Employer of Record in the Philippines

Your business setup and expansion may be streamlined and accelerated in the Philippines with the aid of an EOR (Employer of Record) solution, all without the need to set up a foreign legal corporation. The Philippines features a workforce that is highly educated and talented in industries like information technology and customer-related services, making the option to develop your company there profitable. The people of the Philippines are kind, adaptable, and very ethical in their job.

Understanding the country’s legal requirements, employment legislation, taxes system, filing requirements, payroll administration, and other specifics is one of the numerous obstacles to business development. To do business successfully and efficiently with a significant cost mechanism, this information is required.

While you are seated in your home nation, our global HR platform enables you to comprehend all business needs in the Philippines. To simply handle the payroll, taxes, hiring, training, development, and compliances of the Philippines, all you need is our automated and unified platform. Let’s start by going over some fundamental employment policies and information regarding the Philippines

Overview of Philippines

• Estimated Population: 110 million
• Currency: Philippine Peso 
• Capital: Manila
• Official Language: Filipino (Tagalog) and English
• Languages spoken: 12 other recognized languages
• GDP: 6.8% (2021)

Employment Landscape in the Philippines

In January 2021, the Philippines’ employment rate was 91.3%. The Labor Code of 1974, which establishes the guidelines and requirements for employment laws, salary rates, working hours, employee benefits, etc., governs employment laws in the Philippines.

Companies from all over the world have exciting chances to access the Philippine market thanks to the Philippines EOR (Employer of Record) solution. Our automated platform decreases the length of time and rigidity required to acquire staff or carry out administrative tasks like providing immediate employment contracts and managing payroll solutions. 

If you want to remain compliant, you must understand the regulations on the hiring and firing of independent contractors, the working conditions, overtime pay, and current labour code standards before creating an employment contract. 

We aid in carrying out commercial activities in accordance with Philippine law and support individuals or businesses in accurately achieving their goals while adhering to all relevant employment rules in the country. Your company will consequently expand more quickly and have a greater chance of enduring for a long period.

Let us discuss the employment laws in detail:

Entitlements	Explanation
Statutory Working Hours	A typical work week shouldn’t go longer than 8 hours each day, 6 days per week.
Overtime eligibility	• On a Sunday or a paid holiday, overtime is paid at a rate of 130% of the basic pay; on a public holiday, it is paid at a rate of 200%. Any employee who works in the nation during an emergency covered by Article 89 is entitled to overtime pay.
Weekly Rest Period	In a seven-day week, Sunday is regarded as a rest day. .
Paid Public Holidays	The following public holidays in Sweden are marked as paid holidays for employees: New Year’s Day (1 January) Lunar New Year (12 February) Maundy Thursday (1 April) Good Friday (2 April) Bataan Day (9 April) Labour Day (1 May Eid ul-Fitr (13 May) Independence Day (12 June) Eid ul-Adha (19 June) National Heroes Day (30 August) Bonifacio Day (30 November) Feast of the Immaculate Conception (8 December) Christmas Day (25 December) Rizal Day (30 December)
Maternity & Paternity Leave	A male employee is entitled to seven days of leave up until the birth of the first four children, while female employees are entitled to up to 105 days of fully paid maternity leave for each pregnancy while employed. Within 60 days after the child’s birth, employees are permitted to take time off. After presenting supporting documentation to the Social Security Program for reimbursement, the employer must pay paternity leave.
Social Security System	The Social Security System was created to aid workers and their families in coping with sickness, disability, and death. Employees under the age of 60 who make at least P1,000 per month are required to pay into the social security fund. Every month, a certain sum is taken automatically out of the employee’s pay.
Annual Vacation Leave	After one year of employment, all employees are entitled to five days of paid leave, known as “service incentive leave,” which can be utilised for vacation or sickness based on the number of working days. When an employee reaches a certain degree of professionalism, their employers also provide them 15 days of paid leave each year.
Medical Leave	There isn’t a set rule regarding sick days for employees in the Philippines, however certain employment contracts or collective bargaining agreements may provide for sick leave benefits. In the event of illness or injury, employees are entitled to receive from their employers 90% of their average daily income. Only those employees who paid a three-month Social Security System contribution fund for a year prior to their illness or accident are eligible for this payment.When all of the employer-paid sick leave has been used, the aforementioned provision takes effect. In this instance, the Social Security System is obligated to compensate the employer in full.
Employment Protection & Anti-Discrimination Rights	Employment agreements may be verbal or in written. For a domestic assistant, youngsters performing in public, and trilateral job contracts, written agreements are required. Employment contracts may contain implicit terms under the Labor Code. The Safe Spaces Act and the Anti-Sexual Harassment Act protect employees against discrimination. All Philippine labourers are under the purview of this legislation.
Confidentiality of Personal Information	The Data Privacy Act 2012 in the Philippines safeguards both personal and corporate data. It offers thorough instructions for handling personal data.

