Hire and manage employees in the Philippines
Table of contents
Key takeaways
The Philippines’ Labor Code governs all private-sector employment. DOLE (Department of Labor and Employment) oversees compliance. Security of tenure means employees cannot be dismissed without just cause or authorized cause.
All rank-and-file employees are entitled to a mandatory 13th-month pay equivalent to one-twelfth of their annual basic salary, paid on or before December 24 each year.
All employers must register employees with SSS, PhilHealth, and Pag-IBIG. Employer contributions include SSS at 9.5% of monthly salary credit, PhilHealth at 5% (capped at PHP 100,000/month), and Pag-IBIG at PHP 200/month.
The Philippines does not have a single national minimum wage. Rates are set regionally. As of 2026, the minimum wage in Metro Manila (NCR) is PHP 645 per day for non-agricultural workers.
Employees with at least one year of service are entitled to 5 days of Service Incentive Leave (SIL) per year. Female employees are entitled to 105 days of paid maternity leave (120 days for solo parents), and male employees to 14 days of paid paternity leave.
Foreign companies can hire Philippine employees without a local entity using an Employer of Record (EOR). An EOR handles BIR registration, SSS/PhilHealth/Pag-IBIG contributions, payroll processing, and compliance with the Labor Code.
Employer of Record (EOR) vs. entity
Before you kick off the hiring process for your Filipino employees, you’ll need to decide between setting up a local business entity or hiring through an Employer of Record (EOR). Read our guide to hiring through an EOR in the Philippines to understand the steps involved.
Legal entity in the Philippines. Setting up a local entity from scratch involves registering with the Securities and Exchange Commission (SEC), Bureau of Internal Revenue (BIR), SSS, PhilHealth, and Pag-IBIG, and opening a local bank account. This can take several weeks.
Philippine EOR. An EOR acts as the employer on your behalf, handling all employment, payroll, and compliance requirements—so you can hire quickly without setting up an entity.
- | EOR | Legal Entity |
|---|---|---|
Cost and implementation | Quick to set up Start hiring within days Becomes more expensive as headcount increases. | Takes months to set up—and requires registration fees and enormous time investment. More cost-effective once your Australian headcount is large enough |
Hiring | Onboard new hires quickly, often within days depending on the provider | Supports large-scale, long-term expansion in the market |
Compliance | Manages all of your compliance work for you, takes on liability, and provides localized employment contracts. Can't tailor certain policies and other HR/legal processes to the needs of your business. | Requires expert knowledge of local laws and tax regulations and internal legal resources, as your company is liable for all legal and compliance infractions. Can tailor certain policies and other HR/legal processes to the needs of your business. |
Payroll and benefits | Pay and insure employees quickly Taxes are filed for you | You track statutory deductions and entitlements for every hire |
Classifying Filipino workers: employees vs. contractors
Another critical early step is classifying your workers correctly. The Philippines has specific criteria for determining whether a worker is an employee or an independent contractor. The key factors are: selection and engagement of the employee, payment of wages, power to dismiss, and power to control conduct. If all four apply, the worker is legally an employee. Check out our classification guide to make sure you’re staying compliant with Philippine labor and employment laws.
Contractors | Employees |
|---|---|
High level of worker control. Contractors are generally given more autonomy to determine how to complete the work and when to do it. | More direction from the employer. Employees are generally subject to more control and direction from their employer, who will provide guidance on how to perform the work and may set specific hours of work. |
Equipment and tools are owned by the worker. | Equipment and tools are typically provided by the company. |
Less integrated. Contractors tend to be independent, they’re more likely to work remotely, and they use their own tools and equipment. | Highly integrated. Employees are typically more integrated into the employer's organization, for example, they may work at the employer's premises. |
No entitlement to benefits. Contractors are not entitled to the same benefits, leave entitlements, and protections as employees. They’re responsible for paying their own taxes. | Entitled to benefits. Employees are entitled to certain employment benefits and protections, such as minimum wage, overtime pay, and vacation pay. They may also be entitled to benefits like health insurance, retirement plans, and paid sick leave. |
Time-bound engagement. Contractors are typically engaged for a specific project or period of time. | Indefinite engagement. Employees are generally hired for an indefinite period of time. |
Risk of loss. Contractors may assume more risk and liability for the work they perform. | No risk of loss. Employees are generally protected from liability for work-related issues. |
Non-exclusive services. Contractors cannot be contractually bound to a single company; they can provide their services to more than one organization. | Exclusive services. Employees can be contractually bound to provide services to just one company. |
Subcontracting. Contractors can delegate work to be performed by another person or business. | No subcontracting.Employees are expected to do their work themselves. They can’t delegate responsibilities to subcontractors without company approval. |
Work permits for Filipino employees
You need to ensure a candidate is allowed to work in the Philippines before moving forward. Unless exempt, foreign nationals must obtain a work visa before starting employment. Common work visas include the 9(g) Pre-Arranged Employee Visa and the Special Work Permit (SWP) for short-term assignments. See our guide on work permits in the Philippines.
