Complete Guide to Employee Benefits and Compensation in Taiwan

Employee benefits are the additional perks that an employer offers its employees in addition to their standard salaries. It includes healthcare benefits, national pension plans, and maternity leaves. 

Carefully planning employee benefits in Taiwan helps you grow your company globally. A practical benefits and compensation package in Taiwan helps you enhance workplace morale, build a reputation as a reliable employer, and encourage more job seekers to fill vacancies in your company.

The employees in the country receive mandatory protections as decided in their employment contracts. These benefits cover statutory minimum wage, annual leave, paternity leave, maternity leave, leave entitlements, medical benefits, sickness benefits, disability benefits, death in service, working hour limits, overtime compensation, and more. These statutory minimum benefits must be included when outlining a Taiwan benefit management plan.

Employers must conduct detailed market research before choosing employee benefits in Taiwan. The following guide simplifies the setup process of compensation and benefits policy in Taiwan and keeps the employees motivated to work more efficiently.

Compensation Laws in Taiwan

The Labour law in Taiwan is chiefly controlled by the Labour Standards Act of 1984 (modified as of 2020). This Act administers the terms and conditions of employment like wages, working hours, overtime, rest periods, holidays, leave, and employment termination.

Various compensation laws in Taiwan administer employee benefits in the country. These include

1. Labor Standard Act, Article 24(3), 32 and 32-1 governs the compensatory time-off benefits companies provide to their employees in exchange for overtime payment.
2. As per Gender Equality in Employment Art. 15, 18, and 19, female employees are entitled to maternity leave and breastfeeding breaks.
3. Article 4-7 of the Regulations of Leave Taking of Workers allows employees to take sick leaves in case of medical emergencies.   

How to Design an Employee Benefits Program for Employees in Taiwan

Before designing a compensation package in Taiwan, it is imperative to note several considerations. They are discussed below.

Step 1: Define your business goals and budget

Before creating the compensation policy, you should define the objectives that you expect from the compensation structure in Taiwan. You must assess employment contracts or collective bargaining agreements to ascertain that their contractual terms are fulfilled. You must also evaluate your budget to invest in employee benefits. Moreover, you must consider your company’s commercial climate, size, and the economic sector it operates before drafting the benefits policy in Taiwan.

The policy’s goals should cover the maximum budget to handle all benefits effectively. The following criteria help you to set goals:

• Following all the applicable labor laws
• Motivating the workforce and bringing new talent
• Maintaining the budget when designing a plan for employee benefits in Taiwan

Step 2: Figure out employee requirements

You should cover the best possible benefits in the employee benefits plan. Make sure you have a fixed budget you intend to invest in in the compensation policy.

Your drafted compensation and benefits policy in South Korea verifies that you support your employees. The employees may find certain benefits more valuable than others. You can interview employees or send questionnaires to determine their needs and expectations. This way, employees can confidently express their needs and expectations.

You can conduct thorough research to figure out the prevailing industry standards. Moreover, it informs you about what your competitors offer their employees. The corresponding findings help you to effectively create a comprehensive compensation and benefits policy in Taiwan that fulfills the industry standards and the market competition. The internal survey helps you quickly identify the areas of improvement and suggest necessary changes to implement the compensation and benefits policy in Taiwan. Depending on the survey’s outcomes, you can exclude unnecessary benefits and decrease company costs.

Market research also helps you determine the best possible benefits for your employees. Remember to offer the optimal benefits considering the available resources and budget.

Step 3: Prepare your benefits plan

After thoroughly discerning the employees’ requirements and expectations, you must perform a gap analysis to observe the existing scenario of the benefits plan. Design a flexible framework for worker’s compensation in Taiwan that helps you to maintain the volatile nature of business. Moreover, the flexible benefits structure helps the employees choose appropriate benefits and helps the employer to explore the maximum possible benefits from them.

When creating a benefits plan for worker’s compensation in Taiwan, you must include employee contributions, administrative costs, and outsourcing requirements.

Step 4: Convey the benefits to the stakeholders and obtain feedback

In this step, you need to express the advantages of your formulated benefits plan to all the stakeholders and employees. The recommended approach is to share the plan’s draft with them and obtain their feedback. If there is any valuable feedback, you should incorporate it into your created compensation policy.

The feedback may specify that a particular benefit is superfluous. In that case, you can make the required changes to make it worthy or completely exclude it.

Step 5: Plan analysis

The volatile nature of the business environment can influence the employee’s benefit plan, and businesses may encounter various changes. So, you must regularly assess the overall compensation structure in Taiwan. Subsequently, it helps you to discern the benefits plan’s feasibility and efficiency.

Before executing the employee compensation policy in Taiwan, you must check for any possible errors. It implies that you must thoroughly assess all the benefit plan elements and execute them. Consider a few precise metrics to understand the benefit plan’s effectiveness for the employees, which are as follows:

• Determining the employee’s base pay
• Ensure that the benefits provided fulfill the employees’ individual and family needs.
• Incorporate relocation expenses
• Check that it provides more lucrative benefits packages compared to other companies in your industry
• To ensure that the benefit plan supports learning and development 

Types of Guaranteed Benefits in Taiwan

Employers provide various types of employee benefits in Taiwan to their employees. As discussed below, many of these benefits are mandatory:

Minimum wage

• The minimum monthly wage in Taiwan is 26,400 TWD. The minimum hourly wage is 168 TWD.

