Article 28 of the Labor Standards Act gives specified claims a repayment rank when the employer has closed, entered liquidation, or been adjudicated bankrupt. Wages in that rank are the portion owed for less than six months. If the business is still operating, late pay alone does not bring Article 28 into play. Full payment is not promised.
Three claims share that rank under paragraph 1. Wages are the portion owed under the labor contract for less than six months. Retirement pay is what the employer failed to pay under the Labor Standards Act. Severance is what the employer failed to pay under that Act or the Labor Pension Act. The severance calculation is in the column on severance pay.
Article 28, paragraph 1 does not create the severance debt. The rank covers unpaid severance the Labor Standards Act or the Labor Pension Act already requires, and unpaid retirement pay the Labor Standards Act requires. Closure by itself does not produce severance. The Labor Pension Act is named only for severance. Item 2 names the Labor Standards Act for retirement pay. Monthly deposits into an individual account are not that item.
Under Article 28, those claims stand with debts secured by a first-priority mortgage, a pledge, or a lien. They do not start ahead of the secured claims. Inside the rank, payment follows the size of each claim. Whatever that division leaves unpaid has the most preferential right to be paid.
Six months of average wage caps a fund advance of retirement pay and severance together. The wage portion under six months is a period of contract wages. Article 28 paragraph 1 does not put that money cap on the retirement and severance rank. The table sets the rank beside what paragraph 2 lets the fund advance.
| Claim | Rank under paragraph 1 | What the fund advances |
|---|---|---|
| Wages owed under the labor contract | The portion under six months. Same rank as first-priority mortgage, pledge, and lien claims, paid in proportion to the claims. The unpaid part has the most preferential right | That item 1 amount. Bureau guidance: the six months before the event |
| Retirement pay unpaid under the Labor Standards Act | The same rank. Paragraph 1 does not state a cap of six months of average wage | Together with severance, up to six months of average wage |
| Severance unpaid under the Labor Standards Act or the Labor Pension Act | The same rank. Paragraph 1 does not state that combined cap | Together with retirement pay, up to six months of average wage |
Worker, employer, wage, average wage, and labor contract are Article 2 terms. The employer is the business owner who hires the worker, the person in charge of the business, or the person who represents the owner in labor matters. The definition does not assign a particular company's wage debt. Shareholding does not make another company the employer under Article 28. A worker is a person hired to work for wages. Nationality is not part of the definition. A labor contract is an employment relationship with subordination. A contractor label does not settle the issue; actual employment, pay and subordination determine the assessment.
Pay for work is wages. Article 2 takes in wages and salary, and bonuses, allowances, and any other regular payment under any name, by the hour, the day, the month, or the piece, in cash or in kind. A bonus paid regularly for the work counts as wages.
Average wage is defined in the same item 4. It is the total wages in the six months before the day the calculation event occurs, divided by the total number of days in that period. Service shorter than six months uses wages during the service, divided by the days in it. In the actual calculation, Article 2 of the Enforcement Rules leaves out the dates and periods it lists, and the wages for those periods. The day of the event, medical treatment for an occupational injury, ordinary sick leave, and unpaid leave are on the list, with the other periods that article names. Days actually worked are not that denominator.
Day, hour, or piece-rate pay has a floor. If the average just described is under 60 percent of total wages in the period divided by actual working days, Article 2 of the Labor Standards Act item 4 counts the average as that 60 percent. This floor applies only to those pay methods.
Employers pay a set amount into the arrear wage payment fund, the 積欠工資墊償基金, from that month's total insured salary and the prescribed rate. Paragraph 2 says so. Insured salary stays out of the average-wage formula. Rank is payment out of the employer's assets. The advance is the fund paying within paragraph 2 after the worker has asked and has not been paid.
Only workers whose employer has contributed can receive an advance. A later payment of missed contributions also lets them apply. Article 7 of the fund regulations and Bureau guidance both say that. A temporary stoppage that may resume is not yet a ground to apply. The statute still says the portion under six months. The guidance treats the wage advance as contract wages owed in the six months before closure, liquidation, or adjudicated bankruptcy. Older arrears stay out.
A foreign worker who meets the conditions uses the same method, conditions, and scope as a Taiwanese worker, that guidance says. The person in charge, and people in a mandate relationship, including a statutory agent and a director or supervisor of a company limited by shares, are not workers under Article 2, subparagraph 1. The guidance does not list them as applicants.
Paragraph 5 has the fund advance within paragraph 2 once the worker has demanded the wages, retirement pay, and severance and remains unpaid. The employer repays the fund within the prescribed period. Paragraph 5 gives that period no number of days.
Does the missing reply finish the file? It shows the demand went unpaid. Closure proof and debt proof are still required. For a closure, the file needs local-authority proof that factory, business, or profit-seeking-enterprise registration was cancelled, revoked, or repealed, or a finding that ending production or business, collapse, or dissolution matches closure. That is Article 8 of the regulations. Proof of the wage, retirement-pay, or severance debt goes in as well. Liquidation or adjudicated bankruptcy also needs proof the claim was lodged with the liquidator or the bankruptcy administrator, under Article 9. If the sums and years of service still cannot be fixed, the Bureau may use insured salary and insured years under labor insurance or employment insurance. That step leaves the average-wage formula as it is.
