Mandatory End-of-Year Settlement for Unused Special Leave

Mandatory End-of-Year Settlement for Unused Special Leave in Accordance with Taiwan Labor Law

As the calendar year-end approaches, we must ensure full compliance with Taiwan's labor regulations regarding employee Special Leave (Annual Vacation Days).

The following is a critical reminder of the employer's statutory obligation concerning any unused leave days upon the conclusion of the calendar year or the termination of an employee's contract:

1. Mandatory Wage Settlement for Unused Leave

Under the Taiwan Labor Standards Act, an employer is legally obligated to calculate and pay wages to an employee for any remaining unused Special Leave days at the end of the leave year or upon the termination of the employment contract.

2. Treatment of Deferred Leave

If unused Special Leave days are formally deferred (carried over) to the following year through mutual agreement between management and the employee, the employer must still settle and pay the corresponding wages if those deferred days remain unused by: a) The end of the subsequent year, OR b) The employee's contract termination date (whichever comes first).

3. Calculation Methodology for Settlement

The wage settlement for unused Special Leave days must be calculated as follows: