility for meeting every requirement under Taiwan's employment legislation.

Under the Labor Standards Act and its implementing regulations, employment in Taiwan triggers mandatory obligations including registration with the Bureau of Labor Insurance, enrollment in the National Health Insurance program within three days of hire, written employment contracts containing at least seven statutory clauses, and adherence to collective labor agreements where they exist in your employee's industry or occupation. Fixed-term contracts are permitted only for specific project-based, seasonal, or temporary work as defined in Article 9 of the Act, and probation periods cannot exceed the duration specified in applicable collective agreements or, absent such agreements, what is customary in the industry. The EOR ensures every contract, registration, and payroll cycle meets these requirements without requiring you to build expertise in Taiwan employment law.

You retain complete control over your employee's role, responsibilities, performance targets, daily tasks, and work output. The EOR owns the legal employment relationship, meaning they issue the payslip, sign the employment contract, handle tax withholding and remittance to the National Taxation Bureau, manage termination procedures including severance calculations under the Labor Standards Act, and respond to any inspections or inquiries from Taiwan's labor authorities.

How Does an Employer of Record Work in Taiwan?

When you hire through an Employer of Record in Taiwan, the process begins with defining the role and employment terms, then moves through compliance checks, contract preparation, government registrations, payroll setup, ongoing administration, and eventually termination if the relationship ends. Each step involves specific legal obligations under Taiwan law, and the EOR handles every filing, calculation, and deadline so you can focus on managing your team rather than navigating Taiwanese labor regulations.

Step 1: Define Role and Terms

You provide the job title, responsibilities, base salary, benefits, and any variable compensation. The EOR reviews whether a collective labor agreement applies to the role based on industry and occupation. If your employee falls under a collective agreement, those terms override statutory minimums for salary, leave, working hours, and other conditions. The EOR confirms the proposed terms meet both the Labor Standards Act and any applicable collective agreement before proceeding.

Step 2: EOR Compliance Check

The EOR verifies that the salary meets Taiwan's statutory monthly minimum wage, which is TWD 27,470 in 2026 as set by the Ministry of Labor. They confirm working time arrangements comply with the 40-hour standard workweek and maximum 12-hour daily limit under Article 30 and 32 of the Labor Standards Act. They also assess whether the role qualifies for any exemptions from overtime pay or rest day rules, which apply only to managerial staff meeting strict criteria defined in the Act's Article 84-1. Any misclassification exposes the employer to back pay claims and penalties from labor inspectors.

Step 3: Employment Contract Preparation

The EOR drafts a written employment contract in Mandarin Chinese, as required by the Ministry of Labor for enforceability and labor inspection compliance. The contract must include the names and addresses of both parties, the place of work, job duties, commencement date, working hours and rest periods, wage structure and payment date, termination and severance provisions, and the applicable collective agreement if one exists, as mandated by Article 7 of the Labor Standards Act. Fixed-term contracts are permitted only for project-based, seasonal, short-term substitution, or temporary work under Article 9, and any fixed-term contract exceeding its lawful purpose converts automatically to indefinite-term employment. The probation period cannot exceed the shorter of what the applicable collective agreement allows or what is customary in the industry, with three months being the most common maximum.

Step 4: Government Registrations

The EOR registers your employee with the Bureau of Labor Insurance and the National Health Insurance Administration within the statutory deadlines: seven days for labor insurance and three days for health insurance from the employment start date. Late registration results in the employer bearing the cost of any claims that would have been covered by the insurance programs during the unregistered period, plus administrative fines. The EOR also enrolls the employee in the Labor Pension scheme, which requires a minimum 6% monthly contribution from the employer deposited into an individual account managed by the Bureau of Labor Funds. These registrations must be completed before payroll can legally commence.

Step 5: Payroll in Local Currency

Payroll in Taiwan runs monthly, with wages paid in New Taiwan Dollars (TWD) on or before the agreed payment date specified in the employment contract. The EOR calculates and withholds income tax using the graduated rates published by the National Taxation Bureau, which range from 5% to 40% in 2026, and applies any applicable deductions or allowances. They remit withheld income tax to the National Taxation Bureau monthly or quarterly depending on the amount, and they deduct the employee's 20% share of National Health Insurance premiums (the employer pays 60%, the government pays 20%) and the employee's voluntary labor pension contribution if elected. Payslips are issued in Mandarin and include itemised deductions as required by labor inspection standards.

