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Can Employers Cut Wages in Taiwan? Legal Rights and Remedies
Wage and salary terms are among the most important conditions employees consider when choosing a job. However, if an employer unilaterally reduces wages after employment begins, most employees face a difficult dilemma: should they silently accept unreasonable treatment, or should they look for another job? Because employees are generally in a weaker position in labor-management relationships, Taiwan's Labor Standards Act and Minimum Wage Act provide relevant protection mechanisms. Understanding these rules in advance helps employees respond correctly and promptly when a dispute arises.
Can an Employer Decide to Reduce Wages Unilaterally? Start with the Legal Basis
Labor Standards Act
Under Article 21, Paragraph 1 of the Labor Standards Act, wages must be negotiated and agreed upon by both employer and employee, and may not be lower than the basic wage (now referred to under the current legal framework as the “minimum wage”). This means that any wage adjustment, whether an increase or a decrease, must in principle be based on mutual agreement. An employer does not have the authority to decide the matter unilaterally. If an employer reduces wages without obtaining the employee's consent, and does so merely by administrative announcement or verbal notice, such conduct violates the Labor Standards Act.
In addition, Article 22, Paragraph 2 of the Labor Standards Act provides that wages must be paid directly and in full to the employee. Unless otherwise provided by law or agreed upon by both employer and employee, the employer may not deduct any portion of wages payable for any reason. This provision is also commonly reviewed when assessing whether an employer's wage adjustment is lawful.
Of course, if the employment contract signed at the beginning of the employment relationship clearly provides that the employer may adjust wages under specific circumstances, and the employee has signed to confirm such terms, a wage adjustment made by the employer in accordance with the contract will generally have a legal basis. However, because employment contracts are usually drafted in advance by employers, employees are advised to review such clauses carefully before signing to avoid future disputes.
After the Minimum Wage Act Took Effect, the Standard Is No Longer the Same as the Former Basic Wage
The Minimum Wage Act came into effect on January 1, 2024. Beginning January 1, 2025, the minimum wage amount has been reviewed and announced under this Act, replacing the former concept of the “basic wage” that was primarily tied to Article 21 of the Labor Standards Act. Under Article 18 of the Minimum Wage Act, references to “basic wage” in other laws and regulations apply to the “minimum wage” under the Minimum Wage Act.
According to the Ministry of Labor's announcement dated October 21, 2025 (pursuant to Article 13, Paragraph 1 of the Minimum Wage Act), starting January 1, 2026, the minimum wage will be adjusted to NT$29,500 per month and NT$196 per hour, representing increases of NT$910 and NT$6, respectively, from the previous year. The amount is subject to annual review and adjustment, and the actual applicable standard should be based on the Ministry of Labor's latest announcement for the relevant year.
If an employer pays wages below the statutory minimum wage, Article 17 of the Minimum Wage Act provides for an administrative fine of NT$20,000 to NT$1,000,000. In serious cases, the fine may be increased up to NT$1,500,000, and the competent authority must publicly disclose information about the violating business entity and its responsible person. If the wage is not below the minimum wage, but the employer reduces the previously agreed wage without the employee's consent, this violates Article 21 of the Labor Standards Act and may likewise result in a fine of NT$20,000 to NT$1,000,000 under Article 79 of the same Act.
Full Attendance Bonuses Cannot Be Used to Evade the Minimum Wage
Another practical point that is often overlooked is that a full attendance bonus is part of wages. However, if the bonus is not paid because the employee took leave, and the employee's actual monthly pay consequently falls below the statutory minimum wage, the result is still unlawful. In other words, an employer may not use a wage structure of “low base salary plus full attendance bonus” to circumvent minimum wage protections. If the employee takes leave and the full attendance bonus is deducted, causing actual pay to fall below the minimum wage for that year, the employer will still bear corresponding legal liability.
If an Employee Performs Poorly, Can the Employer Demote and Reduce Wages as a Disciplinary Measure?
In principle, an employer may not arbitrarily transfer an employee to another position and worsen the employee's working conditions. This is one of the core principles behind what is commonly referred to in practice as the “five principles of job transfer”: a transfer must not adversely affect the employee's existing rights and interests, including wages and allowances. But if an employee's work performance remains poor or the employee repeatedly violates the employment contract or work rules, is the employer completely barred from demotion or wage reduction?
This issue involves the employer's disciplinary authority within the employment relationship. In practice, disciplinary authority may be divided into two categories:
General Disciplinary Authority
This refers to an employer's authority expressly provided by law, the most typical example being disciplinary dismissal under Article 12 of the Labor Standards Act. The exercise of this type of authority does not require an express provision in work rules or the employment contract. However, it must satisfy statutory requirements (such as serious circumstances) and statutory procedures (such as exclusion periods), and is strictly limited by the principle that dismissal should be the last resort.
Special Disciplinary Authority
This refers to disciplinary authority outside express statutory provisions, established through employment contract terms or work rules, such as demerits, wage deductions, demotions, or disciplinary transfers. Its exercise must satisfy the following requirements:
Clear legal basis: the disciplinary grounds and measures must be expressly specified in advance in work rules or the contract, and must be lawfully announced.
