How are staffing costs calculated? A full breakdown of management fees and cost structure
A company's monthly cost for a dispatched worker = employee salary + statutory employer costs (about 18% of salary) + management service fee. With a monthly salary of NT$35,000 and a 20% management fee, the company actually pays about NT$48,300 per month. The statutory costs are fixed; what really drives differences between quotes is the management fee — there's no legal standard for it, it's set by the market.
The three components of staffing costs
Break down a staffing agency's quote to a company and there are only three parts:
- Worker's salary — the monthly pay the temp worker actually receives, agreed between the company and the staffing agency
- Statutory employer costs: labor insurance, health insurance, labor pension and occupational accident insurance — the portions the law requires the employer (the staffing agency) to pay
- Management service fee: the staffing agency's service fee and margin, covering recruiting, payroll, labor and health insurance administration, HR paperwork, compliance and more
The first two are transparent: you set the salary, and statutory costs follow a formula. The third is where quotes from different staffing agencies differ.
How are statutory employer costs calculated in 2026?
Below are the rates that apply in 2026 (ROC year 115). Each one affects staffing quotes:
| Item | Rate | Employer's share | Actual employer cost | Legal basis |
|---|---|---|---|---|
| Labor insurance (incl. employment insurance) | 12.5% | 70% | Salary × 8.75% | Labor Insurance Act |
| National health insurance | 5.17% | 60% | Salary × 3.10% | National Health Insurance Act |
| Pension contributions | 6% (statutory minimum) | 100% | Salary × 6% | Article 14 of Taiwan's Labor Pension Act |
| Occupational accident insurance | 0.12%–0.96% | 100% | Salary × 0.12%–0.96% | Occupational accident insurance and protection act |
In Taiwan, the Labor Insurance ordinary-accident rate of 11.5% + employment insurance of 1% = 12.5%, effective January 2025. The National Health Insurance rate of 5.17% has been frozen since 2021. Occupational accident insurance rates vary by industry: about 0.12% for office-type businesses, higher for manufacturing. The employer's health insurance column covers only the employee's own share; if the employee has dependents enrolled under them, the employer must pay the dependents' portion separately.
Total: statutory employer costs come to about 18%–19% of the employee's monthly salary. This ratio barely changes across salary levels, because every rate is calculated as a percentage of salary.
Source: Taiwan Ministry of Labor announcement on 2026 labor policy changes
For monthly pay of NT$30,000 to NT$50,000, what does a company actually pay?
Below are worked examples for three common salary levels. Statutory costs are calculated directly from each rate, and the management fee is assumed at 20% (for illustration only; actual rates vary case by case):
| Item | Monthly salary NT$29,500 (minimum wage) | Monthly salary NT$35,000 | Monthly salary NT$50,000 |
|---|---|---|---|
| Employee monthly salary | 29,500 | 35,000 | 50,000 |
| Labor Insurance, employer share (8.75%) | 2,581 | 3,063 | 4,375 |
| Employer health insurance contribution (3.10%) | 915 | 1,085 | 1,550 |
| Pension contribution (6%) | 1,770 | 2,100 | 3,000 |
| Occupational accident insurance (0.21%) | 62 | 74 | 105 |
| Statutory costs subtotal | 5,328 | 6,322 | 9,030 |
| Management service fee (20%) | 5,900 | 7,000 | 10,000 |
| Total monthly cost to the company | 40,728 | 48,322 | 69,030 |
| Equivalent to | 1.38x | 1.38x | 1.38x |
Notes on the estimate: Statutory costs are calculated using 2026 rates. The occupational accident insurance rate uses the all-industry average of 0.21% (industry-specific 0.14% + commuting 0.07%). National health insurance covers the employee only, not dependents. The 20% management fee is an assumption for illustration; the actual rate is negotiated between both parties based on job type, headcount, dispatch period and other factors. Formulas used: Labor insurance = monthly salary × 12.5% × 70%; Health insurance = monthly salary × 5.17% × 60%; Labor pension = monthly salary × 6%.
How much do staffing agencies usually charge as a management fee?