Where the employer cannot be found, or will not sign a confirmation of the arrears, court papers can prove the debt. One accepted set is an original payment order or civil judgment, with its certificate of finality, and a copy of the payment-order application or the civil complaint. The Bureau's application note lists that set, and lists other choices. A concluded labor mediation or arbitration can be proved with an original ruling allowing compulsory execution, its certificate of finality, and a copy of the mediation record or the award. After compulsory execution produces nothing, an original creditor's certificate from the execution court is another choice. FAQ 7 names the payment-order or judgment route with the certificate of finality. Applications go to the Bureau of Labor Insurance. Workers of the same employer generally file once, together.
The rate ceiling is in paragraph 4. The central competent authority drafts the rate within 15 per 10,000, written as 萬分之十五, and submits it to the Executive Yuan for approval. As of October 14, 2026, the paragraph states that range. The figure actually collected is not in the paragraph. Once the fund reaches a set amount, the rate is lowered or collection stops. The advance procedure, the rules on collection and management, that amount, and the committee's organic rules are made by the central competent authority. Paragraph 6 allows collection to be entrusted to the labor-insurance institution. Article 2 of the regulations assigns collection and advances to the Bureau.
For disputes over wage amounts before closure, see the column on labor-dispute mediation.
Questions about the named employer, and about whether the notice is a closure, can go to Hovering International Law Firm at wei@hoveringlaw.com.tw.
A liquidation application requires proof of the unpaid wage, retirement-pay or severance claim, together with proof that the claim was lodged with the liquidator (Article 9 of the fund regulations).
Official sources
- Taiwan Labor Standards Act Article 2 and Article 28. The full text is the version posted on the national laws database. The Act's latest amendment date shown there is July 31, 2024. The Chinese text controls.
- Enforcement Rules of the Labor Standards Act Article 2. Full text on the national laws database, with the English text. The rules' latest amendment date shown there is March 27, 2024.
- Regulations for the Management, Repayment, Collection and Allocation of the Arrear Wage Debts (積欠工資墊償基金提繳及墊償管理辦法), Article 2, Article 7, Article 8, Article 9, and Article 10. Full text on the national laws database, with the English text. The regulation's latest amendment date shown there is May 20, 2015.
- Bureau of Labor Insurance, Ministry of Labor, worker guidance on the arrear-wage fund. The page displays a last-update date of December 19, 2023. The debt-proof choices, when the employer will not confirm the arrears, are in that page's section on proof of the debt.
- Bureau of Labor Insurance, Ministry of Labor, FAQ 7 on how to apply and what debt proof is required when the employer will not sign. The page displays a last-update date of November 28, 2023.
- Checked: October 14, 2026.
Frequently Asked Questions
- The company is still open and my salary is two months late. Can I ask the wage fund to pay?
- The repayment priority and the fund advance under Article 28 of the Labor Standards Act apply when the employer has closed, entered liquidation, or been adjudicated bankrupt. Late pay while the business keeps operating is not that trigger. A temporary stoppage that may resume is also outside those three events, and the Bureau of Labor Insurance does not treat it as a ground to apply yet. The fund advances money only after the worker has demanded payment and has not received it, the employer has contributed or later paid up, and only within paragraph 2. For wages, the statute says the portion under six months, and the Bureau describes contract wages in the six months before the event.
- Does the fund pay all unpaid wages, severance, and retirement pay?
- For wages, the slice is the portion under six months owed under the labor contract, and the fund's wage advance stays inside that amount. Bureau guidance places the period in the six months before closure, liquidation, or adjudicated bankruptcy. Retirement pay the employer failed to pay under the Labor Standards Act, and severance the employer failed to pay under that Act or the Labor Pension Act, are advanced together only up to six months of average wage. Paragraph 1 gives those claims the same rank as debts secured by a first-priority mortgage, pledge, or lien, pays them in proportion to the claims, and gives the unpaid portion the most preferential right. The article does not promise payment in full. An application also needs the employer's contributions, or later payment of missed contributions.
- I was hired by a Taiwan subsidiary. Can I use this article against the foreign parent?
- Article 2 defines the Act's terms for a worker, an employer, wages, average wage, and a labor contract. The employer is the business owner who hired the worker, the person in charge of the business, or the person who represents the owner in labor matters. That definition does not by itself decide which company owes a particular wage debt. Article 28 does not name another group company as the employer merely because it holds shares. For that hiring, the employer is the company named in the labor contract. Nationality is not part of the definition. Where a foreign worker meets the conditions, the Bureau of Labor Insurance states the same application method, conditions, and scope as for a Taiwanese worker.
This article provides general information and is not legal advice on any individual matter.
