Over the past decade, the Philippines has burgeoned into the world’s stage as one of Asia’s fastest-growing economies. The island nation boasts a GDP of $376 billion – a 600% increase since the 1990s.
The Philippines is also becoming a bedrock of hot talent in health, information technology, services. Moreover, IMD Business School’s World Talent Ranking report states that the country ranks:
- 3rd in labor force growth
- 13th for skilled labour
- 31st for global talent appeal
Adding to the lucrative talent available in the country is the growing consumer spending. The island nation shall witness P10 trillion boosting the economy in the form of consumer spending in 2021.
All these reasons and many others, such as the improving ease of doing business, increased FDI make the Philippines an attractive destination to establish your footprint in the country.
Why Use a Philippines PEO
The Philippines is surely an attractive destination to pursue your business. With the proximity to countries with vibrant economic activity such as Singapore, India, Australia, the island nation presents itself as a suitable base to expand your business.
However, there are several challenges in running a business in the country. Like any other place, you require a registered local entity to hire in the country. Secondly, companies in export and import have to navigate through several compliance and labor laws. Thirdly, starting a business in the country takes approximately 36 days.
Between dealing with sluggish documentation and border compliance processes and associated costs, companies must plan accordingly.
To navigate these challenges, you could partner with Multiplier’s international Professional Employer Organization (PEO). Our SaaS-based PEO enables you to employ and expand into the country – employment risk-free.
We can also act as your Filipino workers’ Employer of Record. Using our local entity in the Philippines, you can hire talent without establishing your agreementTory in the country. Multiplier also facilitates in offering top-tier benefits so that you can tick employee well-being off from your checklist.
Philippines PEO Costs
Usually, PEOs charge based on two pricing models – fixed and variable. A PEO based on the fixed pricing model charges a transparent fee ranging between $200 – $1000 per employee per month.
Multiplier is one such PEO solution. The final price depends on the complexity of employment laws of the employee’s jurisdiction.
Our prices ensure that you get the most out of your employee spending. Every employee hired through our PEO also receives HR support, benefits management, and a live dashboard to track workforce spending in real-time.
How to Hire in the Philippines
Did you know that there is no statutory requirement to provide your employee with an employment contract while onboarding? The statutory requirement makes it mandatory for domestic workers to secure a written agreement before employment. However, it is not compulsory for all employees.
Also, there is a ‘control test’ with which employers can classify employees as contractors and full-time employees.
Employers must compensate for all additional hours promptly.
To prevent risks like employee misclassification and compliance, you can partner with a PEO partner in the Philippines, like Multiplier. We help you manage HR operations in the Philippines – payrolling, onboarding, termination, etc. – without any employment risks.
However, if you want to grapple with the compliance monster all by yourself, then here are a few things you must consider while hiring from the Philippines.
Employment contracts
Although there is no statutory requirement to offer an employment contract, employees in the Philippines need a meticulously written agreement while considering an employer.
You have to draft employment contracts in the local Filipino language. The agreement must contain details on the employee’s duties, salary, benefits, and procedures related to termination. The employer must compensate for any request to work additional hours.
Employers also send an offer letter to entice their employees. These letters must clearly describe the salary and benefits for the employee.
Moreover, employees in the Philippines are required to serve a probationary period of six months.
Multiplier’s SaaS-based PEO automates generating employment contracts. Our platform reduces the entire process to a few clicks. Our local HR experts also help customize contracts to suit the nature of employment.
Taxation
Check the table below to understand the tax slabs for employees in the Philippines.
Paying and managing taxes of your employees in the Philippines requires a local entity. However, establishing an entity or a subsidiary can take anywhere between 2-3 months.
Partnering with an Employer of Record (EOR) in the Philippines can help you employ and pay your employees at lesser costs and time. Partnering with Multiplier can set you up for hiring in the Philippines in under 24 hours. Our self-serving platform offers a one-click payrolling solution to pay any number of employees in the Philippines.
