Severance Payment System in Taiwan: A Historical Perspective

Abstract

This chapter investigates the institutionalization of the status and function of the severance payment system in Taiwan for the dismissal protection through comparative labor law. The severance payment system in Taiwan had been overburdened with the role of pension protection by legislation of Labor Standard Act in 1984. As a result, the dismissal protection was negatively impacted. Following the differentiation reform of this institution in the first decade of twenty-first century, the severance payment system in Taiwan has embodied the dismissal protection through the separation of labor pension and unemployment insurance. Taiwan’s severance payment had transplanted originally from European countries in 1920s. The European model of rigid job security, however, has not been followed by Taiwan in 1950s. In the meantime, clearly defined requirements of just causes for fair dismissal help to reduce the litigations of labor disputes. The severance payment system in Taiwan has become a weight for the equitable remedy in the dismissal protection.