Substantive legitimacy: the measure must comply with the principles of proportionality and equal treatment.
Procedural fairness: the employee should be given an opportunity to respond, and the procedure must conform to the principle of good faith.
In other words, if the employer has clearly disclosed a disciplinary transfer mechanism in the work rules or expressly agreed to such disciplinary transfer authority in the employment contract, and has warned the employee, required improvement within a specified period, and the employee still fails to improve, then the employer's disciplinary transfer or demotion may, despite differing views in practice, have a chance of being deemed necessary and reasonable. The reason is that once the job duties or job grade have substantively changed, corresponding wage and benefit adjustments may align with the principle of equal pay for equal work; otherwise, it may be unfair to other employees in the same position.
However, in practice, such disciplinary transfer and wage reduction must follow the principles of appropriateness and proportionality. It is more likely to be deemed lawful only when the following prerequisites are actually present:
The work rules or employment contract have expressly provided in advance for disciplinary transfer or demotion mechanisms.
The employer has given oral or written warnings regarding the employee's violation or poor performance and required improvement within a specified period.
The employee still fails to meet the required improvement standard after being warned.
The overall disciplinary procedure is reasonable and appropriate, and is not arbitrary or retaliatory.
If the employer fails to follow the above procedures and merely cites “poor performance” as the reason for unilateral demotion and wage reduction, or imposes a substantial wage reduction despite only minor misconduct, the action may still constitute an unlawful transfer and be invalid. The employee may consider labor mediation or litigation to protect their rights.
If I Did Not Immediately Object After the Wage Reduction, Can I Still Assert My Rights?
This is one of the most commonly overlooked and highest-risk issues employees face when encountering an unlawful wage reduction: “implied consent.”
Under Article 153, Paragraph 1 of the Civil Code, the formation of a contract is not limited to express declarations of intent. If an employee, after a unilateral wage reduction, continues to receive the reduced wages for a long period without ever objecting to the employer or taking any legal action, a court may in practice find that the employee, after weighing the relevant interests, impliedly consented to the wage reduction. As a result, if the employee later seeks to claim the wage difference, the claim may be difficult to sustain. In past cases, employees who accepted reduced wages for periods such as one year and nine months or even longer were ultimately found by the court to have impliedly consented, losing the opportunity to claim wage differences afterward.
Therefore, once an unlawful wage reduction occurs, the employee should respond promptly to avoid being presumed to have given implied consent. For example, when signing for a pay slip or otherwise receiving the reduced wages, the employee should expressly state in writing or by certified letter that the payment is accepted “only as partial payment.” This helps preserve the legal basis for claiming the wage difference, rather than merely staying silent and accepting the reduced salary.
How Should Wage Negotiations Be Conducted?
When facing an employer's request for a wage reduction, employees should not only understand their legal rights but also keep several key points in mind during negotiations:
Request that the employer specifically explain the reason for the wage reduction and provide supporting grounds. For example, if the employer claims poor business conditions or financial difficulty, the employee may ask the employer to provide financial statements or other supporting materials, and compare those materials with the employee's own work performance and contributions to assess whether the wage reduction request is reasonable.
Clearly express your position during negotiations. Employees may expressly state that they wish to maintain their existing wage, or indicate the range of adjustment they can accept. Employers should also take into account the employee's actual contribution and industry wage levels as the basis for any adjustment. The core of negotiation is to seek a mutually acceptable solution, not to issue a one-sided notice.
If Private Negotiations Fail, What Can the Employee Do?
If the employer still insists on reducing wages, the employee may protect their rights in the following order:
Apply to the labor bureau for labor-management mediation. This is a faster and lower-cost remedy before litigation.
If mediation fails, consider terminating the employment contract and claiming severance pay. Under Article 14, Paragraph 1, Subparagraphs 5 and 6 of the Labor Standards Act, if the employer fails to pay wages in accordance with the employment contract, or violates the employment contract or labor laws in a manner likely to damage the employee's rights and interests, the employee may terminate the employment contract without prior notice, and may claim severance pay and request a certificate of involuntary separation. The employee may send a certified letter to notify the employer of termination while simultaneously making these requests.
If the employer still refuses to pay, the employee may apply for mediation again and use litigation only as a final resort. If the employer refuses to pay severance or issue the certificate after receiving the certified letter, the employee may first apply to the labor bureau for mediation and reserve litigation as the last step.
Special Reminder: Termination Under Subparagraph 6 Is Subject to a 30-Day Time Limit
This is an important detail that many employees overlook. If the employee terminates the contract under Article 14, Paragraph 1, Subparagraph 6 of the Labor Standards Act, namely because the employer violated the employment contract or labor laws in a manner likely to damage the employee's rights and interests, the employee must exercise the termination right within 30 days from the date of becoming aware of the situation. If the employee fails to do so within the statutory period, the termination will not take effect. In other words, once an unlawful wage reduction is confirmed, if the employee intends to terminate the contract on this ground and claim severance pay, the employee must pay close attention to this time limit to avoid losing the opportunity to assert rights due to delay.
