Hire in Philippines

Employer of record in the Philippines

If a lack of speed or local expertise are among your top concerns when expanding to or employing workers in the Philippines, an employer of record may be the best option for achieving your global growth objectives.

An employer of record, sometimes known as an international PEO, enables you to quickly hire and onboard workers in the Philippines―often in as little as two weeks―without having to take on the cost and risk of establishing a local entity.

Learn about the hiring, employment, payroll and benefits requirements for workers in the Philippines and how our employer of record service, EOR, and local HR experts can help you manage your international employment needs.

Hiring in the Philippines

In the Philippines, labor relations are governed by a variety of regulations, from acts of Congress to the Labor Code. The constitution requires the state to protect employees, promote employment, ensure equal work opportunities, regulate employer-employee relations, and ensure workers’ rights. The Department of Labor and Employment is responsible for creating employment policies and enforcing employment laws.

In circumstances where there is a question about how to interpret the Labor Code, the Constitution requires a judgment in favor of the employee.

Since employment in the Philippines is highly regulated, your employment practices must be compliant. As your employer of record and PEO in the Philippines, we can ensure that every contract, for every worker, meets all requirements. We can also provide you with guidance about cultural norms and hiring best practices and keep you up-to-date with employment regulations as they change.

Employment contracts in the Philippines

As you look to hire employees in the Philippines, here are some common regulations you’ll need to know to create a compliant contract, as well as how an employer of record and PEO can provide support for your unique HR needs.

Working hours

The normal workday is eight hours, which includes short rest periods that count toward the total hours worked. Employees are entitled to at least an hour-long break for meals.

Employees are also entitled to at least 24 consecutive hours of rest after six consecutive workdays. The employer can decide which day is the rest day, subject to collective bargaining agreements. Any employee who asks for a specific rest day based on their religion is entitled to it.

Employees can be required to work on their rest day in the following circumstances:

• Actual or impending emergencies
• Work urgently needed on equipment or machinery
• Special periods of heavy workloads
• Potential loss of perishable goods
• Continual work operation is required

Overtime is work done more than eight hours in a day.

Compensation

As you consider the appropriate salary to offer new employees, keep in mind:

• The minimum wage is set by each of the 17 administrative regions in the Philippines. There are two kinds of wages: the non-agricultural daily minimum wage, and the agricultural daily minimum wage.
• Effective July 17, the minimum wage for non-agriculture sectors will rise to 645 pesos daily from 610 pesos.
• Effective July 17, the minimum wage for agriculture, service, or retail establishments employing 15 workers or less and manufacturing enterprises employing less than 10 workers will increase to 608 pesos from 573 pesos.
• For overtime work, employees get their regular wage plus 25%.
• Employees are entitled to extra pay of 10% of the regular wage for each hour of work performed between 10 p.m. and 6 a.m. Overtime for night work is calculated by first including the overtime premium and then calculating night shift pay.
• Employees who are required to work on a rest day get an extra 30% of premium pay and higher premium pay if the rest day falls on a regular or special holiday.
• Employees covered under the Holiday Pay Rule are entitled to regular holidays off with their usual wages or 200% of regular wages if they work. If employees work on a holiday that also falls on a rest day, they are entitled to 230% of their regular pay. If employees work on a special day, they are entitled to 30% extra pay if the day is a weekday or 50% extra if it falls on a rest day.

As your employer of record in the Philippines, we can provide you with resources and insights about employee compensation, so you are better equipped to make a competitive employment offer.

Bonuses

Under a 1976 presidential decree and later amendments, employers are required to pay a 13th-month bonus by December 24 to all employees who work at least one month of the year.

Probationary period

Employees can be hired for a trial period that lasts no longer than six months unless it is for an apprenticeship program, in which case it can be longer. When a new employee is brought on, the employer must explain the performance standards they must meet to be hired full-time. Employees can be dismissed only for failing to meet those standards, or for just cause.

Termination and severance

Termination requires just cause and due process.

Employers must provide one month’s notice as well as an explanation to the employee before their termination date, and the employee must have the opportunity to defend themselves. Disputes over termination can be taken before the National Labor Relations Commission. If the employee wins, they must be returned to the same position with the same benefits, privileges, and status as well as full back pay. If hostile working conditions make that impossible, the employee is entitled to compensation.

Employees are required to provide one month’s advance written notice if they are terminating employment without just cause. If they don’t provide notice, the employer can hold them liable for damages.

Under the Labor Code, separation pay is required only in cases of layoffs, business closures, or termination because of a disease.

Employees terminated because of redundancy are entitled to one month’s pay for every year of service. If an employer is restructuring to prevent losses or is closing a business, terminated employees are entitled to one month’s pay or one-half month’s pay for every year of service, whichever is higher. If an employer terminates an employee for a reason of disease, the employee is entitled to one month’s pay or one-half month’s pay for every year of service, whichever is higher.

