Employer of Record in The Philippines

Hiring independent contractors has boomed in popularity because of the cost savings and flexibility they offer. It can be a great option if you require niche skills or short-term project support. Contractors allow businesses to access specialized skills quickly, without the time and cost of setting up a local entity.

However, it’s important to know the limits of this model: contractors are not a substitute for full-time employees. Relying on them for ongoing, long-term roles can create serious compliance risks, including employee misclassification, which can lead to fines, back taxes, and reputational damage.

Playroll’s contractor management solutions make it simple to compliantly engage, onboard, and pay contractors around the world. We provide clear visibility into agreements, streamline payments, and reduce compliance risks – so you can focus on getting the work done. And when you’re ready to take the next step, we can help seamlessly convert contractors into full-time employees through our global Employer of Record service.

Businesses can only operate smoothly in The Philippines if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in The Philippines below, to avoid any compliance issues.

Employment Contract Requirements

When hiring In the Philippines, there is no legal obligation to establish a written employment contract. Employment contracts typically contain:

• Start date (and duration for temporary contracts)
• Description of the role, position, duties, and responsibilities
• Advance notice requirements for terminating employment
• Company code of conduct and complaint procedures

Onboarding Process

We can help you get a new employee started in The Philippines quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations.

For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

In the Philippines, employers must adhere to the Labor Code, which establishes standard working hours and overtime regulations to ensure compliance and promote employee satisfaction. The standard workday is eight hours, excluding a mandatory 60-minute meal break, typically resulting in a 48-hour workweek over six days. Any work beyond the standard eight-hour day is considered overtime and must be compensated accordingly.

Overtime compensation is mandated at an additional 25% of the employee's regular hourly wage for work performed beyond eight hours on regular working days. For overtime work on rest days, special non-working days, or regular holidays, the overtime pay rate increases to an additional 30% of the regular hourly wage. Certain employees, such as managerial staff, are exempt from these overtime provisions. Non-compliance with these regulations can lead to legal penalties and damage to the company's reputation.

As of July 2025, the minimum wage in the Philippines varies by region and industry, with the National Capital Region (NCR) setting a daily rate of ₱695 for non-agricultural workers, representing a ₱50 increase that took effect on July 18, 2025.

Employers need to understand how these rates work for different types of workers – like full-timers, part-timers, interns, trainees, and expats. The specific industry, the economy, and government rules all play a big role in setting minimum wages. The Regional Tripartite Wages and Productivity Boards regularly check and update wage policies to keep up with changes in the economy.

Employment laws in The Philippines can be intricate, and even unintentional mistakes in contracts, benefits, or termination processes can carry legal and reputational consequences. With an Employer of Record, you gain a local partner that ensures every hire is compliant. The EOR takes care of drafting compliant contracts, processing accurate payroll, managing contributions to statutory benefits, and handling lawful terminations if needed, all according to local employment standards.

This level of protection is especially valuable when expanding into new or unfamiliar regions. Instead of using time and resources to build in-house legal knowledge, you gain immediate access to local expertise. The EOR keeps you ahead of regulatory updates and shields your company from potential compliance gaps, so you can confidently hire and manage employees while minimizing risk. For hiring managers and founders, it's the difference between hiring with uncertainty and building your team on a legally sound foundation.

Understanding payroll and employment tax obligations in the Philippines is crucial for businesses to ensure compliance with local regulations and foster positive employee relations. Key taxes include income tax withholding, Social Security System (SSS) contributions, PhilHealth contributions, and Pag-IBIG contributions, each with specific calculation methods, rates, and deadlines.

For SSS, the total contribution rate is 15% as of 2025, with employers contributing 10% and employees 5%, applicable to monthly salary credits ranging from PHP 5,000 to PHP 35,000. PhilHealth contributions are set at 5% of monthly basic salary with a floor of PHP 10,000 and ceiling of PHP 100,000. Pag-IBIG contributions are 1% for employees earning PHP 1,500 or below and 2% for those earning above, while employers contribute a fixed 2%. Employers must register with relevant government agencies, remit contributions on time, and adhere to legal requirements to avoid penalties and maintain employee trust.

Using payroll management software can help employers efficiently manage payroll processes, consolidate data, and remain compliant with the Philippines' payroll tax regulations.

When you’re scaling quickly, setting up local payroll systems in each new country slows you down. In The Philippines, the administrative load can include government registration, benefits management, and accurate, on-time payment delivery. An EOR gives you a plug-and-play solution that handles all of this while your internal team stays focused on growth, not red tape.