Step 6: Ongoing Compliance Management

The EOR handles recurring statutory filings including monthly remittance of withheld income tax to the National Taxation Bureau, quarterly labor insurance premium reconciliations with the Bureau of Labor Insurance, annual adjustment of National Health Insurance premiums based on updated salary data, and annual income tax withholding statements (Form IR-56) issued to employees and filed with the tax authority. They maintain the severance reserve fund if the employee is covered under the old severance system rather than the Labor Pension scheme, depositing at least 2% of monthly wages into a dedicated account audited annually by labor inspectors. They monitor changes to the Labor Standards Act, collective agreements, minimum wage orders, and Ministry of Labor interpretations, updating contracts, payroll calculations, and policies as required. They also manage statutory leave entitlements including seven days of annual leave after the first year (increasing to 30 days after 25 years), 14 national holidays, and special leave for family care, menstruation, paternity, and other purposes defined in the Act and the Gender Equality in Employment Act.

Step 7: Termination and Severance

Termination in Taiwan must comply with the notice periods and just cause requirements in Chapter 5 of the Labor Standards Act. Under Article 16, the employer must provide notice of at least 10 days if employment is under three months, 20 days if between three months and one year, and 30 days if over one year, or pay wages in lieu of notice. Termination without cause requires payment of statutory severance under Article 17, calculated as one-half month of average wages for each completed year of service for employees under the Labor Pension scheme, or under the old system's formula of one month per year for the first 15 years and two months per year thereafter. Collective agreements may specify longer notice periods or higher severance payments, which override statutory minimums. The EOR calculates the final payment including unused annual leave conversion at full wage replacement, prepares the termination documentation, files the cessation notice with the Bureau of Labor Insurance and National Health Insurance Administration, and ensures compliance with any procedural requirements such as consultation obligations under collective agreements or internal work rules filed with the local labor department.

Employment Laws and Compliance an Employer of Record Handles in Taiwan

When you hire through an Employer of Record in Taiwan, they assume full responsibility for compliance with every applicable employment law, tax regulation, and social security requirement. This removes the need for you to build an in-country HR function, hire local legal advisors, or track legislative changes from the Ministry of Labor and National Taxation Bureau.

