Navigating Employee Termination and Notice Periods in Taiwan

As an international HR expert, understanding Taiwan's employment termination regulations is crucial for compliance. The Labor Standards Act governs dismissal procedures, notice periods, and severance pay, ensuring fair treatment for both employers and employees.

Notice Period Requirements in Taiwan

Taiwanese law mandates specific notice periods based on an employee's length of service. During this period, employees are entitled to up to two paid days per week to seek new employment. Alternatively, employers may opt to provide payment in lieu of notice. The statutory notice periods are:

10 days’ notice for employees with 3 months to 1 year of service
20 days’ notice for those with 1 to 3 years of service
30 days’ notice for employees with over 3 years of service

Note that collective agreements or individual contracts may modify these requirements.

Severance Pay Regulations

Employers must generally provide severance pay upon termination, except in specific circumstances such as employee fraud, workplace violence, or unauthorized absences. Additional exceptions include business closures, force majeure events, or redundancy situations.

Severance calculations follow two systems:

Labor Standards System: One month’s salary per year of service, prorated for partial years
Pension System: (Annual salary ÷ 12) × 0.5 × years of service, capped at six months’ salary

Non-compliance may result in legal disputes and penalties.

Termination Process Overview

Establish valid termination grounds (e.g., performance issues, misconduct)
Review employment contract terms
Issue written dismissal notice with effective date
Provide statutory notice or payment in lieu
Calculate and pay severance if applicable
Finalize payroll, benefits, and documentation

Unemployment Benefits Eligibility

Non-voluntarily terminated employees may claim unemployment benefits through Taiwan’s Employment Insurance Program. Requirements include:

Involuntary separation (e.g., redundancy, business closure)
Minimum 1 year of insurance coverage in the past 3 years
Registration with a public employment service within 14 days of termination

For example, a manufacturing company restructuring its operations must ensure terminated staff receive proper severance and assistance accessing unemployment benefits.

Best Practices for Compliance

Companies like SailGlobal assist multinational employers in aligning termination practices with local laws. Proactive measures include:

Documenting performance issues consistently
Conducting exit interviews to mitigate disputes
Consulting legal experts before mass layoffs

By adhering to these guidelines, employers can minimize risks while maintaining ethical standards.

Taiwan Termination Laws: Notice Periods, Severance Pay & Compliance Guide