Hiring in the Philippines is your gateway to a vibrant, talented, and English-speaking workforce known worldwide for its adaptability and service mindset. But before you dive in, it’s essential to understand the local labor laws, payroll requirements, and cultural dynamics that shape the Filipino employment landscape.

In this guide, we’ll walk you through exactly what it takes to hire compliantly in the Philippines, and show you how an Employer of Record (EOR) can help you scale your team with ease and confidence.

How to Hire Employees in the Philippines

Hiring in the Philippines offers major advantages, such as competitive wages, a large pool of skilled professionals, and a workforce that’s highly accustomed to working with global teams. But like any country, the Philippines comes with its own set of labor laws, tax obligations, and HR practices that can trip up even seasoned employers.

That’s why choosing the right hiring path is so important. Your method affects everything from payroll setup to legal risk to the speed of onboarding.

Setting Up a Local Entity

Registering a local corporation or branch allows you to hire directly. You’ll have full control over HR and payroll, but also full responsibility for compliance with local labor laws, corporate tax, and reporting. This option is best for companies planning a long-term investment.

Working with an Employer of Record (EOR)

An EOR serves as the legal employer for your team in the Philippines, managing employment contracts, payroll, taxes, and compliance on your behalf. You direct the employee’s daily work, while the EOR handles all the regulatory details, which is perfect for companies that want to hire quickly without setting up an entity.

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Hiring Independent Contractors

This approach offers flexibility, especially for short-term projects or specialized skills. However, Philippine labor laws clearly define employee vs. contractor status, and misclassification risks fines, legal disputes, and tax liabilities. Proceed with caution and sound legal advice.

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Things to Know About the Philippines

Before you start hiring, it helps to understand the cultural and legal landscape of the Philippines. It’s a country with deep respect for relationships, loyalty, and work-life balance, plus a growing emphasis on professional development and global business practices.

  • English Fluency: The Philippines is one of the largest English-speaking countries in Asia, with a strong pool of bilingual professionals across industries.
  • 13th Month Pay: A mandatory benefit – equal to one month’s salary – paid to employees in December, as required by Philippine labor law.
  • Cultural Holidays: Major holidays include Holy Week, Christmas, and national independence celebrations. Many companies offer extra flexibility around these times.
  • Social Contributions Are Key: Employers must register and contribute to multiple government-mandated programs: SSS (Social Security), PhilHealth (health insurance), and Pag-IBIG (housing fund).
  • Remote Work Is On the Rise: The pandemic accelerated acceptance of remote work in the Philippines and many professionals now expect flexible or hybrid work arrangements.
  • Loyalty Matters: Long-term employment is highly valued. Offering career development opportunities and strong benefits can significantly improve retention.

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The world’s BPO capital with SSS, PhilHealth, Pag-IBIG, mandatory 13th month pay, and Philippine Labor Code compliance.

We handle employment contracts, payroll, social contributions, and full Philippine compliance.

No local entity needed. Your team can start in days.

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Philippines Employer of Record vs Setting Up a Legal Entity

The key alternative to Philippines EOR services is to set up a legal entity and directly hire in-country through that entity. If you’re planning on entering the Philippine market and doing business there for a long time, this option can give you the most control and stability.

Most foreign investors looking to register entities in the Philippines choose either a one-person corporation (OPC) or a joint-stock corporation (JSC). An OPC can be set up with just one person who acts as the single shareholder and director. The shareholder can be a foreigner and a non-resident, but must also appoint a Philippine citizen as a secretary and a treasurer who is resident in the country. An OPC pays a corporate income tax of 30%.  It requires at least two directors who must also be shareholders but can only be 100% foreign-owned if it has at least three resident shareholding directors. JSCs typically pay 25% CIT on their income.

If you want to register an entity in the Philippines, you’ll need to complete these steps:

  1. Register your company’s name with the Security and Exchange Commission (SEC) and receive a certificate of incorporation. 
  2. Register your new company with the Bureau of Internal Revenue (BIR) to receive a tax identification number (TIN).
  3. Obtain a business permit from your local district (barangay).
  4. Register as an employer with the Social Security System, Philippine Health Insurance Corporation (PhilHealth), and Home Development Mutual Fund (HDMF) so you start to hire and pay employees.

When you’ve finished these steps, you’ll be able to do business and hire employees in the Philippines. However, you’ll likely need to work with HR specialists, tax accountants, and lawyers on a continuing basis to ensure compliance with all local laws. Be sure to include these costs in your operational budget.

By contrast to this time-consuming process, a Philippines EOR service provider that already has an entity in the Philippines and can use it to hire employees on your behalf. It becomes the legal employer o  local staff while you work directly with them, setting their tasks and work schedules. The EOR takes care of hiring, onboarding, payroll, benefits administration, and all other HR concerns on your behalf. While Philippines EOR services have a cost, compared to the expense and complexity of setting up a concern in the country, this may be an effective option.

Using an Employer of Record in the Philippines

Hiring remotely in the Philippines without setting up a local company? That’s where an Employer of Record (EOR) comes in. An EOR acts as the legal employer on paper, handling everything from employment contracts and tax registration to payroll and social security contributions, while you stay focused on managing your team’s day-to-day work.