There is no legal standard for the management fee. Taiwan's current law sets no ceiling or floor on service fees for domestic staffing, unlike migrant worker brokerage (which has a legal cap under the "Standards for Fee Items and Amounts Charged by Private Employment Services Institutions"). The management fee for domestic staffing is purely a market rate, negotiated between the company and the staffing agency.
Factors that affect the management fee:
- Job type: highly replaceable roles such as general admin or warehouse work usually carry a lower management fee; technical roles (IT, engineering) or those requiring specific certifications carry higher rates
- Number of dispatched staff: larger volumes usually leave room to negotiate
- Assignment length — stable long-term arrangements have lower rates than short-term rush jobs
- Replacement commitments: terms such as how many days to fill a gap and free replacement for unsuitable workers are reflected in the rate
- Scope of service: whether it's just supplying staff, or also includes attendance management, performance reporting and labor dispute handling
Many companies' first reaction to a quote is "the management fee is too high—if I hired directly I wouldn't pay this." But the management fee isn't just profit. Job ad costs, interviewing and screening staff, monthly payroll calculation and payment, enrolling and withdrawing workers from labor and health insurance, workplace-safety compliance, and the buffer cost of replacing people are all absorbed by the staffing agency.
What you should really compare isn't "what percent is the management fee," but "after adding these hidden costs, is hiring directly or using staffing the better deal?"
Staffing vs. hiring directly: how much do costs differ?
On paper, hiring directly is always cheaper than staffing, since there's no management fee. But direct hiring has several costs that don't show up on the books:
| Cost item | Use staffing | Hire directly |
|---|---|---|
| Worker's salary | Included in the quote | Paid by you |
| Labor insurance, health insurance and labor pension | Handled by the staffing agency | Enroll in insurance yourself and calculate monthly |
| Recruiting cost | None (borne by the staffing agency) | Job ads + HR screening time |
| Turnover cost | Replacement by the staffing agency | Severance pay + re-hiring |
| HR & administration | Handled by the staffing agency | Attendance management, leave, overtime pay calculations |
| Compliance risk | Borne by the staffing agency | Handle labor inspections and labor disputes yourself |
| Flexibility | Simply don't renew when the contract ends | Dismissal requires legally valid grounds and procedures |
Bottom line: short-term needs (6 months or less), seasonal staffing, a headcount freeze despite rising workload, or a need to fill seats fast — in these cases staffing is usually cheaper than hiring directly. For long-term, stable core roles, direct hiring usually has the lower total cost.
How to read the numbers on a staffing quote
When you receive a quote, check these points:
Items that should be clearly listed
- Employee's monthly salary
- How statutory employer costs (labor insurance, health insurance, pension, occupational accident insurance) are calculated
- How the management service fee is calculated — as a percentage of salary, or a fixed amount
- How overtime and public-holiday work are paid
- Contract term and termination terms
Follow-up questions to ask
- The basis for the management fee — is it charged on base pay only, or on overtime pay too? This affects the actual amount
- Handling unsuitable workers — replaced within how many days? How is billing handled during the replacement period?
- Flexibility to change headcount—if you suddenly need to add or cut people, how much notice is required? Are there penalties?
- Conditions for converting dispatched workers to full-time employees—some agencies charge a conversion fee, so agree on the amount and terms in advance
If a quote is unreasonably low—say the management fee is only a few percent of salary—check whether the savings come out of employees' statutory benefits. Common tactics are under-reporting the insured salary (an employee actually earns NT$35,000 a month but is insured at minimum wage) or shifting pension contributions onto employees. This is not only illegal; if something goes wrong, the client company also shares liability.
Under Article 22-1 of Taiwan's Labor Standards Act, if a staffing agency fails to pay wages, the client company bears supplementary liability for payment. Under Article 63-1, the client company and the staffing agency are jointly liable for occupational injury compensation.
When does staffing make sense, and when doesn't it?
