(a) Yes. Although Taiwanese law does not define "contingent workers," Taiwan has the following specific legislation/rulings for contractors in the gig economy:
- Guidelines for Determination of a Labor Contract ("Guidelines")
- Checklist for Determination of Subordination of a Labor Contract ("Checklist")
The critical issue for using contingent workers is that the contingent workers might argue that they are de facto employees of the company rather than contractors ("Misclassification Risk").
The criterion for determining whether a worker is an employee or contingent worker is based on whether the worker is "subordinated" to the company. If yes, the worker is an employee; if no, the worker is a contingent worker.
The Guidelines and Checklist promulgated by the Ministry of Labor set forth the items the labor authority would review to determine the degree of subordination.
(b) No.
(c) No.
(a) No.
(b) No.
(c) No.
There is nothing specific, but with the rise in digital platform services, we are seeing an increasing global trend in case law and legislation aimed at protecting platform workers' labor rights. For more insight on these developments, along with other employment law updates, click here.
The critical issue with using contingent workers is that the contingent workers might argue that they are de facto employees of the company rather than contractors.
Although the labor authority has promulgated guidelines for classification, there is still room for interpretation. In general, the labor authority tends to interpret the rules more favorably for the workers.
A finding that an individual is an employee affords them greater employment law rights, including the right not to be unfairly dismissed and the right to statutory redundancy pay. An employee has some employment rights, including holiday, working time and minimum wage rights. Misclassification will carry higher costs for the employer, potential reputational risk and more restrictions on managing the relationship.
Taiwanese tax law does not treat hiring employees and contingent workers differently. Therefore, there are no special risks in this regard.
A penalty of 100% to 300% of the amount of tax (or shortfall of tax) that should have been withheld will be imposed.
The risk is for the employer to misclassify employees as contractors and, therefore, omit its social security obligations.
National health insurance
If a company fails to carry out a subscription to this insurance for the employee or their dependents, it will be fined an equivalent of two to four times the payable premiums in addition to the unpaid premium.
Labor insurance
A company failing to enroll its employees for employment insurance will be fined four times the total of premiums for the period from the date of employment to the date of the actual enrolment or the date of termination of employment.
The risk is for the employer to misclassify employees as contractors and, therefore, omit its pension obligations.
When an employer fails to apply contribution, etc., the employer will be notified to rectify the situation within a given period; failure to rectify by the end of a given period will result in a fine of between TWD 20,000 (approximately USD 715) and TWD 100,000 (approximately USD 3,571). The fine will be consecutively imposed every month until the situation is rectified.
Yes, if employees are seen to be facilitating the tax evasion of contingent workers, the company could be liable for a corporate criminal offense.