Hello, I am Wei Tseng (曾雋崴), Taiwan Attorney.
Today, I would like to explain severance pay in Taiwan.
Many of you may already be familiar with how severance works in Korea.
In Korea, a company must pay severance when an employee leaves.
Taiwan, however, is different:
a company is obligated to pay severance only when it dismisses the employee.
If the employee resigns voluntarily, the company does not need to pay severance.
However, if the employee engages in unlawful conduct,
violates company rules,
or is absent from work without justification for three or more days,
the company may dismiss the employee without paying severance.
I will summarize this in a simple table.
| Type | Economic dismissal 資遣員工(經濟解僱) | Disciplinary dismissal 解僱員工(懲戒解僱) | Employee voluntary resignation 員工自請離職 |
| Meaning | When an employer needs to adjust staffing because of business conditions, the reason arises from the employer’s business and is not attributable to the worker. The employer must therefore observe the advance-notice period and pay severance to mitigate the resulting disadvantage to the worker. | When a worker engages in unlawful or improper conduct, the employer may immediately terminate the labor contract without prior notice and need not pay severance. This is an exercise of the employer’s disciplinary authority. | A worker is free to terminate the contract but must observe the notice period applicable to the worker’s length of service, giving the employer time to arrange a handover and find a replacement. |
| Conditions | Yes (Taiwan Labor Standards Act Article 11) | Yes (Taiwan Labor Standards Act Article 12) | None |
| Prior notice | Required | Not required | Required |
| Difficulty | Easy | Difficult | Easy |
| Whether the company must pay severance (資遣費) | Required | Not required | Not required |
| Taiwan Labor Standards Act Article 11 (勞動基準法第11條): Except in one of the following circumstances, an employer may not terminate a labor contract even after giving the worker prior notice. 1. The employer’s business is suspended or transferred 2. The employer’s business incurs operating losses or undergoes a business contraction 3. Force majeure necessitates suspending business for one month or more 4. A change in the nature of the business makes a workforce reduction necessary, and the terminated employee cannot be reassigned to another suitable position 5. A particular worker is unable to perform the work required for the position satisfactorily | Taiwan Labor Standards Act Article 12 (勞動基準法第12條): An employer may dismiss a worker without prior notice in any of the following circumstances. 1. The worker misrepresents facts when entering into the labor contract, thereby misleading the employer and creating a risk of harm to the business 2. The worker commits violence against or seriously insults the employer, a member of the employer’s family, the employer’s agent, or another coworker 3. The worker receives a final sentence of imprisonment or a more severe penalty and is neither granted a suspended sentence nor permitted to commute the sentence to a fine 4. The worker seriously violates the labor contract or work rules 5. The worker intentionally damages or consumes machinery, tools, raw materials, products, or other property owned by the employer, or intentionally discloses the employer’s technical or business secrets, thereby causing damage to the employer 6. The worker is absent without justification for three consecutive days or for six or more days in one month |
In Taiwan, for each full year of an employee’s service, the employer must pay severance equal to 0.5 months of average wages. (Up to a maximum of six months’ wages)
When an employee has both a high salary and substantial length of service,
the severance payment will also be relatively large.
Some unscrupulous companies in Taiwan use various tactics
to avoid making large severance payments
and pressure employees to resign voluntarily.
Employees should remain vigilant
and avoid falling into such a scheme.
Let me share a case I handled.
Company A is well known and has branches across Taiwan.
For some reason, the company’s management changed,
and as soon as the new manager took office,
in order to cut personnel costs,
the company began calling high-paid, long-serving employees into individual meetings.
My client, Mr. B, had worked at Company A for more than ten years
and was the highest-performing salesperson in central Taiwan.
Because his salary and bonuses were very high,
the company singled out Mr. B.
One day, a senior company executive called B into a meeting
and suddenly began accusing him of not working diligently.
The executive said that the company was struggling,
that B should make a sacrifice and set an example,
and demanded that B accept a pay cut and a demotion.
The executive said that otherwise B would have to leave the company,
handed him a sheet of A4 paper,
and ordered him to write, “I, OOO, voluntarily agree to accept a lower position and salary.”
The executive also said that this written agreement would be shown to all the other employees
so they would follow suit.
B was the top performer in the central region,
had generated substantial revenue for the company,
and was working diligently every day,
so he strongly objected to this unreasonable demand.
B refused to write the statement,
and the company executive eventually became angry and told him to leave.
Feeling deeply wronged and distressed,
B left the company he had worked at for ten years
and did not return to work afterward.
Using the same tactics, the company
reduced the salaries of many senior employees,
and some employees could not endure this treatment
and resigned voluntarily.
But B had realized early on that, after the change in management,
the company was trying to force employees to leave through improper means,
and he had discovered that the company posted recruitment advertisements even before employees resigned.
On the day B went into the meeting,
B recorded the entire meeting on his mobile phone
and was therefore able to prove that he had not resigned voluntarily.
With a lawyer’s help,
B was able to receive a substantial severance payment,
but the other employees who had left were not as fortunate.
Because such cases are common,
when a company uses improper methods,
you must preserve evidence.
If the company seizes on an employee’s minor mistakes,
sets unreachable targets,
makes unreasonable demands,
or assigns the employee to an unusual position,
you must preserve evidence.
Keep your regular attendance records.
Keep your overtime and performance records.
Keep the company’s work rules and emails with coworkers and supervisors.
Record conversations with your supervisor.
Preserve any evidence that supports your position.
If you work in Taiwan,
obtaining severance can be harder than you might think.
Do not give in to the company too readily,
and remain alert to attempts by the company to dismiss you unfairly
or pressure you into resigning voluntarily.
Severance is an employee’s legal entitlement,
and the company is obligated to pay it.
You too should protect your rights in Taiwan.
See also:
Frequently Asked Questions
- In Taiwan, does an employee who resigns voluntarily receive severance pay?
- No. Unlike Korea, Taiwan requires a company to pay severance only when the company dismisses the employee. If the employee resigns voluntarily, the company does not need to pay severance.
- Does the company still have to pay severance in a disciplinary dismissal?
- No. If the employee commits an unlawful act, violates company rules, or is absent from work without justification for three or more days (Labor Standards Act Article 12), the company may dismiss the employee without prior notice and need not pay severance. By contrast, an economic dismissal under Article 11 requires prior notice and payment of severance.
- How is Taiwan severance pay calculated?
- For each full year of service, the employer must pay severance equal to 0.5 months of the employee’s average wages, up to a maximum of six months’ wages.
