Probationary Periods Are Illegal? Stop Believing Baseless Rumors!
"An internet myth about labor law resurfaces periodically to become the center of debate: that because provisions regarding probationary periods were deleted from the current Labor Standards Act, probation is now illegal. Is this claim accurate?"
A corporate executive asked me this question with an expression full of doubt and confusion.
Let's get straight to the conclusion:
Probationary periods are not only legally valid, but they also serve as a vital golden transition and mutual alignment period for both employers and employees.
The real questions are: How do you establish probation lawfully? And how do you part ways without getting sued?
Here are 7 essential takeaways that business owners, workers, and HR professionals must know to navigate this legal minefield safely.
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1. Is Probation Illegal? Absolutely False!
Although the Labor Standards Act no longer explicitly codifies probation, under the legal doctrine of "freedom of contract," establishing a probationary period is entirely lawful as long as it does not violate mandatory statutory provisions (such as paying below the statutory basic wage). Both Taiwan's courts and the Ministry of Labor fully recognize its legal validity. This window functions as a mutual trial and observation period. Stop assuming that the absence of explicit statutory mention makes it illegal.
2. Labor and Health Insurance Cannot Wait Until Probation Is Passed!
This is a massive legal minefield that employers trip over constantly. Day 1 on the job = Day 1 of insurance coverage. An employer must never say, "We will enroll you in Labor and National Health Insurance once you pass probation." If an occupational injury occurs during an uninsured window, the employer's statutory liability can be astronomical—and late enrollment incurs severe administrative fines. Employers: never risk your company's solvency just to save a few days' worth of insurance premiums!
3. Probation ≠ A "Get-Out-of-Jail-Free Card" to Fire at Will
Think a boss can simply show someone the door the moment they decide the employee is "unfit"? Think again. While the judicial threshold for dismissing an employee during probation is more flexible than for permanent staff, the employer still must substantiate concrete facts demonstrating incompetence—such as missed KPIs, documented refusal to cooperate, or chronic unpunctuality. Terminating someone arbitrarily without tangible appraisal evidence still constitutes an unlawful dismissal that can easily trigger litigation.
4. Must You Pay Severance Pay Even During Probation?
Many people are unaware that even if a worker has been with the company for just a single week, as long as the dismissal is initiated by the employer, paying statutory severance pay is strongly advised. While the calculated amount might only be a few hundred NT dollars (calculated pro rata as seniority × 0.5 months of average wage), failing to pay raises serious compliance violations. Labor inspection fines for non-compliance start at NT$300,000 and can reach up to NT$1,500,000. Risking a NT$300,000+ penalty to save a few hundred dollars is reckless by any calculation.
5. How Are Wages Calculated? Never Cut Corners on Salary!
When an employee is dismissed for failing probation, wages must be calculated from their official start date through their final working day. Some employers might feel that a probationary hire contributed nothing of value to the company and that paying full wages feels unfair. However, fundamental labor law dictates that wherever labor is provided, wages must be paid—regardless of whether the employer is satisfied with the output. Employers are advised not to skimp on these wages; part ways cleanly and amicably, and never let petty change spark a full-blown labor dispute.
6. Extending Probation? The Boss Cannot Decide Unilaterally!
When the initial three months are up, can the company unilaterally decide to "observe for another month"? Watch out: this requires the employee's mutual consent. If an employer unilaterally declares an extension, the action is legally null and void, and the employee is automatically deemed to have successfully transitioned to regular permanent status. New hires should stand their ground here to avoid being taken advantage of; employers who wish to lawfully extend probation must execute a written agreement signed by both parties.
7. Black and White Is Your True Workplace Shield
Talk is cheap; in court, evidence rules. The employment contract must clearly define the agreed probationary duration, and performance reviews must be backed by formal evaluation rubrics bearing employee signatures or corporate seals. Whether you represent labor or management, maintaining a comprehensive written trail (emails, LINE records, appraisal forms) is the single most vital survival rule in the modern workplace.
Have colleagues or friends who are still confused about probationary rules?
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