Terminating an employment contract is a sensitive process that involves various legal considerations, particularly in Taiwan. The country's Labor Standard Act and Labor Pension Act outline specific regulations that employers must adhere to when it comes to providing severance pay. In this blog post, we'll explore the key provisions in these acts that impact the final severance pay and provide a handy Total Severance Pay Chart for quick reference.
Labor Standard Act, Article 16:
The Labor Standard Act's Article 16 governs the minimum period of advance notice an employer must provide when terminating a labor contract. The advance notice periods are as follows:
1. For workers with more than three months but less than one year of continuous service, a ten-day notice is required.
2. For workers with more than one year but less than three years of continuous service, a twenty-day notice is required.
3. For workers with more than three years of continuous service, a thirty-day notice is required.
Additionally, if an employer terminates a contract without serving advance notice within the specified time limits, they are obligated to pay the worker wages for the advance notice period. Furthermore, the Act allows workers to request leave of absence during working hours to search for a new job after receiving the advance notice.
Labor Pension Act, Article 12:
Under the Labor Pension Act, Article 12 outlines the severance pay for workers covered by the pension system. The severance pay is calculated based on the worker's seniority:
1. Workers receive an amount equal to half a month of average wages for every full year of employment.
2. The severance pay is proportionate for a period of employment lasting less than one full year.
3. The total severance pay should not exceed more than six months of average wages and is not covered by Article 17 of the Labor Standards Act.
The severance pay calculated under this article must be paid within 30 days after the termination of the labor contract. Workers choosing to continue coverage under the pension regulations of the Labor Standards Act will have their severance paid according to the relevant articles in that Act.
Total Severance Pay Chart:
Here's a quick reference chart for calculating total severance pay based on the length of employment and notice period:
Understanding the intricacies of severance pay is crucial for both employers and employees in Taiwan. By following the guidelines set forth in the Labor Standard Act and Labor Pension Act, parties can navigate the termination process smoothly and ensure fair compensation. It's recommended to consult the provided references for a more in-depth understanding of the legal provisions mentioned in this blog post.