• Employment Contracts and Work Rules: The Labor Standards Act Article 7 requires written contracts containing at least seven mandatory clauses: party names and addresses, workplace, duties, start date, working hours and rest, wage structure and payment date, and termination and severance terms. Companies employing 30 or more workers must also file work rules with the local labor department under Article 70, and these rules become binding contract terms. The EOR drafts compliant contracts in Mandarin, files work rules where required, and updates both documents when laws or collective agreements change.
• Income Tax Withholding and Filing: Employers must withhold income tax monthly using the graduated rate table published by the National Taxation Bureau, which ranges from 5% to 40% in 2026 for residents and a flat 18% for non-residents in their first 183 days. The EOR calculates withholding, remits tax to the National Taxation Bureau by the tenth of the following month, and issues annual withholding statements (similar to Form IR-56) to employees and the tax authority by January 31. Failure to withhold or remit results in the employer being held liable for the unpaid tax plus penalties of up to 10% of the amount due.
• Labor and Health Insurance: Article 6 of the Labor Insurance Act and Article 15 of the National Health Insurance Act require employers to register employees within seven days and three days respectively of their start date. The employer pays approximately 70% of labor insurance premiums and 60% of National Health Insurance premiums, with the employee paying the remainder. The EOR handles registration, premium calculation using the insured salary table published by the Bureau of Labor Insurance, monthly remittance, and annual reconciliation. Unregistered employees trigger employer liability for any insurance claims plus administrative fines up to TWD 100,000.
• Labor Pension Contributions: The Labor Pension Act requires employers to contribute at least 6% of monthly wages into individual pension accounts managed by the Bureau of Labor Funds. Employees may voluntarily contribute up to another 6% from pre-tax salary. The EOR calculates contributions using the statutory salary brackets, remits them monthly, and issues annual statements to employees. Late or incomplete contributions result in penalties and interest charges calculated from the due date.
• Statutory Leave Entitlements: The Labor Standards Act grants employees seven days of paid annual leave after one year of service, increasing incrementally to 30 days after 25 years. Employees also receive 14 national holidays annually, 30 days of paid ordinary sick leave per year (with half pay after the first 30 days in aggregate across employers), and special leave including five days for paternity, five days for family care, and menstruation leave of one day per month as needed under the Gender Equality in Employment Act. The EOR tracks accruals, approves leave in accordance with statutory and collective agreement terms, and converts unused annual leave to cash at termination using the full daily wage rate.
• Working Time and Overtime: Article 30 limits regular working hours to eight per day and 40 per week, with at least one rest day and one regular day off every seven days. Overtime requires employee consent under Article 32, is capped at 46 hours per month and 138 hours per quarter, and must be compensated at 1.34x for the first two hours and 1.67x for subsequent hours. Work on rest days requires higher premiums under the 2016 amendments. The EOR configures payroll systems to track hours, calculate premiums correctly, and enforce the statutory caps, preventing violations that can trigger labor inspection fines up to TWD 100,000.
• Severance and Termination Procedures: Termination without cause requires notice under Article 16 (10 to 30 days depending on tenure) and severance under Article 17 (half a month per year under the new pension scheme, one month per year for the first 15 years under the old system). Termination for cause is limited to the grounds in Article 11 (business necessity, force majeure, poor performance after warning) and Article 12 (gross misconduct, criminal conviction, material breach). The EOR calculates severance using average wages from the prior six months, provides statutory notice or payment in lieu, prepares termination documents, and files cessation reports with insurance authorities. They also manage the severance reserve fund for employees under the old system, depositing at least 2% of monthly payroll into a dedicated account.
• Collective Labor Agreements: Taiwan has over 40 industry and enterprise-level collective agreements negotiated between labor unions and employers or employer associations. Where applicable, these agreements override statutory minimums on wages, leave, working hours, severance, and termination procedures. The EOR identifies whether an employee's role falls under a collective agreement based on industry classification codes maintained by the Ministry of Labor, applies the agreement's terms in the employment contract, and monitors amendments to the agreement through official registries.
• Workplace Safety and Occupational Health: The Occupational Safety and Health Act requires employers to implement safety management systems, conduct hazard assessments, provide protective equipment, and report occupational accidents to the Occupational Safety and Health Administration within eight hours if they result in death or hospitalisation of three or more workers. Companies with 100 or more employees must appoint certified safety officers. The EOR manages reporting obligations, maintains records of work-related incidents, and coordinates with your operational team to ensure workplace safety protocols meet legal standards.
• Personal Data Protection: Taiwan's Personal Data Protection Act imposes strict obligations on employers who collect, process, or store employee personal data. Employers must obtain written consent, limit use to the stated purpose, implement security measures, and notify employees and the National Development Council within 72 hours of any data breach. The EOR acts as the data controller for employment-related personal data, maintains processing records, executes data protection agreements, and ensures all payroll and HR systems meet the Act's security standards. Violations can result in fines up to TWD 200,000 per incident and civil liability for damages.

How Much Does It Cost to Use an Employer of Record in Taiwan?

The total cost of hiring through an Employer of Record in Taiwan has two components: the statutory on-costs mandated by Taiwanese law, which apply regardless of how you hire, and the EOR service fee. Statutory costs include employer social security contributions, labor and health insurance premiums, and pension contributions, all calculated as percentages of gross salary and set by the Bureau of Labor Insurance, National Health Insurance Administration, and Bureau of Labor Funds. Playroll's service fee starts from USD 399 per employee per month and is billed separately from payroll, covering all compliance management, government filings, contract preparation, and ongoing employment administration.

Let's look at an example that includes a base salary and the EOR service fee.

The EOR service fee covers employment contract drafting and updates, registration with the Bureau of Labor Insurance and National Health Insurance Administration, monthly payroll processing and tax withholding, remittance of all statutory contributions and withheld income tax, compliance monitoring for changes to the Labor Standards Act and collective agreements, annual leave tracking and unused leave conversion, termination processing including severance calculation, and response to labor inspections or employee inquiries on your behalf.

Employer of Record vs Setting Up an Entity in Taiwan

The decision between using an Employer of Record and setting up your own entity in Taiwan depends on your hiring volume, timeline, and long-term commitment. Most foreign companies establish a Taiwan Branch Office, which requires registration with the Ministry of Economic Affairs, appointment of a local representative, minimum capitalisation of TWD 500,000, and filing of audited financial statements from the parent company. The entire process takes three to four months from document preparation to final approval, with setup costs ranging from USD 8,000 to USD 15,000 for legal and registration fees.

For companies hiring fewer than 10 employees in Taiwan, an Employer of Record is almost always the faster and more cost-effective route.

