PhilippinesAn employer’s guide to employment laws, regulations, and Employer of Record (EOR) in the Philippines.
Want to hire in the Philippines? An EOR can support you
Are you looking to grow your business and hire employees in the Philippines? Employer of Record services (EOR) can help you hire and onboard staff without setting up a local entity.
As the official employer of your team in the country, an EOR assumes responsibilities such as payroll processing, benefits administration, and ensuring compliance with tax laws—all in accordance with Philippine employment regulations. You’ll retain control over your business operations and employees’ day-to-day.
Partner with an EOR to stay agile, efficient, and focused on your core business goals.
How to hire in the Philippines
Step 1: Choose between setting up a local entity and using an EOR
When hiring in the Philippines, you must decide whether to create a local business entity or engage an Employer of Record (EOR) service.
Setting up your own company in the Philippines gives you full control but takes a lot of time, money, and effort. You need to deal with government paperwork, hire local managers, and understand complex tax laws. It can take weeks or even months to get started which could delay your hiring plans. You’ll also be responsible for staying on top of the Philippine’s employment rules.
Using an EOR is much simpler as you outsource all compliance. It’s faster to hire people, and you don’t have to worry about HR tasks. EORs can legally employ your personnel in the Phillippines on your behalf, taking care of onboarding, payroll, tax withholdings, and more.
If your goal is to employ a significant number of people and build a substantial presence in the Philippines, establishing a local entity might work. However, if you prefer a faster and more efficient hiring process, an EOR is the optimal solution.
Step 2: Finding the right EOR
Choosing the right EOR for your Philippine operations is key. A bad choice can lead to legal problems, unexpected costs, and unhappy employees. Here’s what to look for:
- Legal compliance. Ensure the EOR is well-versed in the local labor laws, employee rights, tax obligations, and local benefits. Assess their track record and inquire about their experience working with businesses in the Phillippines.
- Customer service. The EOR must provide ongoing support. For instance, Multiplier offers 24/5 personalized support and dedicated account managers with no bots!
- Transparent pricing. Be cautious of EOR services that advertise low initial costs but hide additional fees or have complex pricing structures. Ensure you understand all potential costs before finalizing your decision.
- Total cost of ownership. Don’t just focus on the price tag. Cheaper EORs might actually cost you more in the long run due to providing a poor service. Choose an EOR that offers good value for your money by finding a service that fits your budget while giving you the features you need.
Step 3: Employing and onboarding in the Philippines
Send over the contract
Once you’ve chosen the right candidate and EOR, the next step is to create a compliant employment contract. Services like Multiplier can quickly draft contracts that adhere to Philippine laws.
You can then tailor the contract to detail job responsibilities, working hours, salary, and termination conditions. After finalizing the document, the EOR will securely send it to the candidate and ensure that all necessary signatures are obtained.
Enhance compensation with competitive benefits
To craft an appealing benefits package, work with a knowledgeable EOR. Rather than dealing with local vendors yourself, an EOR can offer a variety of locally administered benefits and ensure employees receive the essential IT equipment to start their roles effectively.
Get all your documentation in order
It’s important to gather the new hire’s tax and banking information. An EOR like Multiplier can automatically collect this data to set up payroll. The EOR will manage all the required documentation, streamlining the process and reducing your administrative workload.
Onboarding in the Philippines might initially seem complex, but with the help of an EOR, the process can be smooth and efficient.
Step 4: Run payroll for employees based in the Philippines
Managing payroll for employees in the Philippines requires compliance with local tax regulations and mandatory contributions. The tax system in the Philippines is progressive, with rates ranging from 5% to 35%, depending on income levels.
Employers must also handle several mandatory contributions, such as Social Security System (SSS) contributions and PhilHealth premiums. The SSS fund supports retirement pensions, healthcare, and disability benefits. Employers must contribute a specified percentage of each employee’s salary to support these benefits.
PhilHealth provides coverage for medical expenses. Employers are required to contribute to PhilHealth, helping employees manage healthcare costs.
Using an EOR like Multiplier can simplify payroll management. They ensure accurate and timely salary payments while managing all local taxes and contributions. With Multiplier’s global payroll solution, you can oversee payroll for your international team from a single platform, avoiding the complications of dealing with multiple local providers.