An EOR makes expansion into the Philippines faster, easier, and fully compliant, without the need to navigate complex local labor codes or government processes.

Here’s what an EOR manages for you:

  • Drafts and issues locally compliant employment contracts
  • Registers employees with tax and social security authorities (SSS, PhilHealth, Pag-IBIG)
  • Processes payroll in Philippine pesos (PHP)
  • Handles all statutory deductions and employer contributions
  • Tracks leave, holidays, and working hours per local law
  • Keeps you up to date on changing employment regulations
  • Manages lawful terminations and severance, if needed

Whether you’re hiring one employee or building a full team, an EOR gives you a turnkey way to hire in the Philippines, without setting up a corporation or risking non-compliance.

How Much Does a Philippines Employer of Record Cost?

Prices for an EOR in the Philippines can vary but typically start around $499/employee per month.

Employment and Labor Laws in the Philippines

Hiring in the Philippines means navigating a structured set of labor laws that prioritize employee rights and benefits. The backbone of these regulations is the Philippine Labor Code, which sets minimum standards for wages, benefits, working hours, leave entitlements, and termination.

Whether you’re hiring your first employee or scaling a team, understanding these basics is key to staying compliant.

Employment Contracts

Written employment contracts are highly recommended and widely practiced, especially for full-time hires. Contracts should clearly state job role, compensation, benefits, working hours, leave policies, and termination terms. English is the standard contract language in many industries.

Working Hours and Paid Holidays

The standard workweek is 40 – 48 hours, typically Monday to Friday. Employees working beyond 8 hours a day are entitled to overtime pay at 125% of their regular rate. Night shift premiums (10 p.m. to 6 a.m.) apply at 110% of regular pay.

Probationary Periods

Commonly up to 6 months. Termination during this period is more flexible but must still follow legal justifications.

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Social Security System (SSS), PhilHealth, and Pag-IBIG Fund Contributions

Employers must register and contribute to:

  • SSS (Social Security System) – retirement, disability, and sickness benefits
  • PhilHealth – government health insurance
  • Pag-IBIG Fund – housing savings fund

Minimum Wage

Wage rates vary by region. In Metro Manila, as of 2024, the minimum wage is PHP 610/day. Employers must stay updated on regional wage board announcements to ensure compliance.

Paid Leave

Employees earn at least 5 days of Service Incentive Leave per year (which can be used for vacation or sick leave), though most companies offer more competitive packages.

The Philippines also observes 18 – 20 public holidays annually, a mix of regular and special non-working days.

Termination Rules

The Philippines has strict protections around dismissal. Employers must follow due process, such as valid cause, written notice, and an opportunity for the employee to respond. Termination without proper process can lead to legal action.

How an Employer of Record Helps You Hire in the Philippines

Hiring a team in the Philippines can be a game of fine print. Between mandatory government contributions, strict termination rules, and region-specific wage rates, it’s easy to get caught off guard.

An Employer of Record (EOR) makes this process much smoother, serving as your local partner who handles compliance while you focus on growing your team.

Here’s what an EOR takes off your plate:

  • Drafting compliant employment contracts
  • Registering employees with SSS, PhilHealth, and Pag-IBIG
  • Running accurate, on-time payroll in PHP
  • Calculating and filing mandatory government contributions
  • Managing statutory leave, holidays, and overtime pay
  • Staying updated on labor law changes and regional wage adjustments
  • Guiding lawful terminations and avoiding disputes

By working with an EOR, you can confidently build your team in the Philippines without needing to set up a local entity or become an expert in local labor codes.

Payroll and Employment Taxes in the Philippines

Philippine employment best practices means keeping up with a multi-layered tax system. Both employers and employees contribute to several mandatory funds, and failure to comply can lead to steep penalties or delays in government processing.

Contribution Details
Social Security System (SSS) Covers retirement, disability, and maternity benefits. Employers contribute about 8.5%; employees contribute 4.5%.
PhilHealth National health insurance. Contributions are shared equally, usually 2.75% from the employer and 2.75% from the employee.
Pag-IBIG Fund Savings and housing fund. Employers contribute 2%; employees contribute 1%.
Withholding Tax Employers deduct and remit progressive income tax on behalf of employees, with tax rates ranging from 0% to 35% based on income.

An Employer of Record ensures all taxes and contributions are calculated correctly, submitted on time, and fully documented, so you can focus on your team instead of red tape.

How an EOR Helps You Run Payroll in the Philippines

Payroll in the Philippines might look simple, until you get into the fine print. Between mandatory government contributions, fluctuating tax rates, and holiday pay entitlements, it’s easy to miss a step. An Employer of Record (EOR) helps you run compliant, accurate payroll without building an entire local payroll team.

Here’s what an EOR handles:

  • Salary Disbursement: Pays employees in Philippine pesos (PHP), through approved local banking channels, right on schedule.
  • Tax Withholding & Filing: Accurately calculates income tax and files monthly and annual reports with the Bureau of Internal Revenue (BIR).
  • Social Contributions: Manages SSS, PhilHealth, and Pag-IBIG contributions for both employer and employee, and ensures timely payment.
  • Payslip Management: Issues clear, detailed payslips that reflect salary, bonuses, and deductions.
  • Holiday Pay & Bonuses: Manages 13th-month pay (mandatory by law) and other statutory bonuses or allowances.

