How To Hire And Pay Employees In the Philippines

Emerald Technology's guide to hiring employees in the Philippines

CURRENCY

Philippine Peso is the official currency of the Philippines. Its currency symbol is , PHP.

CAPITAL CITY

Manila is the capital, densely populated bayside on the island of Luzon.

LANGUAGE

Both Filipino and English are both the official languages, with Filipino (Tagalog) being the national language used in formal education.

POPULATION The current population of the Philippines is 111 Million 2021 based on World bank numbers.
PAYROLL FREQUENCY

Salaries are paid monthly and employers are required to pay a 13 month salary bonus.

PUBLIC HOLIDAYS

The Philippines has 18 public holidays.

GROW YOUR TEAM IN THE PHILIPPINES

NO ENTITY, NO PROBLEM

To start growing your team in the Philippines, you must establish a local entity- including an account with a local bank, a local office and an address registered as a subsidiary. This allows you to manage payroll, tax, benefits and compliance for your employees, but can take several months. 

Emerald can hire and payroll your workers, quickly and compliantly with their ready to go entity. Make growing your team simple with Emerald as a global partner.

PROS AND CONS OF HIRING IN THE PHILIPPINES

Hiring in the Philippines provides access to a strong and diverse workforce with 700,000 graduates entering the labour market from Filipino universities each year. Furthermore, the Philippines has a hardworking attitude firmly integrated into the country’s working culture. Expanding your business to the Philippines is supported by the government through the provision of several different incentives that encourage investment. For example, the government provides tax deductions for foreign investors and special economic zones throughout the country. However, the Philippines holds corporate income tax at a flat rate of 30%, which is amongst the highest in Southeast Asia. The Philippines also has strict labour regulations, which include a requirement for companies to pay employees an additional 13th month pay at the end of the year.

WHY THE PHILIPPINES IS GOOD FOR REMOTE WORKERS

Remote working in the Philippines is on the rise with visas being easier to obtain than in other Southeast Asian countries. A 6-month extension on a visa is available for approximately USD $200 and is seen as the unofficial ‘digital nomad visa’. In addition to this, the Philippines has less regulations and rules for digital nomads compared to neighbouring countries, making it favourable for remote working. Although the Philippines is yet to become a hotspot for digital nomads in Southeast Asia, accessible visas, low cost of living, and welcoming society are all contributing to a rise in remote working.

START GROWING YOUR REMOTE WORKFORCE NOW

WORKING TIME AND OVERTIME IN THE PHILIPPINES

Normal working hours in the Philippines must not exceed 8 hours a day. Hours worked beyond this, or overtime work, is paid at 1.25x the employee’s normal hourly salary.

ANNUAL LEAVE AND PUBLIC HOLIDAYS

Philippine employees are legally entitled to 5 days of paid 'service incentive leave', which can be used for vacation or sick leave. However, for most professional-level positions, it is customary for employers to offer 15 days of paid vacation and 15 days of paid sick leave.

There are 18 public holidays

January 1st: New Year's Day 

February 1st: Chinese New Year

February 25th: People Power Revolution

April 9th: The Day of Valor

April 14th: Maundy Thursday 

April 15th: Good Friday 

April 16th: Black Saturday 

May 1st: Labor Day 

May 3rd: Eid'I Fitr

June 12th: independence Day 

August 21st: Ninoy Aquino Day 

August 29th: National Heroes' Day 

October 31st: Special Non Working Day

November 1st: All Saints' Day 

November 30th: Bonifacio Day 

December 8th: Immaculate Conception Day 

December 25th: Christmas Day 

December 30th: Rizal Day 

PROBATION PERIOD IN THE PHILIPPINES

Probation periods should not exceed six (6) months from the date the employee started working, unless covered by an apprenticeship agreement stipulating a longer period.

RESIGNATION AND DISMISSAL IN THE PHILIPPINES

Employees must give companies 30 days’ notice of resignation. In case of termination due to redundancy, employees are entitled to a separation pay equivalent to at least one month’s pay, or one month’s pay for each year of service, whichever is higher.

