Taiwan Severance Pay 2027 Calculator
Taiwan severance differs between the old Labor Standards Act (LSA) system and the new Labor Pension Act (LPA) system. Under LSA: 1 month/year of service. Under LPA: 0.5 month/year, capped at 6 months. Use this tool to compare both regimes for your tenure and current salary.
Old vs New Labor Pension System — Different Severance Rules
Workers under the old Labor Standards Act (LSA) — those hired before July 1, 2005 who opted to stay — receive 1 month of average pay per year of service, no cap. Workers under the new Labor Pension Act (LPA) — anyone hired after July 1, 2005 or who switched — receive 0.5 month per year, capped at 6 months total. Source: Ministry of Labor.
Eligible Reasons for Severance Under LSA Article 14 and 16
Severance is owed when the employer terminates due to: business closure or transfer (Art. 11), redundancy, loss of business need, force majeure, or the employee terminates due to employer misconduct (Art. 14). Voluntary resignation does NOT trigger severance. Termination for documented serious misconduct (Art. 12) also does not require severance. Source: Labor Standards Act.
How Average Salary Is Calculated
Severance base is the average of the worker's last 6 months' total wages divided by 6. This includes basic pay, fixed allowances, regular bonuses, and overtime that occurs routinely. Excludes year-end bonuses, profit sharing, and irregular gifts. If hired less than 6 months ago, the average is taken over actual months worked.
Tax Treatment of Taiwan Severance Pay
Severance pay enjoys a partial tax exemption: NT$182,000 × years of service is tax-free. Amount above that exempt threshold is taxed at progressive rates as 'separation pay.' For example, 10 years of service: NT$1.82M exempt. Source: Income Tax Act Article 14, Class 9. Verify with a 會計師 for amounts above the exemption.