Key Ways an EOR Supports Payroll in The Philippines:

• Rapid Payroll Setup: Onboards employees quickly with ready-to-go infrastructure.
• End Administration: Handles salary, tax, and benefits with no extra internal resources.
• Vendor Simplicity: Consolidates payroll across countries for centralized oversight.
• No Entity Required: Operates legally, saving your business the time and resources needed for local incorporation.

In the Philippines, work permits and visas are essential for employers looking to hire foreign nationals. The process typically starts with obtaining an Alien Employment Permit (AEP) from the Department of Labor and Employment (DOLE), which confirms that no qualified Filipino is available for the role.

Once the AEP is secured, employers can proceed with work visa applications such as the 9(g) Pre-Arranged Employment Visa, which allows foreign nationals to work for a specific employer, or the 47(a)(2) Special Non-Immigrant Visa for employees of regional headquarters or multinational firms. Short-term assignments are covered by the Special Work Permit (SWP) for roles lasting up to six months, while the Provisional Work Permit (PWP) allows employees to begin work while awaiting their 9(g) visa approval.

Employers must follow a structured application process, including labor market tests, document submissions, and fee payments, while ensuring compliance with local labor regulations. Understanding the various permit and visa types and planning for processing times and renewals is crucial to successfully employing international talent in the Philippines.

In the Philippines, leave policies are designed to ensure employee well-being while maintaining compliance with labor laws. The primary annual leave entitlement is the Service Incentive Leave (SIL), which provides five days of paid leave per year for employees who have completed at least one year of service. This leave can be used for vacation or sick purposes. Additionally, the country mandates various other leave benefits, including 105 days of paid maternity leave (with an extra 15 days for solo parents), 7 days of paid paternity leave, and special leave for women undergoing gynecological surgery.

Employers in the Philippines must also adhere to public holiday regulations, as employees are entitled to 18 national holidays per year. While sick leave is not specifically mandated, many employers offer additional benefits beyond the required SIL. Companies are encouraged to establish clear leave policies, ensuring compliance with regulations and supporting employee welfare. By maintaining transparent and flexible leave policies, businesses can enhance employee satisfaction and productivity while meeting legal obligations.

Employers in the Philippines are required to provide essential benefits such as contributions to the Social Security System, PhilHealth, Pag-IBIG Fund, 13th-month pay, service incentive leave, and maternity and paternity leaves.

To attract and retain top talent, many employers also offer supplemental benefits like private health insurance, group life insurance, additional paid time off, performance bonuses, flexible work arrangements, and wellness programs. Understanding and effectively implementing these benefits is crucial for compliance and for fostering a motivated and satisfied workforce.

For startups and small teams, managing global employee benefits isn’t just complex, it’s a full-time job. In The Philippines, understanding what benefits are required, how to deliver them, and how to stay compliant can be overwhelming, especially without local HR expertise. An Employer of Record removes that pressure by taking complete ownership of benefits administration, so you don't have to become an expert in local employment law.

Whether it’s healthcare contributions, pension enrollment, or statutory leave, the EOR ensures everything is delivered accurately and on time. They navigate any country-specific nuances, keep up with legal changes, and ensure each benefit is properly tracked and documented. For founders, that means fewer distractions and more time to focus on growth. Your employees get the security and support they expect from a local employer, and you get to scale your team in The Philippines without building complex infrastructure or worrying about compliance missteps.

In the Philippines, employment termination must adhere to strict legal guidelines to ensure fairness and compliance with labor laws. Employers may terminate employees based on just causes, such as serious misconduct or fraud, or authorized causes, including redundancy or business closure. Just cause terminations require due process, including a written notice specifying the charges, an opportunity for the employee to explain, a hearing or conference where the employee can present their defense, and a final written notice of termination. Authorized cause terminations necessitate a 30-day notice to both the employee and the Department of Labor and Employment (DOLE).

Severance pay is mandated for employees terminated due to authorized causes, with compensation varying based on the reason for termination. Redundancy entitles employees to one month's pay per year of service, while retrenchment, business closure, or installation of labor-saving devices results in at least half a month's pay per year of service. Employees dismissed for just causes are generally not entitled to severance pay. Employers must also provide final wages, unused leave payouts, and official termination documentation. Ensuring compliance with these regulations helps employers avoid legal disputes and safeguards employee rights.