Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.
For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.
For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.
As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.
While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.
A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.
Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Taiwan can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Taiwan, you have to:
If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Taiwan.
An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.
An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.
Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.
At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.
Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:
Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.
Paying employees in Taiwan is not the same as paying workers in your own country. Employees have to be paid using Taiwan's employment and payroll standards.
This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.
Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.
After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:
One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.
Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.
Outside of EORs acting as the full admin employer, many also provide remote payroll.
For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.
We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.
Employees in Taiwan work 8 hours a day with a week being 40 hours, not including overtime. It is also mandatory in Taiwan to have two days off every 7 days. One of these days off is compulsory, the other flexible. The difference between these two resting days is that the employee cannot agree to work on the mandatory day off while working on a flexible day is negotiable. Overtime is paid to employees working on flexible days.
Working hours cannot exceed 12 in one day, and maximum overtime is 46 hours monthly.
Overtime is paid at 134% for the 8th-10th hours (daily) and 167% for the 10th-12th hours (daily).
Overtime on “flex-day” is paid at 134% for the first two hours, 167% for 2nd-8th hours, and 267% for 8th-12th hours.
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The minimum wage is NT$24,000 monthly/NT$160 hourly.
Salaries are paid monthly for work done between the 1st and last day of the month. Payday is typically on the 15th of every month.
Not required by law but is customary.
Annual leave is dependent on the years an employee has worked for the employee.
Unused vacation days carry over to the following year. If those vacation days aren’t used within two years, they will be converted into salary. Payment is based on the employee’s first-year wage.
If unused annual leave is not carried over to the next year, or if the employee’s contract is terminated by the end of the first year, regular daily wages are paid for unused days off. Employees’ daily salary is the amount they received for working regular hours a day before their employment contract was terminated or their service ended. In cases when employees are paid monthly, their daily salary is also based on their regular working hours and wages paid to them one month prior to the end of their employment or the termination of their contract. Yet for them, this amount should be divided by 30. The amount substituted for the annual leave is paid on the employees’ regular payday or within 30 days of the end of their working year. If employees are fired, employers should give them their annual leave payment without delay.
12 public holidays.
Employees are entitled to two types of sick leave in Taiwan. They can have 30 days of ordinary sick leave a year, provided they are not hospitalized, or they can also take one year of sick leave within a two-year period when they are hospitalized. What is noteworthy is that the combined number of sick days taken within two years cannot exceed one year.
If employees are sick up to 30 days within one year, they receive half-pay. When employees’ sickness is covered by labor insurance, but its compensation is less than half of the employee’s salary, the employer pays the difference. When the employee is left injured or disabled due to an accident at work, the employer pays him or her full salary. If after two years, the employee does not recover from the occupational injury or disability and is diagnosed as unable to fulfill former tasks, the employer pays him or her one amount of 40 months’ average wage, provided the employee does not qualify for disability. When employees use up all their sick days, they can ask for additional unpaid days off. The maximum of unpaid sick leave the employee can take is 1 year. There is also a possibility to recover sick pay from the state.
Expecting mothers are entitled to 8 weeks leave paid at 100% rate unless the employee has worked at the company for less than 6 months, in which case the rate is lowered to 50%.
New fathers are entitled to 5 days of fully paid paternity leave.
Employees can take parental leave if they have worked for the same employer for at least 6 months. The employee’s child should be younger than 3 years of age and his or her spouse should be employed. Paternal leave is unpaid.
Taiwanese employment law is regulated by the Labor and Standards Act (LSA). Both employer and employee are required to provide valid reasoning for termination as well as a notice period.
Employers are expected to give notice to their employees based on the length of their employment:
For employees who began employment pre-2005 under the Labour Standards Act, severance pay will be equal to one month of average wages for each year of service, provided the employee was employed by the same employer continuously. Those employees who have worked for less than a year receive severance pay in proportion to the months of service.
For employees who began employment post-2005 under the Labour Pension Act, severance pay is also calculated based on one month’s average wages for each year of service. However, the amount that the company pays for each year of service is equal to 50 percent of the employee’s average monthly salary.
Taiwan does not have a minimum or maximum trial period. 3 months is customary.