Employer of Record in the Philippines

Employment agreements in the Philippines

In the Philippines, there is no statutory requirement to have a written employment contract. Likewise, there is no law that lists in detail the required terms in an employment contract.

Probationary periods in the Philippines

According to Article 281 of the Philippine Labor Code, the maximum length of a probationary period is six months.

Average working hours in the Philippines

Employees in the Philippines usually work an eight-hour day, and cannot exceed 10 hours a day or 48 hours a week for a regular workweek.

How an employer of record helps you hire in the Philippines

An employer of record (EOR) allows you to hire in the Philippines without the headache of setting up a legal entity in the Philippines. Because most companies don’t have the resources or extensive knowledge to compliantly hire in international markets, an EOR helps you engage top talent from anywhere and support them based on their local needs. 

As an industry-leading EOR in the Philippines, Velocity Global is a trusted partner in hiring in the Philippines. By acting as the legal employer, we hire your new team members through local, compliant employment contracts—and you get back the time and flexibility to focus on your growing business.

Payroll cycles in the Philippines

Payroll in the the Philippines is completed on a monthly schedule. Employers are responsible for making biweekly payments to their employees.

Wages in the Philippines

There is not a uniform minimum wage in the Philippines. The minimum wage varies by industry and region. The Philippines’ Department of Labor and Employment has 51 different daily minimum wage rates.

Bonus payments in the Philippines

Discretionary bonuses are at the directive of the employer, and they are not mandatory by law. However, the Philippine government mandates a 13th-month pay by law for employees to receive one-twelfth of their total salary earned in a year. Employers are permitted to divvy its distribution throughout the year or allocate it as a lump sum around Christmas.

How an EOR helps you run payroll in the Philippines

An employer of record (EOR) in the Philippines helps you compliantly manage your global team payroll, ensuring consistent and accurate pay and tax withholdings for employees living in the Philippines. Think of an EOR as your international HR team that understands the complex labor laws and payroll regulations of different markets. 

Partnering with a trusted EOR partner like Velocity Global for global payroll administration in the Philippines offers numerous benefits, like access to a centralized platform for payroll data and reporting, secure data privacy and protection, and time and cost savings.

Tax due dates in the Philippines

Annual income tax returns must be filed by April 15.

Tax thresholds in the Philippines

Individuals are considered Filipino tax residents when they stay in the Philippines for more than 180 days in a calendar year.

Non-tax residents are legally required to pay income tax only on their Philippine-sourced income.

Filipino tax residents are legally required to pay income tax on their global income.

As of January 1, 2023, the Philippine income tax brackets are:

• Up to PHP 250,000: 0%
• From PHP 250,000 to PHP 400,000: 15%
• From PHP 400,000 to PHP 800,000: 20%
• From PHP 800,000 to PHP 2,000,000: 25%
• From PHP 2,000,000 to PHP 8,00,000: 30%
• Above PHP 8,000,000: 35%

Health insurance in the Philippines

The Philippine healthcare system, PhilHealth, provides universal healthcare services to residents of the Philippines. The insurance scheme is government-controlled and funded by Philippine government subsidies and employer and employee contributions. In general, the healthcare system in the Philippines is high quality, the medical staff is skilled and qualified, and the facilities are well-equipped by international standards. The primary barriers to healthcare in the country include a shortage of hospitals and surgical equipment in rural areas.

Pension in the Philippines

Employees in the Philippines are subject to eligibility requirements for the old-age retirement pension. Qualifying conditions include paying at least 120 monthly contributions to the Philippine Social Security System and a range of ages, depending on the type of old-age pension plan. The pension has two payment options: a monthly lifetime cash benefit or a lump sum, one-time payment.

How an EOR helps you calculate taxes in the Philippines

Payroll taxes are taxes imposed on employers and employees. They vary between countries, making compliance a hurdle for businesses that may not have the expertise or resources to navigate payroll taxes in the Philippines. 

As an employer of record (EOR) with a tenured global footprint, Velocity Global is knowledgeable in handling all aspects of payroll for you, including calculating and filing payroll taxes, withholding and remitting taxes, and issuing tax forms in the Philippines.

Annual leave in the Philippines

The Philippine labor law states that employees are entitled to 13 days of annual paid leave, with an additional day for every year of service starting after the third year. The maximum annual leave accrual is 18 days.

Parental leave in the Philippines

Maternity leave is 105 days with full pay and an additional 15 days of leave if the employee is a single parent. Mothers receive a cash allowance from the Philippine Social Security System as a maternity benefit. For eligibility, employees need to pay at least three months of contributions within the 12 months before childbirth.

Under the Philippine Republic Act 8187, employees are entitled to seven days of paternity leave with full pay.