Employment laws and regulations in the Philippines
The Labor Code of the Philippines is the backbone of employment practices in the Philippines. It establishes labor practices and employment standards, covering areas such as recruitment, working conditions, benefits, and termination.
Employers in the Philippines may use both fixed-term and regular (indefinite-term) contracts. While written contracts are not mandatory, they are strongly advised to prevent legal issues. Contracts usually outline job duties, salary, working hours, and termination conditions.
The standard workweek in the Philippines is 48 hours. Overtime pay is required for work performed beyond this limit. Employees are entitled to a rest period of at least 60 minutes for every 8 hours worked.
Employ top talent in Philippines through an EOR
Onboard, pay, and manage all your international employees
Employee benefits and compensation
The minimum wage rates in the Philippines vary by region and are reviewed regularly. As of 2024, the National Capital Region (NCR), which includes Metro Manila, has the highest minimum wage, reported at PHP 610 per day for non-agricultural workers. These rates are adjusted periodically to reflect changes in the cost of living and economic conditions.
Labor laws also stipulate several standard employee benefits, including:
- Annual leave. Employees are entitled to a minimum of 5 days of paid annual leave per year, which increases with longer tenure. For instance, after 5 years of service, employees receive an additional day of leave each year.
- Sick leave. Employees are granted 15 days of paid sick leave annually. If sick leave extends beyond this limit, a medical certificate is required. Extended absences may be covered by the Social Security System (SSS) under certain conditions.
- Parental leave. Maternity leave in the Philippines is 105 days of paid leave, with an additional 15 days for solo mothers. Fathers are entitled to 7 days of paid paternity leave. There are also provisions for adoption leave and extended unpaid parental leave.
- Public holidays. Employees receive paid leave for national public holidays observed throughout the country.
- Retirement benefits and workplace security. Employers must contribute to the Social Security System (SSS), which provides retirement pensions, as well as benefits for work-related injuries and illnesses.
Many employers go beyond these statutory requirements by offering additional benefits to attract and retain talent. For tailored and competitive benefits solutions, consider services like Multiplier’s Global Benefits Administration, which ensures compliance and provides a comprehensive benefits package for your international team.
Termination and offboarding procedures
When terminating employment in the Philippines, employers must follow regulations regarding notice periods and severance pay. The standard notice period is typically 30 days, but this may vary based on the employment contract.
Severance pay, also known as separation pay, is regulated by Philippine labor law and is generally based on the employee’s length of service. The severance pay structure is as follows:
- One month’s salary for employees with less than 6 months of service.
- For employees with 6 months or more of service, the salary is one month’s plus an additional half month’s salary for each year of service.
Employers may provide pay in lieu of notice if specified in the employment contract, meaning the employee may receive compensation for the notice period without having to work through it.
An EOR like Multiplier can streamline the offboarding process by ensuring compliance with local regulations, making the transition smooth for both the employer and the departing employee.
Visa and work permit assistance
Foreign workers in the Philippines need to secure the appropriate visas and work permits to legally work in the country. The type of visa required depends on the nature of the work, the length of stay, and the employee’s nationality.
Here are the main visa categories for working professionals:
- Alien Employment Permit (AEP): Required for foreign workers who will be employed in the Philippines. The AEP is issued by the Department of Labor and Employment (DOLE) and is usually valid for the duration of the employment contract or up to three years.
- 9(g) Pre-arranged Employee Visa: For foreign employees hired by a company in the Philipines. It allows for a longer-term stay and is typically valid for the length of the employment contract, with the possibility of extension.
- 13(a) Resident Visa: For foreign nationals married to a Filipino citizen. This visa allows for indefinite stay and work in the Philippines, subject to renewal and compliance with residency requirements.
Navigating the visa and work permit process in the Philippines can be complicated. Expert assistance can help streamline the application and renewal processes.
An EOR like Multiplier offers comprehensive visa and work permit support as part of its services. If you need guidance on managing global immigration for your employees in the Philippines, explore our Global Immigration Services.
Get started with Multiplier’s EOR services
Multiplier’s Employer of Record (EOR) services provide a complete solution for expanding your workforce in the Philippines. With no need to set up a local entity, you can hire, onboard, and manage staff.
Multiplier EOR ensures adherence to Philippine labor laws by creating locally compliant contracts, managing payroll and taxes, and offering a range of customizable benefits that align with local standards.
Book a demo to learn more about how Multiplier can help grow your workforce in the Philippines.
