In a share purchase, the Taiwan company generally remains the engineers' employer. Moving an operating business to a different company can instead require an employment transition, even if the engineers keep their desks and projects. Ministry of Labor guidance.
Where the retention procedure in Article 16 of the Business Mergers and Acquisitions Act applies, the receiving employer must notify the employees designated for retention of their working conditions in writing no later than 30 days before the statutory effective date. Each employee has 10 days from receiving the notice to respond in writing to the new employer. A US buyer that leaves those documents until closing week may already have a timetable problem.
The company on the employment contract
Compare the current employer with the entity that will operate the business after the transaction. Use their registered names, not the group's trading name. An engineer employed by the target company is in a different position from someone employed by a seller affiliate that is keeping another business. A headcount list labeled “Taiwan team” can conceal that difference.
If the buyer acquires shares and the employing company continues unchanged, the ownership change alone does not make the employees new hires. The Ministry's guidance says that a change of management control that leaves a company's legal identity intact should not affect its employees' rights. A later decision to move them into another group company needs its own employment analysis. It is not completed by the earlier share transfer.
For a business or asset purchase, counsel needs to classify the actual transaction before using the M&A Act's procedure. Article 4 defines the companies and acquisitions covered; Article 27 addresses specified business and asset transfers, including transactions involving foreign companies. It refers to transfers under Company Act Article 185. Buying a few machines does not, merely because the agreement is titled “Asset Purchase Agreement,” establish that the employee-retention provisions apply.
Labor Standards Act Article 20 separately addresses qualifying reorganizations or transfers of a business unit. It requires continued recognition of service for retained workers and notice and severance for the others. The relationship between that rule and the M&A Act must be assessed for the chosen structure; do not borrow the M&A Act's deadlines or deemed-consent rule for every change of employer.
Give employees terms they can actually assess
Under Article 16, the surviving, newly established or receiving company gives the notice to employees whom the old and new employers have agreed to retain. The transaction agreement should therefore identify how those employers settle the proposed list and who prepares and delivers the notices. The seller's promise to make staff available is not a substitute for that work.
A notice stating only a job title and a new company name leaves too much unresolved. Set out the proposed pay, duties, workplace and working arrangements, and explain how prior service will be recognized. Check those terms against existing employment contracts and any applicable collective agreement. If a buyer expects a shift change, a different work location or a revised bonus arrangement, those issues need to be addressed while the employee can evaluate the offer.
Article 16 measures the employee's response period from receipt. Keep the notice actually delivered, evidence of receipt and the written response together. A spreadsheet showing the date HR prepared a letter cannot establish when the employee received it.
Under this statutory procedure, failure to notify the new employer within the response period is deemed consent to continued employment. That rule concerns the specified employee notice; silence after a general acquisition announcement is not the same thing. Nor should a transaction team assume that one affirmative response guarantees the employee will still join when the deal takes effect.
The 30-day notice requirement is tied to the transaction's statutory effective date, often described in the documents as the reference date. Have counsel align that date with the commercial closing and business handover. If approvals delay the deal or the parties change the proposed employment terms, revisit the notices and employee communications before fixing a replacement date. The firm's investment-approval column addresses a separate part of that timetable.
Prior service has to survive the payroll change
Article 16 requires the new employer to recognize retained employees' service with the relevant predecessor. A new contract or employee number should not quietly turn several years of recognized service into a first day of employment. The Ministry's service-credit guidance explains why the service record affects annual leave, severance and retirement rights.
Before the handover, reconcile each employee's start date and service history with the records the new HR team will use. Identify leave already taken or outstanding, accrued pay and bonuses, and any service under Taiwan's old pension system. These are different items: recognizing a period of service does not answer every question about who must pay an accrued amount or how a leave balance should be handled.
The buyer and seller can negotiate how they bear the resulting costs between themselves. Their purchase-price adjustment or indemnity does not replace the statutory recognition owed to the employee. An agreed allocation also needs supporting records; a promise to reimburse “all pre-closing employment costs” can produce a dispute if the parties have not identified which periods and payments it covers.
Compare the final employee terms with the data handed to payroll. If the notice recognizes prior service but the payroll file uses the acquisition date for every purpose, the documents and implementation disagree before the first pay run.
Employees who do not move need a separate plan
Article 17 of the M&A Act places responsibility on the pre-transaction employer to terminate the contracts of employees who are not retained or do not agree to retention. It requires the notice prescribed by Labor Standards Act Article 16 or wages in lieu, together with retirement or severance payments as required by law. Article 17 also covers an employee who initially agrees but, for personal reasons, declines retention before the statutory effective date.
Do not assume that everyone who declines the buyer's offer has voluntarily resigned without payment rights. Equally, do not apply Article 17 to a pure share purchase simply because the new shareholder would prefer a smaller team. Establish the legal basis for each proposed termination.
The parties should identify who will send termination notices, calculate and pay the amounts due, and handle any required reporting. The applicable payment calculation and any mass-layoff obligations require separate review; a single estimate of “one month's salary per engineer” is not an adequate employment budget. The buyer also needs to know which technical roles will be vacant at handover and what the seller has actually agreed to do about unfinished work.
The closing condition and the employee's commitment
A buyer may negotiate a condition that named engineers accept the proposed terms, with a right to postpone or decline closing if the condition is not met. That allocates transaction risk between buyer and seller. It does not compel an engineer to remain employed.
If a retention payment is intended to secure a minimum period of service, have the payment and repayment terms reviewed separately. Labor Standards Act Article 15-1 requires qualifying employer-funded training or reasonable compensation, followed by a separate assessment of reasonableness. The firm's minimum-service-period column covers that issue. Merely calling a payment a retention bonus does not establish an enforceable obligation to stay.
For an initial Taiwan employment inquiry, describe the proposed transaction, the current and intended employers, the approximate team size and the intended handover date. Arrange document delivery after the initial inquiry rather than attaching personnel files or individual salary records at the outset.
Official sources checked: October 10, 2026. The cited provisions are in force. The M&A Act's official amendment history and the Labor Standards Act's history were checked against the current text. Ministry of Labor FAQs state the Ministry's administrative guidance; they do not decide an individual employment dispute. Chinese statutory text controls. This is general Taiwan legal information, not a determination that a particular asset purchase qualifies for the M&A procedure or that a proposed employee transfer is valid. US employment, tax and regulatory questions require separate advice where relevant.
This article provides general information and is not legal advice on any individual matter.
