Hiring employees in the Philippines is relatively straightforward, but employers still need to comply with local employment laws, provide statutory benefits, and choose the right hiring model.
This guide explains what employers need to know, including employment requirements, hiring options, and other key considerations for building a compliant local team.
Philippines Hiring at a Glance
- Legal entity required? No (if using an EOR)
- Written employment contract required? Yes
- Mandatory 13th-month pay? Yes
- Employer social contributions? Yes
- Common hiring options: Entity, EOR, contractor
- Typical onboarding through an EOR: 1–3 business days
Why Companies Hire in the Philippines
The Philippines is one of the world's leading markets for international hiring. A large, highly educated workforce, widespread English proficiency, and a business culture influenced by Western markets make it an attractive option for companies building distributed teams.
The country has built a strong reputation for business process outsourcing (BPO), and decades of experience serving global organizations have produced a highly skilled workforce across customer support, finance, sales, and back-office operations.
At the same time, the country's technology sector continues to grow, giving employers access to experienced software developers, engineers, designers, data professionals, and other technical talent.
Competitive labor costs are another major advantage. While salaries vary by role, location, and experience, employers can often hire highly qualified professionals at lower costs than in many North American, European, and Australian markets.
The Philippines also aligns well with remote and international teams. Many professionals have experience working with overseas employers, and companies can often structure schedules that provide meaningful overlap with teams across Asia-Pacific, Europe, or North America, depending on the role.
Whether you're hiring your first international employee or expanding an established global workforce, the Philippines offers a strong combination of talent, experience, and value.
What Do Employers Need to Know Before Hiring in the Philippines?
Before making your first hire in the Philippines, it's important to understand a few core employment requirements. While this isn't a complete list of every legal obligation, these are the key requirements international employers need to plan for.
Employment Contracts
Employers should provide employees with a written employment contract that clearly outlines compensation, working hours, benefits, job responsibilities, probationary terms (if applicable), and other key conditions of employment. Contracts must be in line with the Philippine Labor Code and other relevant employment regulations.
Mandatory Government Programs
Employers must register eligible employees and make contributions to several government programs, including the Social Security System (SSS), PhilHealth, and the Home Development Mutual Fund (Pag-IBIG). These programs provide social security, healthcare, and housing benefits for employees.
13th-Month Pay
Filipino employees are entitled to 13th-month pay — an extra annual payment equal to at least one month's basic salary.
Leave Entitlements
Employees receive various forms of statutory leave, including service incentive leave (SIL) and protected leave for qualifying events such as maternity, paternity, and other family-related circumstances. Many employers also choose to offer additional paid time off as a competitive benefit.
Minimum Wage
Minimum wage rates are established by regional wage boards rather than the national government, so the applicable minimum depends on where an employee works. Employers should verify the current rate for each employee's location.
Probationary Employment
Employers may hire employees on a probationary basis, provided performance expectations are communicated at the start of employment and the probation period complies with Philippine labor laws.
Termination Requirements
Ending an employment relationship in the Philippines is highly regulated. Employers generally need a legally recognized reason for termination and must follow specific procedural requirements, which vary depending on the circumstances.
Choose the Right Hiring Model
Employers have three main options for hiring employees in the Philippines. The right approach depends on your hiring plans, budget, and long-term business goals.
Open Your Own Legal Entity
Opening a legal entity gives you full control over your operations in the Philippines, making it a good fit for companies planning to establish a long-term local presence or hire a larger team.
However, setting up and maintaining an entity requires significant time and administrative effort. Employers are responsible for company registration, payroll, tax filings, government contributions, employment contracts, and ongoing compliance with Philippine labor laws.
Learn more about opening a legal entity in the Philippines.
Hire Through an Employer of Record (EOR)
An Employer of Record (EOR) allows you to employ workers in the Philippines without establishing your own local presence.
The EOR becomes the legal employer, while you continue to manage the employee's day-to-day work, responsibilities, and performance.
This approach is often the best option for companies making their first international hire, testing a new market, or building an international team without the time and cost of opening an entity.
Learn more about hiring in the Philippines with an Employer of Record.
Hire Independent Contractors
Hiring contractors can be a flexible and cost-effective option for project-based work, specialized expertise, or short-term engagements. However, contractors must operate as genuinely independent businesses.
If a contractor is treated like an employee — for example, by working under the same level of control or supervision — they may be considered misclassified under Philippine law. Misclassification can expose companies to additional taxes, penalties, and other legal obligations.
Learn more about hiring contractors in the Philippines.
