Hire Employees in the Philippines

The usual vehicle is a domestic corporation registered with the Securities and Exchange Commission, followed by a barangay clearance, a mayor’s permit, BIR registration and enrolment with each of the three contribution agencies. Minimum paid-in capital rules apply to companies with substantial foreign ownership unless the business qualifies as an export enterprise.

An Employer of Record signs the Philippine contract, runs semi-monthly payroll, remits SSS, PhilHealth and Pag-IBIG, withholds income tax and pays the mandatory 13th month. The Philippines is a strongly pro-employee jurisdiction, so the risk transfer matters as much as the administrative saving.

Regularisation is the concept foreign employers most often miss. An employee who completes six months of continuous service becomes regular by operation of law, regardless of what the contract says, and regular employees can only be dismissed for just or authorised cause with due process. Repeated fixed-term renewals to avoid this are treated as circumvention.

Break-even rule of thumb: EOR fees begin to exceed the running cost of a small Philippine entity somewhere between 15 and 20 employees. Model both before committing, see EOR vs Entity for the full comparison, and plan any later migration so employees keep seniority.

Already paying someone in the Philippines as a contractor? Run the risk check before the arrangement is tested by an audit.

Not sure which model fits? A GX specialist will cost EOR vs entity for your exact headcount, free, within two business days. Get a model recommendation

Minimum wages are set regionally by tripartite wage boards, so the applicable rate depends on where the employee works. Rates differ substantially between the National Capital Region and provincial areas, and are reviewed periodically rather than on a fixed annual cycle.

Employees must be paid at least twice a month, at intervals not exceeding sixteen days. Monthly-only payment does not comply. Payslips must be issued showing pay, deductions and the period covered.

The thirteenth month pay is statutory under Presidential Decree 851, not customary. It equals at least one twelfth of basic salary earned during the calendar year, must be paid on or before 24 December, and applies to all rank-and-file employees regardless of position or how they are paid.

Night shift differential of at least 10% applies to work between 10pm and 6am, directly relevant given how much outsourced work runs on US hours. Holiday and rest-day premiums are similarly prescribed by statute.

Three funds, three different bases and three very different ceilings, this is where Philippine payroll goes wrong. SSS runs on the Monthly Salary Credit, excluding 13th month pay and bonuses, and caps at ₱35,000. PhilHealth runs on monthly basic salary between ₱10,000 and ₱100,000. Pag-IBIG runs on compensation including overtime but caps at just ₱10,000, making the employer share effectively a flat ₱200 for anyone above that. Applying one base or one ceiling across all three will be wrong three ways at once. The MSC is a bracket, not a salary: it moves in ₱500 steps, so a raise within a bracket changes nothing, and crossing ₱35,000 freezes the SSS contribution permanently however much the salary grows afterwards. Note also that Pag-IBIG is not mandatory for expatriate employees, so employer cost is lower for foreign hires.

Four representative profiles, costed with the 2026 contribution rates above and the statutory 13th-month accrual. Salaries are illustrative market midpoints, not GX operating data, use them to see how the on-cost percentage behaves as pay rises. The Philippine caps bite early: SSS stops at a monthly salary credit of PHP 35,000 and Pag-IBIG at PHP 10,000, so statutory cost falls from about 13% on a PHP 28,000 salary to under 7% on PHP 90,000. For real market data on your roles, ask for a costing.

Watch the on-cost percentage rather than the absolute figure. 7 of the charges here are capped and 1 are not, so the effective employer rate falls as salary rises, but it flattens rather than disappearing. The senior rows below show where it settles.

Benchmarks pending GX Philippines payroll data. Any benchmark should state the 13th month accrual separately, since it is statutory rather than discretionary.

The tax-free treatment of 13th month pay and other benefits up to the statutory ceiling is a meaningful part of Philippine package design, and works alongside the de minimis benefit list. Both are worth building into an offer rather than paying everything as basic salary.

Thresholds move on a local cycle that does not always fall in January, so a figure correct at the start of the year may not hold through it. Where a row below carries a flag, published sources disagreed and the conflict is recorded rather than resolved, there are 2 such rows on this page.

Employment is regular by default under the Labour Code, and written contracts are standard. The grounds for termination are statutory and narrow, so the contract cannot expand them.