Working hours and overtime

• The maximum number of working hours in Taiwan is 8 hours/day (40 hours/week). 
• The maximum number of working hours (including overtime) is 12 hours/day.
• Having two days off every seven days in the country is obligatory. One is compulsory, and the other is flexible, i.e., employees can work and get paid overtime.
• Female employees in Taiwan are prohibited from working between 10 p.m. and 6 a.m. except when the labor-management committee or the labor union approves. Those female employees who are pregnant or breastfeeding are not allowed for night work (according to Labor Standards Act, §30).
• The overtime compensation offered to the employees is as below:

1. 1. For the first 2 hours of overtime: 134% of the regular pay
   2. Following 2 hours of overtime: 167% of the regular pay

Paid leaves

The employment contract decides on paid leave in Taiwan based on the years of service.

Public holidays

Regardless of the industry and sector, public holidays in Taiwan apply to all employees. The employees in Taiwan receive 15 public holidays per year. They are listed below:

Note: An employee working on a public holiday shall be paid 200% of the regular wages. This rule is also applied when the employees work with the approval of the labor union to fulfill seasonal needs.

Sick leaves

• For employees who are sick but don’t need hospitalization, the sick leave entitlement is 30 days per year which is paid at 50% of the regular pay. 
• When the employee is hospitalized, the sick leave entitlement is 12 months.

Maternity leaves

• Those female employees with at least six months of employment are entitled to 8 weeks of paid maternity leave (at 100% of the regular pay) in Taiwan. 
• If the employment duration is less than six months, the maternity pay is 50% of the regular pay. 
• Pregnant female employees are entitled to 5 days leave before birth for medical check-ups.  

Paternity leaves

• The employees in Taiwan receive five days of paid paternity leave (at 100% of the regular pay). 

Other Leave

• An employee receives up to 8 days of leave in case of the death of an immediate family member.
• National Service is a paid official leave provided to an employee serving their National Service duty.

Employee Benefits for Expatriates

Foreign employees in Taiwan can obtain the same benefits as local employees. The ex-pats are eligible for health insurance and travel allowances for their employment duration in Taiwan. Most employers offer these benefits. The ex-pats are also eligible for benefits of relocation and travel and benefits related to lodging expenses.

How are Employee Benefits Taxed in Taiwan?

The employee’s compensation package in Taiwan is a significant part of these benefits. Any compensation received or to be received (either capital or revenue) regarding the termination or amendment of the terms and conditions of any contract in context to its business will be taxable as business income. The range of Taiwan’s income tax rate is 5 to 40%.

In addition to personal income, the employees should also make social contributions. The employer makes these deductions from the employee’s salary. They are directly financed by the institutions controlling the social security accounts.

All types of remuneration, including benefits, are usually considered taxable income. But there are certain exceptions. Specifically, meal allowances up to TWD 2,400 per month are not taxable. Moreover, if an employer directly offers an employee housing, this provision is nontaxable.

Restrictions for Taiwan Benefits and Compensation

Most benefits offered to employees in Taiwan are taxable. Therefore, you must be familiar with the monetary value of these benefits to calculate the tax amount the employer has to pay. Moreover, an employer must ensure that all tax payments are made timely and to the respective authorities.

Ensure your business is incorporated in Taiwan and legally operated in the country before creating a benefits plan for your employees. Besides, companies should pay employees minimum wages based on their sectors. The benefits and compensation package in Taiwan must comply with all the labor laws controlled by the government.

The majority of restrictions for benefits and compensation in Taiwan are determined by trade unions or collective bargaining agreements (CBAs). Although Trade Unions aren’t common in the country, you must carefully check to decide whether your employees or industry are covered under them.

Supplemental Benefits for Employees in Taiwan

The employees in Taiwan receive some additional benefits during their employment. They are discussed below.

13th-month pay

It is customary to pay a 13th-month salary in Taiwan. Generally, it is paid during the Lunar New Year.

Other supplemental benefits:

• Life, accident, and business travel insurance
• Leaving service benefits (LSB)
• Housing allowances
• Private health insurance
• Meal allowances
• Festival bonuses
• Transportation stipends
• Holiday bonuses
• Gym memberships
• Company phones
• Extended medical benefits to the employees’ spouses and dependent children

How Multiplier Can Help with Benefits Management in Taiwan

It is not straightforward to establish a business abroad and hire skilled employees. To streamline this process, employers must conform to local laws and regulations before developing employment contracts and deciding employee benefits. You can simplify the process by contacting a global EOR platform like Multiplier.

Multiplier supports in compliance with Taiwan labor rules. Moreover, we help you with hiring a talented workforce. Our skilled staff can assist you in effectively managing the workforce without creating a subsidiary in the country. Hence, you can lower your employment expenditures and explore new markets.