Contractors vs. Full-Time Employees

In the Philippines, there are two primary categories of employees that are protected by employment contracts outlined in the Labor Code: full-time employees and contractor employees.

Full-time employment encompasses various benefits and protections, such as statutory sick pay, paternity leaves, minimum notice periods, legal safeguards against unfair dismissal, and access to pension and health insurance benefits. Full-time employees are selected based on the nature of their work, and they may be hired to perform activities essential or desirable in the regular course of business.

Regular employees, as defined by the Labor Code, are those who have served for at least a year, whether continuously or with interruptions, in relation to their business activity. They enjoy the security of tenure, ensuring that their employment cannot be terminated without just cause or due process.

On the other hand, contractor employees have a fixed tenure specifically tied to a particular project. Once the project is completed, their engagement comes to an end. Contractors are generally not entitled to the benefits typically provided to full-time employees.

In the Philippines, full-time employment is generally preferred by individuals due to the significant job security it offers. The attractive benefits and a higher level of stability associated with full-time employment are among the main reasons for this preference.

Recruiting in the Philippines

For the success of your company to increase, you must assemble a top-notch team since a strong team aids in the accomplishment of the organisation’s goals. During the interview process, you must assess the candidates’ abilities and ability in light of the job description before making a hiring decision. The rules of the Philippine Department of Labor and Employment (DOLE) apply to all employment-related matters.  

In the Philippines, employment for government posts is done through two to six month long civil services tests. Private sector job openings are filled through a variety of job sites, including Google for Jobs, Pinoy Jobs, jobfinderph.com, Jora, etc. The candidate must sign a formal employment contract with the business in line with compliances after being chosen. But while you sit in your own nation, you must be wondering how you’ll maintain compliance.

Probation & Termination

Every new employee in the Philippines must go through a probationary period that lasts up to 6 months. If an apprenticeship agreement does exist between the employer and the employee, the time frame may be extended. According to Philippine employment law, once this term is successfully completed, the employee must be treated as a regular employee regardless of whether a new contract is signed for the same.

Termination

Topics	Explanations
Notice for Termination of Employment	An employee may end their employment relationship with their employer by giving written notice to the employer at least one month in advance, or they may do so immediately for the reasons listed below: A grave affront made by the employer or a representative of him Abhorrent and inhumane treatment The employer has committed an infraction or a crime
Grounds for Termination by Employer	According to Article 282 of Book VI, Title I of the post-employment laws of Labor Relations, the employer may terminate the employee’s employment. The following are the grounds for termination: Wilful disobedience Gross negligence towards duty Serious misconduct Breach of trust and fraud Commission of any crime against the employer or his representative

EOR Solution

The Philippines Employer of Record (The Philippines EOR) solution makes it simpler to grow a business in the Philippines while being accurate and compliant without creating additional legal organisations. Making the decision to use EOR can help your company run more smoothly in terms of managing payroll, corporate compliances, attendance, tax filings, and other employment-related chores.

Through its unified and automated platform, which is designed to handle monthly payroll, onboarding employees, drafting employment contracts, managing compliances, and all day-to-day HR functions for your employees in the Philippines, our global HR platform will help you manage your business more simply by removing complexities. Contact a professional right away.

