As your company grows, hiring internationally can be an effective way to enter new markets and achieve your goals. Taiwan has a broad pool of independent contractors with specialized skills to help you meet various project needs.
Hiring independent contractors in Taiwan
Before you begin the hiring process, you must understand how independent contractors differ from employees and how this distinction impacts your responsibilities.
Independent contractors vs. employees
Because they are legally self-employed, independent contractors are not part of a company or subject to its direction and control like employees. Rather, they have the freedom to determine their own work schedules and methods of completing tasks.
Contractors aren't legally entitled to benefits coverage, but companies must still withhold tax when paying them. The rate depends on whether the contractor is a Taiwan tax resident and whether the payment is Taiwan-source income.
Penalties for misclassification
Incorrectly classifying workers can have serious consequences for companies, so ensure the contractor designation truly applies. Misclassifying an employee can put companies at risk for fines and penalties, including retroactive benefits payments for the full duration of service.
How to hire independent contractors in Taiwan
Whether your company plans to hire contractors to work on-site or remotely, for short- or long-term projects, you can follow these 3 steps to start the hiring process on the right foot.
1. Carefully conduct interviews.
Contractor interviews typically address project-specific needs and prior experience. Focus on discussing the contractor’s relevant skills and certifications. Contractors are not part of a company, so personality and cultural fit should not be determining factors as they would in employee interviews. Hiring an independent contractor is a business-to-business transaction for services.
2. Create a service agreement.
The next step is to establish specific working terms that are acceptable for both parties. Service agreements are not a legal requirement, but they serve as a helpful framework. Include these details in the service agreement:
- Pay rates and arrangements
- Services the contractor will provide
- Length of the contract
- Termination conditions
3. Introduce necessities.
While in-depth training might suggest a level of supervision that does not apply to contractors, you may need to provide a general scope of certain aspects of your company. Ensure contractors understand any company-specific tools, programs, and workflows that apply to the project and connect them with a point of contact for questions.
How to pay independent contractors in Taiwan
Contractors are not on company payroll. They are usually paid a lump sum after completing the specified project or at certain project milestones. You may negotiate whether to use your company’s local currency or Taiwan’s national currency (TWD). Ensure you’ve researched any restrictions for sending compensation internationally before setting up payments.
While companies typically do not need to cover taxes or benefits for contractors, you do need to meet remuneration conditions and schedules agreed upon in your service agreement.
Terminating independent contractors
Independent contractors usually work on specific projects, so termination of service is straightforward. Both parties have freedom to outline terms for termination and extension of service in the agreement.
Regardless of the situation, be sure to detail termination protocols in case there’s an issue with the contractor’s performance or cooperation with service terms. A legal framework will help protect your company in the event of a dispute.
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