TAIWAN Law and Practice Contributed by: Chengkai Wang, Yachi Huang, Herman Lin and Tzutien Huang, Dentons Taiwan (Dacheng Taiwan)
While notice does not necessarily have to be in writ - ing, it is highly recommended to provide written noti - fication to avoid any misunderstandings or disputes. Severance Pay Requirements Severance pay is mandated under specific condi - tions, as outlined in the Labor Standards Act and the Labor Pension Act. The calculation of severance pay depends on whether the employment falls under the old pension system or the new pension system, as follows. • Old pension system (Labor Standards Act pension system): (a) employees receive one month’s average salary for each year of continuous service; and (b) for periods of service less than a year, sever - ance pay is calculated on a pro rata basis, with periods less than a month considered as a full month. • New pension system (Labor Pension Act pension system): (a) employees are entitled to 0.5 month’s average salary for each year of service, with a cap at six months’ average salary; and (b) severance for service periods less than a year is also calculated pro rata, subject to the six months’ average salary cap. Procedure and External Authorisation The formalities for termination involve notifying the employee in advance according to the stipulated notice periods. There is no specific requirement for external advice or authorisation for the termination process under Taiwan labour law. However, ensuring compliance with all legal provisions, including appro - priate documentation and adherence to severance pay regulations, is crucial for the lawful termination of employment contracts. This structured approach helps protect both the employer and the employee from potential legal complications. 7.3 Dismissal for (Serious) Cause Definition and Grounds for Summary Dismissal Summary dismissal, or dismissal for serious cause, allows an employer to terminate an employment con - tract immediately, without the requirement of a notice period, due to severe misconduct or specific situa -
tions that necessitate such immediate action. Accord - ing to Article 12 of the Labor Standards Act, grounds for summary dismissal include: • misrepresentation – providing false information at the time of the contract signing that leads to employer harm; • violent or insulting behaviour – acts of violence or severe insults directed at the employer, their family, agents or coworkers; • criminal conviction – if an employee is convicted and receives a non-suspended temporary impris - onment in a final judgment; • breach of contract or work rules – serious viola - tions of the employment agreement or workplace regulations; • deliberate damage or disclosure – intention - ally causing damage to the employer’s property or revealing confidential information resulting in employer harm; and • unauthorised absences – absence from work with - out a valid reason on three consecutive days or on six days within a month. Procedure and Formalities When proceeding with a summary dismissal, the employer must ensure that the reasons for termina - tion fall strictly under the categories listed in Article 12 of the Labor Standards Act. The dismissal process involves: • documentation – thoroughly documenting the reasons and evidence supporting the dismissal decision, which should clearly match one of the valid grounds under Article 12; • communication – communicating the decision to the employee, ideally in writing, to provide a clear record of the dismissal and its reasons; and • immediate effect – the dismissal takes effect imme - diately, with the employee ceasing work and obli - gations to the employer from the date of dismissal. Consequences of Summary Dismissal Aspects of summary dismissal include the following: • no notice period required – employers are not obli - gated to provide a notice period when terminating an employee for serious cause under Article 12;
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