As your employer of record in the Philippines, we can work with you to quickly handle the unforeseen event of an employee termination, providing legal guidance and a personalized process that ensures you stay out of labor court.

Employee benefits and paid leave in the Philippines

When negotiating terms of an employment contract with a candidate in the Philippines, here are some of the statutory benefits and paid leave requirements to keep in mind, as well as how an employer of record can support your company’s benefits strategy.

Maternity leave

Pregnant employees are entitled to 105 days of paid maternity leave as well as 30 days of unpaid leave. In the case of a miscarriage or emergency termination, the employee is entitled to 60 days of paid leave (or 78 days of paid leave for Cesarean delivery). Single mothers are entitled to an additional 15 days of paid maternity leave. Employees who have four children cannot qualify for any future maternity leave.

Maternity pay is equal to 100% of an employee’s average daily salary. Employees who have made at least three monthly contributions to the Social Security system in the 12 months before childbirth will receive some or all of their maternity pay from Social Security. Employers must pay the difference between what the employee receives from social security and their salary.

Employees may allocate up to seven days of their leave to the child’s father.

Vacation

Employees of businesses with 10 or more employees who have worked for their employer for at least a year are entitled to five days of paid leave per year. Vacation pay is equal to their regular salary. Unused leave may be cashed in at the end of every year.

Holidays

Employees in the Philippines are entitled to the following paid holidays:

• New Year’s Day
• Maundy Thursday
• Good Friday
• Bravery Day
• Labor Day
• Independence Day
• Christmas Day
• Rizal Day

Every year 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

The Philippines recognizes holidays that are categorized either as regular holidays or special (non-working) days.

Holidays that fall on a weekend are moved to the next regular workday.

Sick leave

Offering paid sick leave is not a legal requirement, but employers usually provide this through collective bargaining agreements. Workers who don’t have sick leave or have used it up are eligible for social security benefits if they have made at least three months of contributions in the prior 12 months, and their injury or illness leaves them unable to work for at least four days. The sickness benefit pays roughly 90% of one’s average salary for up to 120 days per year.

Health coverage

There are several forms of retirement benefits, including those provided by employers in collective bargaining agreements, those required under the Labor Code and those paid under the Social Security System.

Retirement is compulsory at 65. Employees aged 60 or older who have contributed for at least 120 months can also retire with benefits.

The minimum retirement pay due employees under the Labor Code is one and a half month’s salary for every year of service. Retirement provisions in collective bargaining agreements must at least provide this level of benefits.

In addition, retirees receive benefits from the Social Security System. Those who have made at least 120 monthly contributions into the system receive a monthly pension, the amount depending on how many contributions they have made, how many years they have been in the system and how many dependent children they have.

Additional benefits

In addition to healthcare benefits, employees in the Philippines are entitled to pension, which is funded by government tax revenues, as well as workers compensation, which is covered through mandated employer insurance.

Employer social costs will cover a large portion of employee benefits in the Philippines, but we can consult with you about supplemental coverage options, such as additional pension contributions or life insurance if needed.

Updated: July 04, 2024

Employee onboarding with an employer of record in the Philippines

We write and validate all local employment contracts, streamlining the onboarding process for you and your Filipino employees—all you have to do is provide relevant information and review and approve the employment agreement. As your employer of record in the Philippines, we will:

• Schedule a welcome call to discuss HR and employment information for the Philippines, as well as answer any questions
• Prepare a customized employment contract in English and in Tagalog (or other local language)
• Share the employment contract and benefits information with the new employee for signature and review
• Gather tax and banking information from the employee to set up payroll
• Provide a local point of contact to the employee to answer any questions regarding their employment, local HR or payroll

The entire onboarding process for the employee is often completed in as little as two weeks.

Partner with Safeguard Global as your Philippines employer of record and PEO

With over a decade of service, we are the longest-serving employer of record and PEO provider in the international market. Organizations around the world rely on EOR, our employer of record solution, to expand and hire in over 170+ countries around the world, quickly and compliantly.

We’ve seen just about every global employment circumstance imaginable—and with our extensive knowledge of local law and culture, we know what it takes to get employment right in the Philippines. We provide written contracts in the local language, salaries in the local currency and HR support in your employees’ time zone.

Additionally, as a global payroll provider we support payroll administration—including payments, filings and other calculations— all around the world and can accommodate the payroll outsourcing needs of any size organization.

Whether you’re looking to hire as part of a strategic expansion or to meet specific talent needs, our global solutions advisors can walk you through your international hiring options so you can make the right choice for your organization. Contact us today.

Disclaimer

The information provided on or through this website is for informational purposes only and does not constitute legal advice. Safeguard Global expressly disclaims any liability with respect to warranty or representation concerning the information contained herein, including the lost essence, interpretation, accuracy and/or completeness of the information in transit and language translation.