In Taiwan the conditions of employment are governed by the Labor Standards Act (LSA), which provides for the terms and conditions of labor contracts, compensation, working hours etc. The rules in Taiwan are not as stringent as many other countries and can be regarded as quite flexible. Despite the flexibility in regulation it is important for employers and employees to sign labor contracts which outline the obligations, rights, remuneration and terms of the employment relationship between the parties. Any terms and conditions not covered by the LSA are governed by the Taiwan Civil Code.
In Taiwan the law does recognize oral employment agreements, however written agreements that contain express terms and condition are preferred in practice. The employment contract is used to attribute rights, responsibilities and working conditions between an employer and employee. In Taiwan the employment contract is generally where the terms of an employee’s probation period are laid out. The contract also includes the details of the position, the wages and benefits, overtime conditions, as well as the requirements and grounds for termination.
The employment contract cannot set out terms that contravene the rights of an employee or terms in contravention of the LSA or the Taiwan Civil Code. If an agreement fails to specify the necessary terms and conditions, the missing terms will be provided by the relevant statutes.
The LSA does not expressly provide for a probation period but rather a trial period. The trial period in Taiwan is not as strict as other countries who specifically outline a probation period, as such the LSA provides a great deal of flexibility to employers and employees. The LSA provides no maximum period that a trial period may run and instead provides the employer and employee room to negotiate the period. The general practice for most companies is a 3-month trial period in which an employee is effectively under probation.
As there are no express provisions relating to probation periods in Taiwan, termination during a probation period is permitted. Generally, companies state the terms of any agreed trial period in the employment contracts. Therefore, the way in which termination periods in contracts are dealt with is determined by the provisions the employer and employee had agreed upon. The general practice is that if an employee is terminated during a probation/trial period, the employee is entitled to severance pay. The severance payment is usually around half of the employee’s monthly salary while the notice period for a dismissal during the trial period is usually between 10 and 30 days.
For a comprehensive look at employee terminations in Taiwan, check out our Employee Termination Taiwan page
INS Global has been established since 2006 with the main purpose of helping companies do business abroad, in a simple and efficient manner. Our experts have helped more than 200 enterprises do business across the world. If your company is looking to expand into Taiwan, you may want to consider our Taiwan employment solutions or company incorporation, if you wish to set up an entity. Our experts are well equipped with the knowledge of all procedures and regulations that your business needs, in order to begin operations in Taiwan.