What Does It Cost to Hire an Employee in the Philippines?
Before making your first hire, it's important to understand the expenses that may affect your overall budget.
Salary
Compensation varies widely based on the role, experience level, industry, and location. Professionals in Metro Manila, for example, often command higher salaries than those in other parts of the country.
Employer Contributions
In addition to salary, employers should budget for required government contributions and other statutory employment costs, including mandatory 13th-month pay.
Benefits
Many employers offer benefits beyond the statutory minimum to remain competitive. Additional health coverage, wellness programs, professional development opportunities, and flexible work arrangements can all influence the total cost of employment.
Equipment and Technology
If employees work remotely, employers may need to provide laptops, monitors, software licenses, security tools, or internet and home office allowances, depending on company policy.
Payroll and HR Administration
Companies hiring through their own entity should factor in the cost of HR software, internal staff, or outsourced providers. Businesses using an Employer of Record typically pay a monthly fee that includes these services.
Recruiting Costs
Finding qualified candidates may involve job board fees, recruitment agencies, background checks, skills assessments, and the time managers spend reviewing applications and conducting interviews.
Understanding all of these costs upfront can help you build a more accurate hiring budget and avoid unexpected expenses as your team grows.
Common Hiring Challenges in the Philippines
The Philippines is generally considered one of the easier markets for international hiring, but there are still a few challenges employers should plan for before building a local team.
Competition for Experienced Talent
While the Philippines has a large workforce, experienced professionals in software engineering, cybersecurity, data science, and other specialized fields are in high demand. Employers may need to move quickly through the hiring process and offer competitive compensation to secure top candidates.
Keeping Up With Employment Requirements
Employers need to comply with Philippine employment laws, including rules around employment contracts, taxes, government contributions, statutory benefits, and termination procedures. Companies hiring through their own entity should have processes in place to manage these ongoing obligations.
Coordinating Across Time Zones
Many Filipino professionals are accustomed to working with international companies, but employers should still establish clear expectations around working hours, communication, and availability. Depending on your team's location, some roles may require flexible schedules to ensure adequate overlap.
Retaining Top Employees
Competition for experienced talent means retention is just as important as recruitment. Offering competitive compensation, career development opportunities, and a positive employee experience can help reduce turnover and improve long-term retention.
Managing a Distributed Team
If your Philippine employees work remotely, invest in the processes and tools needed to support distributed collaboration. Clear documentation, regular communication, and well-defined expectations help keep remote teams productive and engaged.
Frequently Asked Questions
Can a U.S. company hire employees in the Philippines?
Yes. U.S. companies can legally hire employees in the Philippines, but they must do so through a compliant employment structure. This typically means either establishing a local legal entity or partnering with an Employer of Record (EOR). An EOR allows you to hire employees without opening a Philippine company.
Do I need a legal entity to hire in the Philippines?
No. While opening a local entity is one option, it's not required if you use an Employer of Record. An EOR enables companies to hire employees, run payroll, provide statutory benefits, and comply with Philippine employment laws without establishing their own local business. Companies planning to establish a larger long-term presence in the Philippines may eventually choose to open an entity instead.
Is 13th-month pay mandatory in the Philippines?
Yes. Eligible employees in the Philippines are legally entitled to receive 13th-month pay. This mandatory benefit is equal to at least one-twelfth of an employee's basic salary earned during the calendar year and is generally paid no later than December 24. Employers should include this cost when budgeting for new hires.
Can I hire Filipino workers as independent contractors?
Yes, but only when the working relationship is genuinely that of an independent contractor. Contractors should maintain control over how they perform their work and should not be treated like employees. If a contractor is misclassified, employers could become responsible for employment taxes, statutory benefits, and other legal obligations. If you need someone to work as part of your business on an ongoing basis, hiring them as an employee is often the more appropriate option.
How long does it take to hire an employee in the Philippines?
The hiring timeline depends on your recruitment process and hiring model. Finding the right candidate can take anywhere from a few weeks to several months, depending on the role and market conditions. Once you've selected a candidate, hiring through an Employer of Record is typically much faster than opening a local entity because the legal employment infrastructure is already in place.
Hire Employees in the Philippines with RemoFirst
Whether you're making your first hire or expanding an existing team, RemoFirst helps you employ workers in the Philippines without opening a local entity. We manage the local employment requirements, so you can focus on growing your team.
With support in 185+ countries, transparent pricing, and a dedicated account manager, RemoFirst helps you hire with confidence and scale internationally as your business grows.
Schedule a demo to see how RemoFirst can simplify hiring in the Philippines.
