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The Philippines is an archipelagic country in southeast Asia, consisting of around 7,641 islands. It is located between the Pacific Ocean and the South China Sea, and is home to gorgeous beaches and significant biodiversity. The Philippines is considered an emerging market and a newly industrialized country whose economy is transitioning from agriculture-centered to services and manufacturing-centered.
The following types of contracts can be implemented in the Philippines:
Part-time versions of the above contracts are possible.
There are no specific job title restrictions, however certain professions are regulated for health and safety reasons (e.g. nannies, construction workers).
The typical workweek in the Philippines consists of 8 hours per day and 40-45 hours per week, with one day designated as a rest day.
The minimum wage in the Philippines varies across regions, determined by respective tripartite wage boards. These rates typically span from PHP 282 to PHP 537 per day. The minimum wage is determined by the primary place of work, whether it be an office for commuters or a remote worker's home address. Additionally, the minimum wage is influenced by the industry sector.
Hours exceeding the standard workweek constitute overtime and are governed by the employment contract. Typically, overtime is compensated at 125% of the regular pay.
Employees who are required to work on public holidays are entitled to an additional amount between +50% and +160%.
Note: The number of overtime hours is not restricted. Senior managers are exempt from receiving overtime pay.
Night differential must be paid to employees working in specific night hours (+30% of the hourly rate for all hours in the night differential (10pm-6am).
In The Philippines, the probation period is between 3 and 6 months. A notice period of 7 days is required for termination of employment during the probation period.
Probation typically does not apply for project-based (fixed term) contracts).
All employees in the Philippines are entitled to a 13th-month salary, which amounts to 1/12th of their annual salary. This benefit is mandatory and is distinct from other bonuses, which are at the employer's discretion.
The 13th-month pay can be either:
Employees who have worked for at least 1 month are entitled to receive the 13th-month pay. For those who have completed less than 1 year of work, the payment is prorated.
It is essential to distinguish the 13th-month salary from any optional Christmas bonuses. While the 13th-month pay is mandatory, Christmas bonuses are discretionary and may vary depending on the employer's policies.
Employees pay between 0% and 35% in taxes depending on their income bracket. They also pay into social security, Home Development Mutual Fund (HDMF), and Health Insurance (PHIC).
Employers in the Philippines are not required to contribute to their employees' income tax. However, they are responsible for acting as withholding agents, deducting income taxes from their employees' monthly wages.
Employers contribute PHP 2,880 to social security per employee. They also contribute 2% of the base salary to the Philippine Health Insurance Corporation (PHIC) and 2% to the Home Development Mutual Fund (HDMF) (Pag-ibig).
Employees are entitled to 10 days of annual leave. Leave unused at the end of the year can be extended as approved by management until 31 March of next year. After that, it is forfeited.
At a minimum, employees receive 5 days of paid “service incentive leave” for every 12 months of service, which can either be taken as vacation or sick leave. In practice, most employers provide specific vacation days and sick leave above this amount in contracts, for example:
In general, unused leave days can be carried into the following year; the Philippines employment year does not specify a maximum, so employers wishing to limit how many days can be carried over should specify this in their agreements with employees.
Employees are entitled to 5 days of sick leave for the entire calendar year.
Female employees who have completed at least 1 year of service are entitled to 105 calendar days of maternity leave. For single mothers, the entitlement is increased to 120 calendar days of leave. If the worker has made at least 3 monthly contributions to the Social Security System in the 12-month period immediately preceding their childbirth or miscarriage, they will be paid a daily maternity leave benefit equivalent to 100% of the average daily salary. The employer will make the full payment and will be reimbursed by the Social Security System up to a cap of PHP 70,000.
Mothers can also choose to take an additional 30 days of maternity leave without pay. Employees should inform their employer of pregnancy and the expected due date at least 30 days before the intended date of leave. A medical certificate should also be provided to support the leave application.
There are approximately 18 public holidays in the Philippines, depending on the region. These are broken down into the following types:
For probationary employees, a minimum of 7 days’ notice is required. For resignations, employees must provide a minimum of 30 days’ notice. It is also possible to provide payment in lieu of notice.
The notice period for dismissals without cause (business or health reasons) is 30 days. However, depending on the gravity of the offense, termination can occur immediately, with payment for the notice period. In cases of poor performance or attendance, a more extended process is followed to give the employee ample opportunity to improve before termination.
Note: It is important to note that local laws generally discourage the termination of employment.
In the event of termination without cause, employees are eligible to receive severance compensation equivalent to half a month's salary for each year of service.
Upon issuance of Clearance, the Employee's final payment is calculated. It includes any unpaid days worked, accrued unused leave credits, the 13th Month Pay, and any applicable Tax Refund, regardless of the reason for termination. The clearance process is valid and has legal bases. Final pay subject to clearance process. Wages may be withheld for debts or obligations to the employer.
It is mandatory to pay a 13th-month salary bonus to employees every year that is equal to 1 month of pay, usually paid in December.
★ PHP 2,880 - Social Security
★ 8.33% - 13th month salary
★ 2% - Philippine Health Insurance Corporation (PHIC)
★ 4.17% - Severance Pay Fund
★ 2% - Home Development Mutual Fund (HDMF) (Pag-ibig)
You've sourced a full-time employee or contractor located in a country where your company is not incorporated.
Pass us the details of your candidate and we will let you know exactly what it costs to employ your candidate in that country.
Sit back and relax as we onboard your new team member and take care of all the local compliances and admin work.
It can be prohibitively expensive to establish an entity in every country you want to hire talent in, so Remofirst will hire and pay your employee on your behalf while you manage their daily duties. Remofirst will handle formal HR procedures and employment contracts that adhere to local laws, so that you can simply approve invoices via our platform. When you work with an Employer of Record (EOR) you can compliantly hire the best employees around the world.
Unlike full-time employees, contractors work on projects with multiple companies at a given time and are technically self-employed. Full-time employees are solely focused on their employer and usually receive benefits (such as health insurance, equity or stock options, and time off) as an additional form of compensation. While it can be cheaper to work with international contractors instead of paying benefits to a full-time employee, you run the risk of misclassification. It's recommended to work with an EOR for contractor onboarding and payments, so you can know that your international contractors are paid compliantly and on time.