New hire onboarding checklist
Once you’ve confirmed your new hire can legally work in the Philippines, you can begin the onboarding process. A successful onboarding starts well before the first day and continues through the first 90 days. See our new hire checklist for employees in the Philippines.
Before their first day
Send an offer letter and employment contract.
Complete a background check.
Register them with SSS, PhilHealth, and Pag-IBIG.
Enroll them in payroll and any company benefits.
Configure their devices and app access.
On day one and beyond
Provide general and role-specific training.
Schedule 30-, 60-, and 90-day check-ins.
Set goals and offer regular feedback.
What to include in an offer letter in the Philippines
Employment contracts in the Philippines must be in writing and should include: the parties’ names, job title and duties, start date, compensation and pay schedule, benefits, probation period, working hours, grounds for termination, and NDA or IP assignment clauses. Read our guide on how to create offer letters for employees in the Philippines.
NDAs and confidentiality agreements in the Philippines
NDAs are enforceable in the Philippines under the Civil Code’s freedom of contract principle, as long as they are reasonable in scope and duration. They must also comply with the Data Privacy Act of 2012 (Republic Act 10173). Read our full guide on NDAs in the Philippines.
Running background checks on Filipino employees
Background checks are allowed and common in the Philippines, but must comply with the Data Privacy Act. Employers must obtain written consent before conducting checks. Common checks include NBI clearance, employment history, education, and professional license verification. Read our guide on employment background checks in the Philippines.
Paying employees in the Philippines
Payroll must account for withholding tax, SSS contributions (9.5% employer share), PhilHealth (5%, split equally), and Pag-IBIG (PHP 200/month). The minimum wage in Metro Manila is PHP 645/day as of 2026, though rates vary by region. Salaries are typically paid semi-monthly. Rippling pays your employees and contractors around the globe in their local currencies. See our step-by-step guide to running payroll for employees in the Philippines.
Mandatory employee benefits in the Philippines
Mandatory benefits required by law include:
13th-month pay: One-twelfth of annual basic salary, paid by December 24.
SSS, PhilHealth, and Pag-IBIG contributions as described above.
Service Incentive Leave (SIL): 5 days of paid leave per year for employees with at least 1 year of service.
Maternity leave: 105 days paid (120 for solo parents), funded through SSS.
Paternity leave: 14 days paid for married male employees.
12 regular holidays and up to 3 special non-working holidays per year, with specific pay rules for each.
Read our full guide to offering benefits in the Philippines for more on statutory and supplementary benefits.
Managing remote employees’ computers and apps
With a distributed Philippine team, you’ll need a reliable way to manage remote employee devices and app access. Rippling lets you ship, configure, and manage devices remotely, and instantly provision or deprovision access to all your company apps from a single dashboard.
Protecting company IP in the Philippines
The Philippines’ Intellectual Property Code (Republic Act 8293) protects trademarks, patents, copyright, and trade secrets. Copyright protection is automatic upon creation. IP assignment clauses should be included in employment contracts. Read our primer on IP law in the Philippines to ensure your company’s intellectual property is protected.
Complying with Philippine labor laws
The Philippine Labor Code (Presidential Decree No. 442) is the primary legal framework governing employment. Key compliance requirements include: correct classification of employees vs. contractors, timely payment of mandatory benefits, compliance with working hours (8 hours/day, 6 days/week maximum), overtime pay of at least 125% of the regular rate, and proper termination procedures. Read more about labor laws in the Philippines.