Suited to staffing
- Seasonal or project-based needs — year-end stocktaking, production rushes, trade shows: no longer needed once they're over
- Headcount is frozen but workload is growing — official headcount won't be approved, but the work is already piling up
- Fast fill — the operational loss from a position sitting empty for two weeks or more is often greater than the management fee
- Trial evaluation — use staffing for 3–6 months first, then convert to a permanent hire once the fit is confirmed
When staffing isn't a good fit
- Core roles: positions that require building expertise over time or handling confidential information
- Roles that need extensive training: training is costly, and when someone leaves you start over
- Long-term, fixed frontline roles—for steady needs lasting more than a year, hiring directly usually costs less overall
The legal framework of staffing: who is the employer, and who is responsible for what?
Taiwan currently has no standalone "Dispatch Act." In 2019, the Legislative Yuan passed amendments to the Labor Standards Act that placed dispatch-related provisions directly into the Act. The main rules are spread across the following articles:
| Legal provision | What it requires | What it means for employers |
|---|---|---|
| Article 17-1 of Taiwan's Labor Standards Act | The client company is prohibited from interviewing and selecting specific dispatched workers; if it does, the worker can demand that a direct employment contract be established | Interviewing dispatched workers carries legal risk; they should be recommended by the staffing agency |
| Taiwan Labor Standards Act, Article 22-1 | If a staffing agency fails to pay wages, the client company is secondarily liable for payment | Choosing a financially sound staffing agency matters |
| Article 63-1 of Taiwan's Labor Standards Act | If a dispatched worker suffers an occupational injury, the client company and staffing agency are jointly liable | Workplace safety is the company's own responsibility and can't all be pushed onto the staffing agency |
All of the above articles were added and promulgated on May 20, ROC year 108 (2019). In addition, the "Guidelines on the Rights of Dispatched Workers" (administrative guidance from Taiwan's Ministry of Labor, not binding law) set out the items that dispatch contracts should specify.
In short: a dispatched worker's legal employer is the staffing agency, which handles and pays labor insurance, health insurance, and pension contributions. But the client company (where the worker is placed) shares joint liability for supplementary wage payments and occupational injury compensation; if the agency runs into trouble, the company can't say “that's not our problem.”
FAQ
Do staffing agencies deduct a management fee from workers' pay?
No. The management fee is a service fee the company pays the staffing agency; it is not deducted from the worker's pay. The worker's monthly salary is the amount shown on the quote, paid in full. If a staffing agency deducts a management fee or any other charge from the worker's wages, that violates the full-payment-of-wages principle in Taiwan's Labor Standards Act.
Who is responsible for a dispatched worker's labor and health insurance?
The staffing agency. The legal employer of a dispatched worker is the dispatch business (the staffing agency), which handles enrollment and the employer's share of labor insurance, national health insurance, employment insurance, and occupational accident insurance, as well as pension contributions. Legal basis: Taiwan's Labor Insurance Act Articles 6 and 10, National Health Insurance Act Article 15, and Labor Pension Act Article 14.
Is there a fee to convert a temp worker to permanent?
Check the contract. Most staffing agencies specify a "conversion fee" or "buyout fee" in the dispatch agreement, commonly 1–2 months' salary, or a fee that decreases over the service period (for example, no fee for conversion after one year of dispatch). This isn't required by law. It's a commercial term you can negotiate before signing. Also, if a company violates Article 17-1 of Taiwan's Labor Standards Act (by interviewing and selecting specific dispatched workers), the dispatched worker has the right to demand a direct employment contract with the company without the staffing agency's consent.
If a dispatched worker has a workplace accident, who is responsible?
Under Article 63-1 of Taiwan's Labor Standards Act, the client company is jointly liable with the staffing agency for occupational injury compensation. And under Article 25 of the Occupational Safety and Health Act, the client company must handle occupational safety and health for dispatched workers the same way as for its own employees. Simply put: workplace safety is the company's responsibility, and it can't be ignored just because the worker is dispatched.
Are short-term and long-term staffing rates the same?
Usually not. For short-term assignments (3 months or less), recruiting costs can't be spread out and turnover risk is higher, so the management fee rate is usually higher than for long-term arrangements. With stable long-term arrangements (a year or more, fixed headcount), the agency's management costs are predictable, leaving more room to negotiate the rate.
Need a specific staffing quote?
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