General Employer of Record Service Terms

Taxes that apply to invoices	Employer Liability 12.25% + Provident fund.
Minimum duration of service	There is no set timeframe for the service. There is a six-month probationary period that may be terminated on certain grounds, as described in the probation and termination section, by either the employee or the employer.
Currency Accepted	Philippine Peso.
Required Details and Documents	Personal data, ID evidence, home proof, a resume, bank information, and employment information are all required for Filipino citizens. For expatriates: contact information, employment contract, resume, copy of ID and passport, job description, educational background, and technical qualifications.

Types of Visas In the Philippines

Immigrant, Non-Immigrant, and Special Visa are the three types of visas available in the Philippines, and they are further divided into several sorts of visas as shown in the table below.

Immigrant Visas

Visa category	Explanation
A Child born abroad of an immigrant mother	a kid born when the mother is on a short stay outside the Philippines.
13 C	This visa is for a kid who was born after the accompanying parent’s immigrant visa was issued.
13 A	It comes in two varieties: Dependent children under the age of 21, who are not married and are joining or accompanying the applicant, and who can provide acceptable documentation of their blood tie Conversion to a non-quota immigrant visa by marriage, which is granted to a foreign person based on his legitimate marriage to a Filipino citizen.
Permanent Resident Visa (PRV)	This type of visa is granted to four types of categories: Amendment to PRV by marriage Amendment to PRV-PROC married to Filipino Conversion to PRV-PROC married to Filipino PRV for Filipino Veterans
13 G	This is for the candidate who:  Was once a Philippine citizen by virtue of birth; Was granted naturalization by a foreign nation, and Plans to settle permanently in the Philippines when she returns there.
Returning Visa (13 E)	Anyone who has previously been awarded permanent residency in the Philippines and is returning to a relinquished abode there following a brief trip abroad is eligible to make this transaction.
Quota Visa (13)	This applies to citizens of the nations with whom the Philippines maintains diplomatic ties and which, in accordance with the concept of reciprocity, provide Filipinos the same immigration rights. For any given calendar year, there may not be more than fifty (50) people of any one nationality or who are stateless.

Non-Immigrant Visa

Visa category	Explanation
Temporary Resident Visa (TRV)	This type of visa is granted to 4 types of categories: Conversion to TRV by marriage Extension to TRV by marriage Conversion to TRV-Indian married to Filipino Extension of TRV-Indian married to Filipino
Temporary Visitor Visa (9A)	These types of temporary visitor visas are available: Extension of the permitted stay over 59 days Visa waiver Long-term visitor visa extension; motion for rebuilding or updating and extension of approved stay
Treaty Trader or Treaty Investor (9D)	This category of visas comprises the following:  Conversion to a Treaty Trader or Treaty Investor Visa Extension of a Treaty Trader or Treaty Investor Visa Including a dependent on the primary visa holder’s Treaty Investor or Trader visa.
Accredited Official of Foreign Government (9E)	Any accredited representative of a foreign government acknowledged by the Philippine government, together with his family, close friends, and staff members.
Student Visa (9F)	This includes 2 categories: Conversion to student visa Extension of student visa Intends to return to the Philippines for permanent residence
Pre- Arranged Employment Visa (9G)	This kind of visa consists of: Switching to an employee commercial planned in advance Extension of an employee commercial that was prearranged Changing from pre-arranged employee commercial Extending previously agreed-upon employee non-commercial Including a dependent on the principle holder’s pre-arranged employee visa

