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Best Practices for Hiring in the Philippines

By September 17, 2017May 4th, 2022No Comments
Best Practices For Hiring In The Philippines

There are many valuable benefits to hiring in the Philippines including cost-effective, highly skilled labor, a vibrant culture, and a growing economy. In fact, the Philippines is the 10th fastest growing economy in the world, according to the World Bank’s latest edition of Global Economic Prospects. If your organization is seeking a move into the Philippines, you will need to understand the local rules and regulations to help your company avoid compliance issues down the road.

International-payroll

In preparation for your international expansion, we pulled together a few best practices for hiring in the Philippines. It’s important to note that similar to all our law-related articles, this information is a guide and outline of suggestions. Always consult with a local expert or international attorney before making any decisions during global expansion.

Hiring in the Philippines: What Are Your Options

As with hiring in any foreign market, the Philippines is full of unique requirements and labor laws. Below are two expansion methods you can utilize when hiring in the Phillippines.

1. Establishing a Permanent Foreign Subsidiary

One of the most common methods for hiring in-country is finding team members after establishing a permanent foreign subsidiary. As this method may seem the most obvious and straightforward, it’s not always the best option given the complications. Foreign subsidiaries are expensive, time-consuming, difficult to manage, and force employers to work with international banking systems. For a more detailed report on the complications associated with establishing a foreign subsidiary, read this post.

Also, as an employer, you must manage compliance completely on your own. In the Philippines, employers and employees are obliged to contribute to the following:

  • Social Security System (SSS)
  • Philippine Health Insurance Corporation (PhilHealth/PHIC)
  • Home Development Mutual Fund (HDMF)

Requirements such as social programs and health insurance, along with payroll requirements, may be very difficult to manage on your own. If you’re unsure of the legal requirements you can easily run into issues surrounding compliance, which can lead to costly penalties and fines.

Avoid these risks by working with an in-country partner or by utilizing an agile global expansion method, such as an Employer of Record (also known as International PEO).

2. Partner With a Global Employer of Record

When entering a new market it can be overwhelming to navigate the landscape. Businesses have the option of working with a solution like an Employer of Record.  This solution can help your company manage compliance by onboarding your team members, managing payroll, and taking care of any needs such as termination, work permits, or taxation, which can be a real benefit.

The Philippines Bureau of Internal Revenue (BIR) is the governing body for tax withholdings. Failure to properly manage tax payments could result in financial penalties or criminal prosecution.

Overall, it’s unnecessary to reinvent the wheel. You can easily streamline hiring in the Philippines by utilizing Velocity Global’s global Employer of Record solution. Our team of experts has experience in over 185 countries, including the Philippines and we’re ready to answer your questions about global expansion. Reach out to learn more today.