Sick leave in the Philippines

Employees are entitled to 12 days of sick leave for the first two years of service and an additional day for every year of service starting after the third year. The maximum annual sick leave accrual is 15 days.

Regional and national holidays in the Philippines

The Philippines has 18 public holidays in a calendar year, which are excluded from the minimum paid leave entitlement and are taken in addition to annual leave. The following are national holidays recognized by the Philippines:

• New Year’s Day (January 1)
• Chinese New Year (January or February, the specific day fluctuates each year)
• EDSA (Epifanio Delos Santos Avenue) Revolution Anniversary (February 25)
• Day of Valor (April 9)
• Maundy Thursday (March or April, the specific day fluctuates each year)
• Good Friday (March or April, the specific day fluctuates each year)
• Black Saturday (March or April, the specific day fluctuates each year)
• Labor Day (May 1)
• Eidul Fitr (March, April, or May, the specific day fluctuates each year)
• Independence Day (June 12)
• Eidul Adha (May, June, or July, the specific day fluctuates each year)
• Ninoy Aquino Day (August 21)
• National Heroes Day (August, the specific day fluctuates each year)
• All Saints’ Day (November 1)
• Bonifacio Day (November 30)
• Immaculate Conception (December 8)
• Christmas Day (December 25)
• Rizal Day (December 30)

How an EOR helps you manage leave and PTO in the Philippines

An employer of record (EOR) supports companies by managing annual leave, paid time off (PTO), and even local holidays all over the world—including Philippines. When it comes to handling a company's annual leave requirements, an EOR ensures compliance with local labor laws in the Philippines at every step. 

Some EOR partners, like Velocity Global, provide a platform that helps you oversee employee time off in the Philippines. By outsourcing leave and time-off management to Velocity Global, you can ensure accurate tracking, compliance, and seamless administration, freeing up valuable time and resources for other business priorities.

Federal benefits in the Philippines

Philippine government agencies administer the country’s benefits programs. The Department of Labor and Employment provides overall general supervision and administration of employment programs and cash benefits to Filipino residents. The Philippine Social Security System provides financial assistance to employees due to disability, sickness, maternity, old age, death, and other events resulting in income loss or financial hardship. The Department of Health ensures access to general public health benefits and medical services. PhilHealth, a government-owned corporation, administers public healthcare.

Supplemental benefits in the Philippines 

Supplemental benefits are extra benefits an employer provides to boost their workers' benefits package. Examples of supplemental benefits in the Philippines include:

• Health insurance
• Retirement contributions
• Extended time off benefits

While Filipino employees receive government health insurance, employers often provide additional benefits for enhanced coverage. This extended healthcare may include prescription drugs, physical therapy, dental, and vision coverage. Many employers offer their Filipino workforce additional coverage for work-related accidents, life-threatening illnesses, and disabilities. Similar to mandatory insurance, employers and employees contribute a portion of an employee’s salary to fund this coverage. 

To attract top talent, employers may offer Christmas or mid-year bonuses worth a month's salary. This is in addition to the mandatory 13th-month pay. Many employers, recognizing rice as a nutritional staple in the Philippines, offer allowances that help offset inflation and make the grain more accessible. Some employers provide housing allowances, transportation stipends, and meal allowances to compensate employees further.

How an EOR helps you administer benefits in the Philippines

As the legal employer for your employees living in the Philippines, an employer of record (EOR) administers statutory benefits and ensures they are enrolled and contributing to the appropriate government benefits. Additionally, an EOR partner manages the administration of supplemental benefits, including ensuring employees in the Philippines receive tailored, expert-vetted, and competitive supplemental benefits packages. 

Velocity Global makes understanding foreign statutory and supplemental benefits easy and offers your workforce competitive benefits packages tailored specifically to the Philippines and beyond.

In the Philippines, the law distinguishes an important difference between an authorized cause dismissal and a just cause dismissal. Authorized cause is based on economic or health reasons, and just cause is based on blameworthy actions such as misconduct, disobedience, neglect, fraud, or crime.

Notice periods in the Philippines

There is no notice period required by an employer for a just cause dismissal.

Employers are legally required to give employees a 30-day notice for an authorized cause dismissal.

Employees can terminate the employment contract with a 30-day notice.

Severance pay in the Philippines

If an employer terminates the employment relationship for a just cause, no severance pay is legally required. If an employer dismisses an employee for an authorized cause, the employee is entitled to severance pay of at least a half month’s wages for every year of service.

How an EOR helps you process terminations in the Philippines

An employer of record (EOR) is responsible for processing terminations in the event you need to terminate an employee in the Philippines. This may include adhering to local labor laws and regulations regarding termination procedures, including notice periods, severance pay, and any other statutory requirements. 

As an EOR with experience in terminations, Velocity Global helps businesses minimize the risk of legal disputes or liabilities in the Philippines.