RESTRICTIVE COVENANTS

Employers are free to include clauses in the employment contract which prohibit employees, within a certain period from and after termination, from:

  • Starting a similar business, profession or trade or
  • Working in an entity that is engaged in a similar business that might compete with the employer

There must be a limitation as to time (typically no longer than two years), place, and trade. Courts have found a two-year prohibition reasonable. Employee and customer non-solicitation clauses are also permissible.

READY TO HIRE YOUR EMPLOYEES IN THE PHILIPPINES?

CONTRACT OF EMPLOYMENT IN THE PHILIPPINES

Written employment contracts are optional but advisable. Employers and employees are free to agree to terms which are not contrary to law, morals, good customs, public order or public policy.

MATERNITY LEAVE IN THE PHILIPPINES

All working mothers are entitled to up to 105 days of paid maternity leave for each pregnancy, provided that they have made at least three monthly contributions to the Social Security System (SSS) in the 12 months preceding the semester of the birth and have notified their employer. All married male employees are entitled to a paternity leave of seven days with full pay for the first four deliveries of the legitimate spouse

SICKNESS LEAVE IN THE PHILIPPINES

Philippine employees are legally entitled to 5 days of paid 'service incentive leave', which can be used for vacation or sick leave. However, for most professional-level positions, it is customary for employers to offer 15 days of paid vacation and 15 days of paid sick leave.

SOCIAL SECURITY

The employer’s Social Security contribution is approximately 8% of employees’ salaries, up to a maximum monthly contribution of PhP 1,630 per employee.

HEALTHCARE AND INSURANCE

Healthcare in South Korea is universal and funded through a combination of government subsidies, outside contributions, and tobacco surcharges.

Employment of

FOREIGN NATIONALS IN THE PHILIPPINES

Unless specifically exempted or excluded, all foreign nationals desiring to work in the Philippines must obtain an Alien Employment Permit (AEP). AEPs are normally valid for one year, but may be extended annually, up to a maximum of five years

Visas in the Philippines

Local employers who desire to employ a foreign national must apply for the AEP on the foreign national’s behalf with the regional office of the Department of Labor and Employment. The petitioning company must prove that the foreign national possesses the required skills for the position.

Educational background, work experience and other relevant factors are considered in evaluating the application. The petitioning company must prove that no Filipino is available who is competent, able and willing to do the specific job and that the employment of the foreign national is in the best interest of the public.

Salary Taxes

MINIMUM WAGE IN THE PHILIPPINES

The Philippines' minimum wage ranges from PhP 466 per day for agricultural workers in the Mimaropa Region to PhP 491 per day for non-agricultural workers in the National Capital Region. Minimum wages in the Philippines are set by tripartite regional wage boards.

INCOME TAX

Effective from 1 January 2023, the graduated rates will be as follows:
Net Taxable Income 

Rate on Excess

0 - 250,000 0%
250,000 - 400,000 15%
400,000 - 800,000 20%
800,000 - 2,000,000 25%
2,000,000 - 8,000,000 30%
8,000,000 + 35%

 

SALARY PAYMENTS IN THE PHILIPPINES

Payroll in the Philippines follows a monthly cycle, depending on the employer and the sector. Employers must pay salaries once every two weeks at intervals of not more than 16 days. There is a statutory requirement to pay a 13th month salary bonus, no later than 24th December each year.

SOCIAL SECURITY CONTRIBUTIONS IN THE PHILIPPINES

All individuals working in the Philippines must pay social security contributions of approximately 4% of salary, in addition to an 8% employer contribution. The minimum monthly salary subject to social security contributions is PhP 1,000. The maximum monthly contributions are PhP 1,630 for employers and PhP 800 for employees, which apply to employees receiving monthly compensation of PhP 19,750 or more.

SOCIAL CONTRIBUTIONS RATES IN THE PHILIPPINES

Employers are required to pay 4% and employees 8% as social security contribution.

WORKER MISCLASSIFICATION IN THE PHILIPPINES

Similar to other countries, the Philippines has strict rules on classifying individual contractors and full-time employees differently. Misclassifying your workers can put your business at risk of fines.

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