Special Visa

Visa category	Explanation
Visa Upon Arrival (SEVUA)	Foreign businesspeople and investors who have received the proper endorsement from the Board of Investments (BOI), the Philippine Retirement Authority (PRA), the Philippine Chamber of Commerce and Industry (PCCI), regional business councils, or both local and international chambers of commerce and industry; athletes and delegates to sporting events that have the full support of their organisers and/or sponsors; Delegates to international conventions, symposia, conferences, and similar events that have the support of their sponsors and/or organisers, as well as resource speakers at those events Foreign investors and their executives who participate in government-approved investments, those brought about by bilateral agreements, those made in response to presidential invitations for investments made during foreign journeys by presidents or official visits World Bank, Asian Development Bank, and other foreign development partners’ employees, as well as their dependent spouses and minor children who are not married Other foreign nationals who may be eligible for this program’s benefits at the Commissioner’s discretion.
Special Visa for Employment Generation	A qualified non-immigrant foreigner may apply for this visa provided they really employ at least ten (10) Filipinos in a legitimate and long-lasting business, trade, or industry.
Special Employment Visa for Offshore Banking Unit	This includes: converting an offshore financial unit’s PD 1034 non-immigrant visa; extending a non-immigrant visa for an offshore banking unit;
Special Visa under E.O. 226 as amended by R.A. 8756	This includes: Conversion of special non-immigrant visa Extension of special non-immigrant visa

Work Permits

You may get assistance from our regional partners in the Philippines with handling work permits for your company. As an EOR in the Philippines, we handle all employment-related obligations and duties in a straightforward and legal manner. The client firm may manage the day-to-day operations and employment activities of its personnel on our HR platform. You must submit an Employee Visa 9G application to the Bureau of Immigration in the Philippines in order to obtain a work visa there. The following documents are necessary:

• passport photocopy
• Employment Agreement
• The Department of Labor and Employment has given an alien employment permit.
• Form of Application
• If necessary, additional information on the applicant’s children
• Number of foreign and Filipino employees certified by a notary

Payroll & Taxes in the Philippines

You must be familiar with local employment laws and the Philippine tax system because it might differ depending on your business type in order to manage payroll and taxation in the nation. Different forms of tax regulations, including company tax, withholding tax, employee pay, social security, and others, are included in the taxation framework.

The EOR solution will keep you in compliance with Philippine payroll laws. A home development fund and the Philippines Health Insurance Corporation (PhilHealth) are further components of the social security system. Let’s go over the tax rates in further depth.

Taxes in the Philippines

Employer Taxation

Tax	Explanation
Tax Year	31st December (Calendar year)
Penalties	P1,000 for basic tax, not more than P5,000. P3,000 for basic tax is more than P5,000 but less than P10,000.
Payroll Tax	No specific payroll taxes.
Social Security Contributions	Employers make social security contributions at a rate ranging from 73.70 to 1,178.70 pesos per employee.
Public Pension	The Government Service Insurance System and Social Security System are in charge of overseeing pensions in the Philippines.

Employee Taxation 

Tax	Explanation
Income Tax Rates	Taxable Income (PHP) Tax Rate (%) Up to 250,000 0 250,000 – 400,000 20 400,000- 800,000 25 800,000- 2,000,000 32 8,000,000- Over 35 25% of their gross income is applied to non-resident immigrants who are not involved in trade or commerce in the Philippines.
Sales Tax	12% on all goods and services.
Filing & Payment	The deadline for submitting the yearly income tax return is April 15 of the year after the calendar year.
Health Insurance	The Philippines Health Insurance Corporation (PhilHealth), which provides publicly financed healthcare, offers non-taxable healthcare benefits.

We are here to help you make sure compliance for your business all around the nation. You can establish a number of different business organisations in the Philippines, including a company, branch office, regional headquarters, or foreign partnership. The type and operations of your firm will determine the entity you choose. Let’s go into the specifics of the criteria.

You must submit particular documentation to the Securities and Exchange Commission (SEC) and get the required licences in order to create a Filipino subsidiary. In addition to this, the following paperwork is needed:

• Articles of Association
• Memorandum of Association
• Declaration from the Treasurer’s office
• Company name verification and approval paper
• Registration datasheet
• Tax Identification Number (TIN) registration
• Registration with the social security system

Typically, it takes 30 days to incorporate a subsidiary in the Philippines. Once finished, you may perform commercial activities without any problems. As your supplier of Employer of Record (EOR) solutions globally, we allay your worries about documentation requirements, corporate compliances, employee development, and hiring in the Philippines. Our goal is to streamline your business operations so you may concentrate on key growth areas.