Playroll also supports your long-term growth through its Global Entity Setup product, which handles entity incorporation and local payroll in 120+ countries, so you can transition from EOR to your own compliant entity in Taiwan when the time is right, without switching providers or rebuilding your HR processes.

How Long Does It Take to Hire Someone in Taiwan Through an Employer of Record?

The total timeline to hire an employee in Taiwan through an Employer of Record is typically 7 to 12 business days from the point you finalise the offer to the employee's first day on payroll.

• Stage 1: Contract preparation and signing (2 to 3 business days): The EOR drafts a compliant employment contract in Mandarin containing the seven mandatory clauses under Article 7 of the Labor Standards Act, applies any relevant collective agreement terms, and sends it to you for review. Once you approve, the contract is sent to the employee for signature. The timeline depends on how quickly you review and the employee signs, but typically takes two to three business days.
• Stage 2: Government registrations (3 to 5 business days): After the contract is signed, the EOR registers the employee with the Bureau of Labor Insurance within the statutory seven-day deadline and the National Health Insurance Administration within three days of the employment start date. They also enroll the employee in the Labor Pension scheme with the Bureau of Labor Funds. These registrations must be completed before the employee can legally commence work. Missing the registration deadlines exposes the employer to liability for any insurance claims during the unregistered period and administrative fines.
• Stage 3: Payroll configuration and first cycle (2 to 3 business days): The EOR configures the employee's payroll profile in their system, setting up the gross salary, income tax withholding based on the graduated rates published by the National Taxation Bureau, deductions for labor insurance, National Health Insurance, and pension contributions, and any allowances or benefits. Taiwan payroll runs monthly, and the first payslip is issued after the end of the employee's first pay period, with wages paid on or before the agreed payment date specified in the contract.
• Stage 4: Taiwan-specific requirements (1 to 2 business days): If the employee is subject to a collective labor agreement, the EOR must verify the agreement's terms with the relevant labor union or employer association, which can add one to two business days. If your company will employ 30 or more workers through the EOR or other means in Taiwan, work rules must be filed with the local labor department, adding another two to three business days. These steps can often run in parallel with contract signing and government registrations.

Timelines can extend if the employee requests contract amendments, if collective agreement verification requires outreach to a labor union, if public holidays fall during the registration period (Taiwan observes 14 national holidays annually), or if the employee lacks a Taiwan Alien Resident Certificate or work permit and those must be obtained first. Employees who are not Taiwan nationals require a work permit from the Ministry of Labor and a residence visa from the Bureau of Consular Affairs, processes that can take four to eight weeks depending on visa category and home country.

Compare this to setting up your own Taiwan Branch Office, which takes three to four months and requires Ministry of Economic Affairs approval, notarised and legalised documents from your home country, appointment of a local representative, and CPA certification of your parent company's financials before you can even begin hiring.

How Playroll's Employer of Record Process Works in Taiwan

Playroll manages every step of compliant hiring in Taiwan so you can onboard your team quickly without navigating Taiwanese labor law or setting up a local entity.

1. You define who you want to hire and the employment terms

You provide the role details, salary, benefits, and start date. Playroll reviews the terms to ensure they meet Taiwan's statutory minimum wage of TWD 27,470 per month, comply with working time limits under the Labor Standards Act, and align with any applicable collective labor agreement covering the employee's industry or occupation.

2. Playroll prepares a compliant employment contract under Taiwan law

Playroll drafts a written contract in Mandarin Chinese containing the seven mandatory clauses required by Article 7 of the Labor Standards Act, including names and addresses, workplace, duties, start date, working hours and rest periods, wage structure and payment date, and termination and severance provisions. The contract reflects the applicable collective agreement terms if one exists.

3. Your employee is onboarded and payroll goes live

After contract signature, Playroll registers the employee with the Bureau of Labor Insurance, National Health Insurance Administration, and Bureau of Labor Funds within the statutory deadlines. Onboarding typically completes within 7 to 12 business days. Payroll runs monthly in New Taiwan Dollars, with all statutory deductions calculated and remitted to the National Taxation Bureau and insurance authorities.

4. Playroll manages ongoing compliance and grows with you

Playroll handles monthly payroll, tax remittance, quarterly insurance reconciliations, annual leave tracking, and compliance with changes to Taiwan employment law and collective agreements. If your hiring in Taiwan grows to where a local entity makes sense, Playroll can handle that too through global entity setup, allowing you to transition from EOR to your own Taiwan Branch Office without changing providers.