Employing people in Taiwan: what a Swedish employer should expect

Why the Swedish model does not translate directly

In Sweden, employers and unions negotiate collective agreements at the sectoral level that set the real floor for wages, working time, notice periods, severance and a wide range of other terms. The statutory minimum sits underneath, and the agreement sits on top. A Swedish HR function's first instinct is to ask: what does the agreement say?

Taiwan has no equivalent framework. Enterprise unions exist and collective agreements exist, but they are not the default architecture. Instead, the Labour Standards Act sets the minimum that applies to almost every employment relationship, and the individual employment contract fills in the specific terms. A Taiwanese employer's first instinct is to ask: what does the statute require?

The practical consequence is that the statute carries the weight that a Swedish employer expects a collective agreement to carry. Notice periods, severance, leave, working time, overtime rules, and the employer's financial obligations all come from the statute or the individual contract, not from a sectoral negotiation. That is a material difference in how labour relations are structured, and it affects recruitment, cost-setting and risk management from the start.

The employment contract and when it can be fixed-term

A Swedish firm often uses fixed-term contracts for project work or temporary cover, which is normal. Taiwan is narrower. Fixed-term employment is permitted by statute only for specified reasons, such as temporary replacement of an absent employee, performance of a specific piece of work, or seasonal work. Casual or ad hoc use as a management tool is not permitted.

In practice, any employee hired for an open-ended or indefinite role will be hired on an indefinite contract. The distinction between the two is real and enforceable. An employer cannot describe a role as temporary and then renew it cycle after cycle; at a certain point, statutory law will treat it as indefinite regardless of what the contract says.

An indefinite contract means that termination requires a statutory ground and notice and severance, not merely the passage of time or a failure to renew. This is the key difference from a casual or fixed-term arrangement that ends when the task ends.

Probation, and what it does and does not do

A probationary period is permitted for new employees. It provides some additional flexibility in the early stage of employment, but it does not remove the protections of the Labour Standards Act or suspend the contract. A probationary period is not a trial period with no commitment.

The legal standing of probation in Taiwan is considerably weaker than many foreign employers expect. A probationary employee can still acquire statutory leave rights, is still covered by mandatory insurance, and is still entitled to notice and severance if dismissed without a statutory ground. The window for a probationary dismissal is narrower than the window for dismissing a probationer in a jurisdiction with an at-will employment model.

Mandatory contributions: the cost structure

An employee's salary is what appears in the contract. On top of that, the employer pays mandatory contributions to several statutory schemes. These are not optional benefits or deductions from salary. They are employer obligations, and they apply to nearly every employee on a payroll.

The schemes are labour insurance (a flat contribution tied to the salary), national health insurance (employer and employee both contribute), the labour pension fund (employer and employee contributions, with the employer's contribution into a personal account owned by the employee), and employment insurance (again, both employer and employee). The contribution rates change annually and are set by the authorities administering each scheme.

A Swedish employer budgeting a salary cost has to add these contributions on top of gross pay. They are a material addition rather than a rounding error, they vary with salary level and with the particular scheme, and the rates are reset periodically. Get the current rates from the administering authorities or a local payroll provider and build them into the cost model before you make an offer. Omitting them is the most common budgeting mistake a first-time foreign employer makes here.

Leave: statutory minimum and no trade-off

An employee in Taiwan accrues paid annual leave based on length of service and the number of working days in a year. The accrual schedule is set by statute and increases with years of service. An employer cannot buy out leave, trade it for higher pay, or use a blanket opt-out. Leave is a statutory entitlement, not a negotiable benefit.

Taiwan observes a fixed calendar of public holidays each year. These are statutory holidays and employees do not work them. An employer cannot substitute them for other dates or require work on a statutory holiday except in limited circumstances and at premium rates.

Leave is actively enforced by the labour authority. An employee can complain if leave is not taken or is not properly recorded, and an audit of payroll and timesheets will flag leave that is not accounted for.

Working time, overtime and rest days

The Labour Standards Act sets a maximum working time per day and per week. Overtime is permitted but is regulated: it requires a legitimate operational need, can be compensated in cash or time off, and is subject to a maximum number of hours per month. An employer cannot simply require unlimited overtime, and the rate at which overtime is compensated is set by statute.

Employees are entitled to specified rest days. The rules on how many rest days per week and how they are scheduled are set by statute. A compressed working week is possible but requires agreement and does not change the fundamental maximum working time in a week.

Working time, overtime and rest day arrangements are actively inspected by the labour authority. A labour inspection will verify timesheets, overtime records and rest day arrangements. Non-compliance exposes the employer to administrative penalties and employee claims.

Dismissal and why it is not the place to experiment

Dismissal in Taiwan requires three things: a statutory ground listed in the Labour Standards Act, advance notice in writing, and severance calculated under a statutory formula. An employer cannot dismiss an employee for convenience, as a performance improvement step, or as a way to exit a relationship that is not working. Dismissal should not be attempted from a guide; it requires local legal advice specific to the individual circumstances.

The statutory grounds for dismissal are narrow and include continued serious misconduct after a written warning, incapacity to perform, breach of a fundamental work rule, and certain other circumstances. Performance improvement plans or capability procedures are not statutory grounds and will not protect an employer from an unfair dismissal claim if they are used as a pretext for exit.

A Swedish employer used to order of selection and union consultation will find the process considerably more constrained. There is no order of selection, no union consultation requirement, and no negotiation of terms. There is a defined set of grounds, a defined notice period and a defined severance formula. Attempting to design flexibility or to move individuals around for cost reasons is likely to trigger a claim.

Work rules and the role they play

In Taiwan, an employer with more than a defined number of employees must draw up work rules, file them with the labour authority, and provide them to employees. Work rules are internal regulations that govern attendance, conduct, discipline, safety and other operational matters. They are the nearest equivalent to the handbook function that a handbook plays in Sweden alongside a collective agreement.

Work rules must be reasonable and must not contravene the Labour Standards Act. They can address matters that the statute does not prescribe, such as dress code, attendance expectation, conduct standards and the disciplinary process. Work rules do not set wages, working time or leave; the statute does that.

Work rules are enforceable and an employer can point to them in a discipline or dismissal situation, but they do not override the statute and they must be applied consistently and fairly.

Co-determination and flat management in a Taiwanese context

A Swedish parent company often has consultation and co-determination obligations that are embedded in the collective agreement and in company practice. Works councils or staff representatives may have input on material decisions, and there is an expectation of dialogue and shared understanding.

Taiwan has no equivalent statutory framework. There is no works council, no statutory co-determination right, and no requirement for management consultation on operational decisions. That is a legal fact, not a cultural choice.

However, this does not mean that a Swedish parent can import flat management and open dialogue by unilateral decision and expect it to land the same way. A Taiwanese workplace typically operates with more explicit hierarchy and clearer authority lines. An employee often expects direction from a clear superior, regular formal feedback, and a formal evaluation process. A flat structure with ambiguous authority and heavy reliance on open discussion and consensus tends to confuse rather than empower, particularly if it is not paired with clarity about who has final decision authority and how feedback is recorded and used.

A Swedish parent that wants to import its management style should make the explicit adjustments: name clear authority, provide regular structured feedback, invest in onboarding the team to how decisions are made, and adjust expectations around how input flows. The absence of a works council does not mean the absence of consultation; it means the form and timing are a management choice, not a statutory obligation.