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Termination of Employment

Author: James Chang 74 views

If the company considered to terminate the employment agreement, please be reminded of the following issues:

Legitimate reasons of terminating a labor contract

No employer shall, even by advance notice to a worker, terminate a labor contract unless one of the following situation arises:

  1. Where the employers’ businesses are suspended, or has been transferred.
  2. Where the employers’ businesses suffers an operating losses, or business contractions.
  3. Where force majeure necessitates the suspension of business for more than one month.
  4. Where the change of the nature of business necessitates the reduction of workforce and the terminated employees can not be reassigned to other suitable positions.
  5. A particular worker is clearly not able to perform satisfactorily the duties required of the position held.

Minimum period of advance notice

When an employer terminates a labor contract, he shall govern the minimum period of advance notice:

  • Where a worker has worked continuously for more than three months but less than one year, the notice shall be given ten days in advance.
  • Where a worker has worked continuously for more than one year but less than three years, the notice shall be given twenty days in advance.
  • Where a worker has worked continuously for more than three years, the notice shall be given thirty days in advance.

After receiving the advance notice, a worker may, during hours of work, ask for leave of absence for the purpose of finding a new job. Such leave of absence may not exceed two work days per week. Wages shall be paid during such leave of absence.

Where an employer terminates the contract without serving an advance notice within the time limit, he shall compensate the advance notice period by wages.

Severance pay

The severance pay is based on the employee’s seniority: an amount equal to half a month of average wages for every full year of employment, and in proportion for a period of employment lasting less than one full year; the foresaid severance shall not exceed more than six months of average wages.

Example
We assume an employee:
  • With monthly salary at TWD 55,074;
  • Leaves on the 15th of the month;
  • Has 10 days of unused paid-leaves;
  • Has worked in the company for 1 year, 4 months, and 23 days

then, the last payroll includes:

NOItemCalculation
1Partial monthly salary25,702 = 55,074 / 30 * 14
2Compensation for unused paid leaves18,358 = 55,074 / 30 * 10
3Severance payHalf of base salary: 27,537
= 55,074/2
Severance pay: 38,475
=27,537 (1 year)
+ 27,537 / 12 * 4 (months)
+ 27,537 /12/30*23 (days)
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