Salary
There is no statutory minimum when paying your employees in the Philippines.
P9,064 is a minimum to make a living in the Philippines.
Working hours
Employers cannot task their staff for more than 40 hours a week at 8 hours a day.
Any request to work additional hours must be compensated by the employer. Usually, the employer pays an extra 25% of their regular wage.
Suppose the employer requests their staff to work on public holidays or Sundays. In that case, employers pay 30% more, including the 25% paid for overtime work.
Bonuses
Like several other countries in Asia, employees in the Philippines receive a 13-month salary – often referred to as an annual bonus. The bonus amounts to a month’s pay provided the employer has worked for at least twelve months.
You should note that the bonus must be on top of any included allowances, monetary benefits, or additional funds. Also, employers must disburse these payments even before 24th December. However, with Christmas being an important holiday for Filipino workers, employees pay bonuses before this date.
Health benefits
Most employees provide health insurance to their employees. Additionally, the Philippines’ Health Coverage offered by the government covers each citizen.
However, the state’s health care program doesn’t cover all employees. Hence, employees choose to work with companies, which offer plenty of supplementary medical benefits.
As your employer of record in the Philippines, we can provide your employees with locally-renowned benefits at affordable costs.
Leaves
Partnering with Multiplier can help you manage HR administration from a single platform. Our platform features a dedicated dashboard to handle holidays, vacations, timesheets for all your international employees in a single place.
Annual leave
Statutory minimum dictates employers to grant five days of paid leave each year. However, a minimum of 15 days of paid vacation annually is given as a general rule of thumb.
Sick leave
All employees are entitled to 15 days of paid leave per year. Employees can avail sick leaves to rest against sickness. Sick leaves can also be applied to care for a family member.
Public Holidays
Employees in the Philippines are entitled to eight paid holidays:
- New Year’s Day
- Maundy Thursday
- Good Friday
- Bravery Day
- Labor Day
- Independence Day
- Christmas Day
- Rizal Day
The government announces several special holidays, which are unpaid days off and may change from year to year. These might include any of the following:
- Chinese New Year
- End of Ramadan
- Festival of Sacrifice
- Ninoy Aquino Day
- National Heroes Day
- All Saints Day
- Bonifacio Day
- Christmas Eve
- Last Day of the Year
Maternity leave
Statutory requirement mandates 105 paid leaves for maternity leave. Female employees are entitled to an additional 30 days of unpaid leave.
Employees who have made at least three monthly contributions to the social security system 12 months before childbirth can receive maternity pay from social security.
Employers must pay the difference between what the employee gets from social security and their salary.
Termination
When there is just cause, the employer must provide two notices of at least 30 days. They must provide a written statement of dismissal with grounds of termination specified. The notice must also contain the following:
- A notice of intent to dismiss and a reasonable opportunity to explain the employee’s side
- A hearing or conference with the opportunity to respond to the charge
- A notice of dismissal with grounds that establish justified termination after the response
When there is just cause for termination, due process requires the employer to provide written notice of dismissal to the employee.
The notice must specify the details of the grounds of termination.
Employers must release these details at least 30 days before the date termination will occur.
In unfair cases, employees can appeal to relevant arbitrators. Suppose the arbitrator decides to favor the worker, the employer reinstates the employee and pays damages.
Why Multiplier
With Multiplier’s PEO/EOR solution, treading into a new market is as seamless as confidently ice-skating.
We can help you onboard your preferred candidate, handle HR issues and payroll, and ensure compliance with local laws. By partnering with our EOR in the Philippines, you avoid the hassle of setting up a foreign branch or subsidiary.
Once you have chosen your desired talent, start generating and customizing employment contracts for them in a few clicks and manage the workforce from a single platform. You can also pay thousands of employees in Philippines Peso with a single click.
Hire and expand using the best SaaS-based PEO service in the Philippines. Contact us to grow your business today.