Terminating employees in the Philippines
The Philippines has strict employee protections. An employee cannot be dismissed without just cause (e.g., serious misconduct, gross neglect, fraud) or authorized cause (e.g., redundancy, retrenchment, closure). Just cause terminations require a notice-to-explain, a formal hearing, and a written notice. Authorized cause terminations require 30 days’ written notice to both the employee and DOLE, plus separation pay. Read our full guide on terminating employees in the Philippines.
Frequently asked questions about hiring in the Philippines
What are SSS, PhilHealth, and Pag-IBIG, and how do they affect employers?
All Philippine employers must enroll employees in three mandatory government benefit programs. SSS (Social Security System) provides retirement, disability, sickness, and maternity benefits — employers contribute 9.5% of the employee's monthly salary credit. PhilHealth provides national health insurance — employers contribute 5% of the monthly basic salary (split equally with the employee), subject to a ceiling of PHP 100,000/month. Pag-IBIG (HDMF) provides housing and short-term loans — employers and employees each contribute PHP 200/month (or more for higher earners). Monthly contributions must be remitted to the respective agencies on time, and failure to do so carries penalties and criminal liability for employers.
Can a foreign company hire employees in the Philippines without a local entity?
Yes. Foreign companies can hire Philippine employees using an Employer of Record (EOR) like Rippling without registering a local entity. The EOR acts as the legal employer under Philippine law, handling BIR (Bureau of Internal Revenue) registration, SSS/PhilHealth/Pag-IBIG contributions, payroll processing, and compliance with the Labor Code. Setting up a Philippine entity (corporation or branch office) is the alternative, but requires SEC registration, BIR enrollment, and typically takes 4–8 weeks minimum. An EOR is usually the faster, lower-risk option for companies testing or scaling in the Philippine market.
Is 13th month pay mandatory in the Philippines?
Yes. Under Presidential Decree No. 851, all rank-and-file employees in the private sector are entitled to 13th month pay regardless of their designation, employment status, or method of payment. It must be paid on or before December 24 each year. The amount is equivalent to one-twelfth (1/12) of the total basic salary earned by the employee within the calendar year. Employees who have worked for at least one month during the year are entitled to a prorated amount. Managerial employees are excluded from this requirement by law, though many employers choose to extend it to them as well.
What is the minimum wage in the Philippines?
The Philippines does not have a single national minimum wage — rates are set regionally by Regional Tripartite Wages and Productivity Boards. As of 2026, the daily minimum wage in Metro Manila (NCR) is PHP 645 for non-agricultural workers. Rates in other regions are lower. In addition to the daily rate, employees in the private sector are entitled to a Cost of Living Allowance (COLA). Minimum wage orders are periodically reviewed and can change, so employers should check with the relevant regional board for the latest rates in the areas where they hire.
What leave entitlements are employees entitled to in the Philippines?
Philippine law provides several mandatory leave entitlements. Employees with at least one year of service are entitled to 5 days of Service Incentive Leave (SIL) per year, which can be used as vacation or sick leave. Female employees are entitled to 105 days of paid maternity leave (120 days for solo parents), covered by SSS. Male employees get 14 days of paid paternity leave for legitimate spouses. Victims of violence against women and their children (VAWC) are entitled to 10 days of paid leave. Additionally, there are 12 regular holidays and up to 3 special non-working holidays per year where pay rules differ.
How do terminations work in the Philippines?
The Philippines has strict employee security of tenure protections — at-will employment does not exist. Employers may only terminate employees for just causes (serious misconduct, gross neglect, fraud, or commission of a crime) or authorized causes (redundancy, retrenchment, closure, or disease). Just cause terminations require a notice-to-explain, a formal hearing, and a notice of termination. Authorized cause terminations require 30 days' written notice to both the employee and the Department of Labor and Employment (DOLE). Separation pay is mandatory for authorized cause terminations: typically one month's pay or one month per year of service, whichever is higher, depending on the cause.
Isenção de responsabilidade
Rippling and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.
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