How is Overtime compensation being handled in Taiwan?

INTRODUCTION

According to Article 30 of Taiwan's Labor Base Law, workers' normal working hours shall not exceed 8 hours per day and 40 hours per week. Working hours that exceed "normal working hours" are extended working hours (overtime), and the employer must pay for them by law.

The hourly wage of Taiwanese workers = MONTHLY Basic Pay/240 per hour

What is the definition of overtime and overtime pay in Taiwan

In accordance with Article 30 of its Labor Standards Act:

The normal working hours of labourers shall not exceed 8 hours a day and 40 hours a week.

Article 32 of the Labor Standards Act:

The extended working hours of a worker shall not exceed 12 hours a day together with the normal working hours; The extended working hours shall not exceed 46 hours per month, provided that the employer, with the consent of the labor union, or, if the business unit does not have a labor union, with the consent of the labor council, the extended working hours shall not exceed 54 hours per month or 138 hours per 3-month period.

Article 36 of the Labor Standards Act:

Workers shall have two days off out of every seven days, of which one is a regular holiday (such as Saturday) and one is a rest day (such as Sunday).

Work overtime on Workday

Article 24 (1) of the Labor Standards Act:

If an employer causes a worker to work more than 8 hours a day, or more than 40 hours a week, overtime pay shall be paid according to law. The standards are as follows:

(1) If the extended working hours are less than 2 hours, more than one third of the normal hourly wage will be added. (1+1/3)

(2) If the working hours are extended within 2 hours, more than 2/3 of the normal hourly wage will be added. (1+1/3)

(3) If the employer causes the worker to work longer hours on ordinary days due to natural disasters, incidents or emergencies, it shall be paid double the normal hourly wage. (1+1)

Working overtime on rest days

 Article 24 (2) of the Labor Standards Act: When the employer makes the worker work on a rest day stipulated in Article 36, the employer shall pay overtime pay according to law, and the standard is:

(1) If the working hours are less than 2 hours, the salary will be added to more than 1 1/3 per hour (1 +1/3).

(2) After 2 hours of work, continue to work, according to the weekday hourly wage plus 1 and 2/3 (1+2/3).

(3) For those who work more than 8 hours, an additional 2 2/3 or more will be paid according to the regular hourly wage. （1+2+2/3)

(4) The hours that the employer allows the worker to work on rest days shall be included in the total number of extended working hours as specified in paragraph 2, Article 32 of the Labor Standards Act (that is, must be included in 46 hours of one month).

(5) If it is necessary for the employer to make the worker work on the rest day due to natural disasters, incidents or emergencies, the attendance pay shall be calculated according to paragraph 2, Article 24 of the Labor Standards Act, and the working hours shall not be limited by paragraph 2, Article 32 of the Labor Standards Act.

Working overtime during Regular weekly dayoff（e.g. Saturday）

Article 40 OF THE LABOR STANDARDS ACT: WITHOUT NATURAL DISASTERS, incidents or emergencies, the employer shall not make the worker WORK ON THE "REGULAR HOLIDAY". If the worker has to work for reasons previously disclosed, the salary of the day shall be doubled, and the worker shall be given a supplementary leave afterward. (1+1+ compensated off day)

Working overtime on national holidays and PTO/Annual Leaves

Article 39 OF THE LABOR STANDARDS LAW STIPULATES THAT THE EMPLOYER SHALL PAY DOUBLE wages to the workers on the holiday (national holidays or special holidays) with the consent of the workers. The "double payment" means that the wages on the holiday day are paid in addition to the wages on the holiday day. (1+1)

Personal income tax burden of Overtime Payment in Taiwan

Employees of public and private enterprises shall be exempt from income tax on overtime paid in accordance with the limits set out in Articles 24 and 32 of the Labor Standards Act. For both male and female workers, the employer shall not extend the working hours of the workers, together with the normal working hours, to more than 12 hours a day. Not more than 46 hours per month (54 hours per month and 138 hours per 3 months for those in accordance with the proviso 2 and 3 of Article 32 of the Labor Standards Act).

For the purpose of the employer, employees of government agencies, organizations, public and private enterprises who perform their duties on national holidays, regular holidays, and special holidays shall be exempt from income tax if the amount of overtime paid is within the range of the aforesaid standards, and the overtime hours may not be included in the calculation of the "total extended working hours per month on weekdays".

For example, if an employee has worked overtime for 49 hours in a normal working day in a month, the part of the 46 hours can be tax-free according to the regulations, and the overtime pay for more than 3 hours will be incorporated into the income tax. If he works overtime for 8 hours on national holidays, as long as the overtime pay meets the standards of the Labor Base Law, the 8 hours of overtime pay will still be tax-free.

Reference → “Ministry of Labor“ in Taiwan