The Philippines is home to dedicated, experienced workers who are reasonably fluent in the English language. And their services are available to employers worldwide for a relatively small monetary investment. 

If you’re looking to add Filipinos to your business’s workforce, it’s critical to understand how the country approaches employee benefits. This knowledge will enable you to stay within the confines of the employment law and build an employee benefit plan your Filipino workers will appreciate. 

This simple guide will dive deep into employee benefits in the Philippines. We’ll touch on mandatory and supplementary benefits and give you some direction as to how to build your employee benefits plan. 

Overview of the Employment Law in the Philippines

You’ll find all of the laws and regulations governing the employer/employee relationship in the Labor Code of the Philippines. It covers everything you need to know as an international employer looking to employ Filipinos, including:

  • Working hours
  • Social Security
  • Minimum Wage
  • Medical benefits
  • Pension
  • and more

The following resources may also be helpful:

Below, we will take you through the most important benefits to include in your employee benefits plan, but we also urge you to look at the actual laws. 

Mandatory Employee Benefits in the Philippines

The Filipino government has enacted many non-negotiable employee benefit laws. These are the benefits you have to include in your benefit plans for your workers. If you don’t, there could be severe legal consequences. 

Social Security Benefits

Social security benefits help to ensure that Filipino workers don’t miss out on necessary care and services as they progress through life. Through the country’s Social Security System (SSS), employees can access the following benefits: 

The amount that employees are required to pay towards these benefits is 9.5% of the employee’s salary. And the employee will pay 4.5% of their salary as well, for a total contribution amount of 14% of the salary.

There will be some contribution variations depending on the worker’s salary – we recommend reviewing this Contribution table on the SSS website.

PhilHealth Benefits

Health benefits in the Philippines range from inpatient and outpatient care to cancer treatment and more. To access these benefits, employers of Filipinos have to take the following steps through PhilHealth, the health insurance provider for private Filipino employees: 

  1. Register their company with PhilHealth. 
  2. Register the employee with PhilHealth so they can receive health benefits. 
  3. Tell PhilHealth when you let an employee go (you have 30 days to do so). 
  4. Take out employee contributions from the employee’s paycheck.
  5. Make contributions to the account as the employer. 
  6. And more.

As of the time of this writing, the contribution rate is 5%, which is to be split evenly between the employer and the employee. So, as an employer, you should expect to pay 2.5% of the employee’s salary to fund your Filipino worker’s health insurance. 

Pag-IBIG Fund (Home Development Mutual Fund)

This non-negotiable benefit helps to ensure that Filipino workers can save for housing – the savings plan is administered through the Pag-IBIG Fund. To fund this account, employers must contribute 2% of the employee’s basic salary.

Minimum Wage

The minimum wage in the Philippines varies by region and sector. In the National Capital Region (NCR), the daily minimum wage for non-agricultural workers is 645 Philippine peso per day (non-agricultural) and 608 Philippine peso per day (agricultural workers, as well as those in service or retail establishments with 15 or fewer employees, and manufacturing companies with fewer than 10 employees)

This equates to 11.61 USD per day or 255.42 USD per month.

Work Hours, Overtime Pay, and Night Shift Pay

Filipino workers should not be made to work over 8 hours per day. In instances where a worker needs to go past these hours, they should be paid overtime – 125% of their regular pay rate. Also, whenever a worker works the night shift, they should receive special night shift pay, which should be 10% more than their regular pay. 

Premium Pay

Whenever Filipino workers work on a day they would have otherwise had off, they get what’s called “premium pay.” It’s essentially a bonus equal to 30% of their regular salary. We’ll touch on holiday pay and leave benefits later on in this guide. 

13th Month Pay

Under the Labor Law of the Philippines, rank-and-file employees are eligible to receive 13th-month pay, a bonus payment that’s equal to one month of the employee’s salary. Since this is only for rank-and-file employees, you won’t have to pay this bonus to your managers or leaders. 

Leave Benefits

By law, Filipino employees are entitled to several types of leave, including:

  • Service incentive leave – Employees who have worked in the same place of employment for at least 12 months get 5 service incentive leave credits. They can use them however they want, and unused credits must be paid for by the employer.
  • Maternity leave – Pregnant Filipino employees get 105 days of paid maternity leave and can be awarded up to 30 days extra without pay. These leave days aren’t able to be traded for cash.
  • Paternity leave – Male employees with a partner who is pregnant or has recently given birth are eligible for 7 days of leave credits. They should receive full payment for these days off.
Type of Leave Main Eligibility Requirement Duration of Leave/Number of Credits
Service Incentive Leave Employees who have worked at the same place for at least 12 months 5 days of leave credits
Maternity Leave Pregnant Filipino employees 105 paid days leave + 30 days unpaid
Paternity Leave Male employees with a pregnant partner or partner who recently gave birth 7 days of leave credits

Holiday Pay

Holiday pay is mandatory for all Filipino employees. Here are the holidays they should have off: 

  • New Year’s Day
  • Maundy Thursday
  • Good Friday
  • Araw ng Kagitingan
  • Labor Day
  • Independence Day
  • National Heroes’ Day
  • Eid’l Fitr
  • Eid’l Adha
  • Bonifacio Day
  • Christmas Day
  • Rizal Day
  • General election

On these days, the employee is entitled to 100% of their regular pay. Discover more about holiday pay in detail here.

Retirement Pay

Whenever one of your Filipino employees retires, they will receive ½ of a month’s salary for every year they worked. Employees can retire voluntarily at 60 years old, but the compulsory retirement age is 65.

You can learn more about retirement pay in the Philippines here.

Supplementary Employee Benefits to Offer Filipino Employees

Any employer looking to hire Filipino employees should check off all of the above mandatory benefits. But they’d also do well to include some of the below supplementary employee benefits to encourage candidates to say “yes” to your offer of employment: 

  • Financial benefits, like profit-sharing and performance bonuses
  • Private health insurance to fill gaps left behind by PhilHealth coverage
  • Mental health support in the form of free or reduced therapy or specialized programs
  • Fitness memberships
  • Sick pay
  • Extended paid time off
  • An allowance for professional development

These aren’t the only supplementary benefits you could include in your employee benefit plans. 

How to Craft a Good Employee Benefits Plan

Creating a good employee benefits plan isn’t an easy task – by far. But if you follow the below steps, you can take much of the sting out of the process: 

  • Take note of all the core mandatory benefits we outlined above and ensure you’re clear on all of them. You’ll need to include them all in your benefit plans for employees from the Philippines. 
  • Get to know your ideal Filipino candidate in an effort to pinpoint the supplementary benefits that would most appeal to them. 
  • Explore the supplementary benefits above, and brainstorm additional ones as necessary. Once you’ve settled on one or more, include them in the benefit plan as well. Make sure that they don’t take you over your budget.
  • Look into service providers that could help set up or administer your benefit plan. They include HR professionals, lawyers with experience in international law, business consultants, Professional Employer Organizations (PEOs), Employers of Record (EORs), and more. Take some time to sort through your options. 
  • Create a handbook that outlines all of the benefits you intend to offer to your Filipino employees. Look for other opportunities to communicate the benefits – in job descriptions, orientation sessions, and webinars, for example. 
  • Update the benefit package as needed. Laws and regulations are always subject to change. Stay up to date on the Labor Code in the Philippines to monitor for changes, and quickly update the package accordingly to remain compliant. 

So, there you have it- all you need to know about employee benefits in the Philippines. We hope that this employee benefits guide has given you the information you were looking for, and we wish you the best as you tap into the Filipino workforce.