In short: an EOR helps you pay your people right, stay compliant, and keep your focus on growth; not payroll regulations.

Work Permits and Visas in the Philippines

Hiring foreign talent in the Philippines? You’ll need to navigate the country’s visa and work permit system carefully. While the Philippines welcomes skilled professionals, the process requires proper documentation and government approvals to avoid delays or penalties.

9G Work Visa (Pre-Arranged Employment Visa)

The primary visa for foreign nationals with a local job offer. Requires sponsorship from a Philippine-registered company and approval from the Bureau of Immigration.

Special Work Permit (SWP)

A temporary permit allowing short-term work (usually up to 6 months). Suitable for consultants or project-based hires.

Alien Employment Permit (AEP)

Issued by the Department of Labor and Employment (DOLE), required for most foreign hires and a prerequisite for obtaining a 9G Work Visa.

What employers must provide:

  • A valid employment contract
  • Business registration and tax documents
  • Proof that the role cannot be readily filled by a local candidate (in some cases)
  • Visa sponsorship paperwork and processing fees

An Employer of Record (EOR) can streamline this entire process, acting as the visa sponsor, handling all documentation, and ensuring your new hire is fully compliant with Philippine immigration law from day one.

Time Off and Leave in the Philippines

Filipino labor law is built with strong protections for workers, particularly when it comes to paid leave and benefits. If you want to attract and retain top local talent, offering clear, competitive leave policies is a must.

Service Incentive Leave (SIL)

Employees who have worked at least one year are entitled to a minimum of 5 days of paid leave per year. Many employers offer more (10 -15 days) as a competitive practice.

Public Holidays

The Philippines observes a mix of regular and special non-working holidays, typically 18 to 20 per year. Employees who work on these holidays must be paid a premium (usually 200% of the daily wage).

Sick Leave

Not mandated by law, but commonly provided by employers, usually 5 to 15 days per year. Extended medical absences may also qualify for state benefits under the Social Security System (SSS).

Maternity Leave

Female employees are entitled to 105 days of paid maternity leave (7 of which may be transferred to fathers) with an option for unpaid extension. Paid by the SSS.

Paternity Leave

Male employees are entitled to 7 days of paid paternity leave.

Parental Leave for Solo Parents

7 days of leave per year for qualified solo parents.

Partnering with an Employer of Record ensures these policies are fully compliant, clearly documented, and consistently administered, keeping your team happy and your business on the right side of Philippine labor law.

Terminations and Severance in the Philippines

Ending employment in the Philippines requires careful attention to process and legal compliance. The country’s labor laws are highly protective of employee rights, and wrongful termination can lead to hefty fines or reinstatement orders.

Notice Requirements

Employers must provide a written notice explaining the just or authorized cause for termination and give the employee an opportunity to respond (the “due process” requirement).

Just Cause Termination

For serious misconduct, habitual neglect, fraud, or other violations. Must be well-documented and follow strict procedures.

Authorized Cause Termination

For business closure, redundancy, or retrenchment. Requires 30 days’ written notice and payment of severance.

Severance Pay

Typically half a month’s pay for every year of service. No severance is required for just cause termination (but due process must still be followed).

Final Pay

All unpaid wages, leave balances, bonuses, and other due compensation must be paid within 30 days of separation.

An Employer of Record helps you manage this process legally and respectfully, minimizing risk and protecting your company’s reputation.

Using an Employer of Record to Administer Benefits in the Philippines

Offering the right benefits is key to keeping employees happy, and staying compliant, in the Philippines. But navigating all the statutory requirements, from SSS to PhilHealth to Pag-IBIG, can get complicated fast. That’s where an Employer of Record (EOR) steps in to handle the details for you.

Here’s how an EOR helps:

  • Government Contributions: Ensures accurate and timely payments to SSS (Social Security), PhilHealth (public healthcare), and Pag-IBIG (housing fund).
  • Leave & Holiday Tracking: Manages annual leave, sick leave, and public holiday entitlements in line with local law and company policies.
  • Benefits Communication: Provides clear documentation to employees on what benefits they’re entitled to and how to access them.
  • Competitive Perks: Helps you structure additional benefits, like private health insurance or wellness programs, that attract top talent in the Philippines’ competitive job market.
  • Legal Updates: Stays on top of changing labor regulations so your benefits program stays compliant.

With an EOR, you can offer a benefits package that supports your team, without having to become an expert in Philippine employment law.

Expand Easily with Remote People’s Employer of Record in the Philippines

Building a team in the Philippines opens the door to a talented, motivated workforce with global experience and strong English fluency. But success here depends on knowing the landscape like employment laws, cultural expectations, payroll compliance, and more.

An Employer of Record takes the complexity off your plate, helping you hire quickly and compliantly without setting up a local entity. Whether you’re building your first team or scaling up, an EOR helps you focus on what matters most: growing your business and supporting your people.