Besides Civil Liability, Can an Employer Be Penalized for an Unlawful Wage Reduction?
In addition to an employee's ability to seek wage differences through negotiation, mediation, or litigation, an unlawful wage reduction may also result in administrative penalties imposed by the competent authority:
Employees may submit relevant evidence, such as pay slips, conversation records, and announcements, to file a complaint with the labor bureau.
As stated above, if the wages actually paid by the employer fall below the statutory minimum wage for the relevant year, Article 17 of the Minimum Wage Act provides for a fine of NT$20,000 to NT$1,000,000. In serious cases, the fine may be increased up to NT$1,500,000, and the competent authority will publish the name of the violating business entity and responsible person.
As stated above, if the wages are not below the minimum wage but the employer reduces the originally agreed wages without the employee's consent, this violates Article 21 of the Labor Standards Act and may likewise result in a fine of NT$20,000 to NT$1,000,000 under Article 79 of the same Act.
This means that an unlawful wage reduction is not merely a private-law dispute between employer and employee. The employer also faces the risk of administrative penalties and even public disclosure of violation records. For employees considering whether to take further action, this can be an important point to raise with the employer.
VII. Frequently Asked Questions (FAQ)
Q1: Can an employer directly announce a wage reduction by administrative notice?
In principle, no. Wage adjustments must be agreed upon by both employer and employee. If the employer unilaterally reduces wages merely by administrative announcement or verbal notice without obtaining the employee's consent, this generally violates Article 21 of the Labor Standards Act.
Q2: After my wage was reduced, I temporarily did not object because I wanted to keep my job. Can I still request payment of the difference later?
There is a risk. If you do not object for a long period and continue accepting the reduced wages, a court may in practice find “implied consent,” making it more difficult to support a later claim for wage differences. Once an unlawful wage reduction is discovered, it is advisable to express objection promptly in writing or by certified letter, and to preserve statements such as acceptance “only as partial payment” to reduce the risk of being deemed to have impliedly consented.
Q3: My employer transferred me to a lower-paying position under the name of a “job transfer.” Is this lawful?
It depends on the circumstances. In principle, a job transfer must not adversely affect the employee's existing wages, allowances, or other benefits. This is one of the core ideas behind the “five principles of job transfer.” However, if the employer has expressly provided a disciplinary transfer and wage reduction mechanism in the work rules or employment contract, and the employee truly had poor performance or rule violations, and reasonable warnings and improvement procedures were given but no improvement occurred, such disciplinary transfer and wage reduction may have a chance of being deemed lawful. In similar situations, it is advisable to consult a professional lawyer first and have the lawyer assess the matter.
Q4: I want to terminate the contract and claim severance pay because of the employer's unlawful wage reduction. Is there a time limit?
Yes. If termination is based on Article 14, Paragraph 1, Subparagraph 6 of the Labor Standards Act, the termination right must be exercised within 30 days from the date the employee becomes aware of the unlawful situation. If this period passes, the termination will not take effect. Once an unlawful wage reduction is confirmed, employees should promptly consult a professional lawyer and take action to avoid losing their rights due to the expiration of the statutory period.
Q5: Can a full attendance bonus be deducted in full as a punishment for an employee taking leave?
This approach is not recommended. A full attendance bonus is part of wages. If the bonus is deducted in full because the employee took leave and the employee’s actual pay for that month falls below the statutory minimum wage for that year, the result is still unlawful. Even if the actual pay does not fall below the basic wage, wage deductions must still satisfy relevant legal requirements. Employers should therefore carefully design wage structures and avoid using full attendance bonuses to inflate nominal wages while effectively evading minimum wage protections.
Employees Should Assert Their Rights Promptly and Proactively When Facing Wage Reductions
Wage adjustments must be based on equal negotiation between employer and employee. In principle, employers do not have the authority to decide wage increases or reductions unilaterally, unless there is a pre-established disciplinary clause with reasonable procedures as the basis. Wages are the statutory consideration employees receive in exchange for their labor. When facing an unreasonable wage reduction, employees should understand their rights and know how to respond at each stage, including negotiation, mediation, and litigation. More importantly, once an unlawful wage reduction is confirmed, employees must promptly express their objection, preserve records of dissent, and pay attention to any exclusion period that may apply to termination of the employment contract, so that they do not lose legal protection due to hesitation.
This article is provided for general informational purposes only. The handling of any specific case must depend on the employment contract, work rules, negotiation process, and concrete evidence. If you are facing a dispute involving a unilateral wage reduction or disciplinary transfer with wage reduction, it is advisable to consult a professional lawyer as early as possible. A lawyer can help assess whether your evidence is sufficient and determine whether negotiation, mediation, or litigation is the most appropriate next step, ensuring that your rights are not impaired by procedural or timing issues. WHP Attorneys-at-Law provides consultation and litigation assistance for labor-management disputes. Please feel free to contact us for professional support in seeking the most favorable resolution for your rights.