Probation may not exceed six months, and the standards for regularisation must be communicated to the employee at the time of engagement. Where they are not, the employee is deemed regular from day one. SSS, PhilHealth and Pag-IBIG contributions apply throughout.

The premium structure compounds: overtime worked on a rest day or holiday attracts both premiums, so a holiday overtime hour can cost well over double the ordinary rate. For BPO and support operations running around the clock, night differential and holiday premiums are a material part of the cost model rather than an edge case.

Managerial employees are excluded from overtime and premium pay entitlements, but the test is the actual nature of the work rather than the job title.

Overtime is where payroll disputes usually begin, and the burden of proving hours worked generally sits with the employer. Record hours from the first day even for salaried roles where overtime is not expected, reconstructing a record after a complaint is considerably harder than keeping one.

The statutory entitlement is modest: five days of Service Incentive Leave after one year of service.

Unused Service Incentive Leave is convertible to cash at the end of the year, so it functions partly as a payment obligation rather than purely as time off.

The statutory floor is far below market practice. Employers commonly offer 10 to 15 days of vacation leave plus a separate sick leave allowance, and an offer at the statutory five days will not be competitive for professional roles.

Employers already granting at least five days of any paid leave are treated as compliant, so a combined vacation and sick leave package generally satisfies the requirement.

The 10 dates below are the statutory position. Employers in many markets grant more by policy or collective agreement, and sector agreements sometimes add local or patronal days that do not appear in a national list.

The Philippines distinguishes regular holidays, paid at 200% if worked, from special non-working days, paid at 130%. The list is set by presidential proclamation each year and can be amended, so confirm the current proclamation before publishing a payroll calendar.

The statutory package is SSS for social security, PhilHealth for medical cover, and Pag-IBIG for housing and savings. All three are mandatory from the first day of employment, alongside the thirteenth month pay.

Because PhilHealth coverage is basic, private health maintenance organisation cover is effectively expected at professional level and is the single most important non-statutory benefit. Dependant cover is a common differentiator.

Service Incentive Leave of five days a year is the statutory minimum, but most employers offer substantially more, commonly splitting vacation and sick leave. Employers with existing leave policies meeting or exceeding five days satisfy the requirement.

Rice allowance, transport and meal allowances are common and carry de minimis tax treatment up to defined ceilings. Night differential and shift allowances above the statutory minimum are widely used to attract staff for US-hours work.

The two-notice rule is procedural and strictly enforced. A first notice setting out the charge, a genuine opportunity to respond, then a second notice of decision. A dismissal with valid grounds but defective process is still actionable, and nominal damages are routinely awarded.

A fraction of at least six months counts as a full year for separation pay. Resignation requires 30 days’ notice from the employee and carries no separation pay unless company policy provides it.

The labour market test is real rather than a formality: the AEP application is published and open to objection. Roles that appear replaceable locally are refused. Plan on several weeks for the AEP and further time for the visa, and start before committing to a start date.

Special routes exist for regional headquarters, PEZA-registered enterprises and certain treaty nationals, which can be materially faster where they apply.

The Bureau of Internal Revenue has become more active on this point, and treaty relief requires a formal application rather than self-assessment. Back-office and support roles are generally lower risk; sales roles and anything involving contract signature are the common trigger.

The four-fold test applies: selection and engagement, payment of wages, power of dismissal, and above all the power of control over the means and methods of work. Philippine tribunals weigh control heavily and read the facts rather than the contract.

If a probationary contract does not communicate the standards for regularisation at the time of engagement, the employee is deemed regular from day one. This is the single most common documentation failure in Philippine hiring.

Work backwards from the start date. For a local hire through an EOR, 1 to 2 weeks is realistic once identity documents, bank details and the signed contract are in hand. For a foreign national requiring a permit, add the immigration timeline set out above before promising a date.

Confirm three things before making an offer: that the candidate has the right to work in the Philippines; that the salary clears any statutory or sector minimum that applies to the role; and whether the work involves concluding contracts locally, which can create a taxable presence for the client entity.

Collect the statutory registrations early. Social security enrolment, tax registration and any mandatory insurance generally must be in place before the first payroll runs, not after it.