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Employment in Philippines

The Labour Code of the Philippines (Labour Code) represents the comprehensive legislation, regulating employment relationships in the Philippines and applies to foreign nationals as well as locals, working in the country.

Applicable labour standards are deemed to be included into all employment contracts, without provisions to fall below the applicable articles of the Labour Code. Accordingly, any contractual term and condition against the labour laws will be considered null and void. Jurisdiction in matters related to modification of the terms and conditions of employment is attributed to Philippine labour arbiters, tribunals and courts.

For these and many other reasons the following are only guidelines in the broadest sense, and professional legal services are recommended when employing in the Philippines.

Key points on employment in Philippines

There are several key areas to be aware of within the Philippines’ employment regulatory framework, especially for companies that plan to initiate a full local office and human resources department.  These challenges can be mitigated by use of a locally sourced payroll provider who is familiar with all of the local laws and rules for both local employees as well as foreign nationals.

  1. Contract

    Under Article 294 of the Labour Code, there are four possible types of employment arrangement:

    • Regular employment.
    • Project employment.
    • Seasonal employment.
    • Casual employment.
  2. Probation Period

    Before becoming a regular employee, every worker may be required to undergo a probationary period of up to six months, unless it is covered by an apprenticeship agreement, stipulated for a longer period. Whenever the new employee is allowed to work after the lapse of the probationary period, he must be employed with a regular employment contract by law. In case the employer does not notify the employee of the standards that he must satisfy at the beginning of the probationary period, the employment will be deemed a regular employment agreement from the time the employee started working.

  3. Termination Procedures

    Under Article 282, Title I, Book VI, an employer may terminate an employment for any of the following causes:

    • Serious misconduct or wilful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;
    • Gross and habitual neglect by the employee of his duties;
    • Fraud or wilful breach by the employee of the trust reposed in him by his employer or duly authorized representative;
    • Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representatives;
    • Other causes analogous to the foregoing.

    It is possible to terminate the employment agreement also for “authorised causes”, according to Art. 283 and 284.

    Under Art. 285, termination from employees can occur when:

    • An employee may terminate without just cause the employee-employer relationship by serving a written notice on the employer at least one month in advance. The employer upon whom no such notice was served may hold the employee liable for damages;
    • An employee may put an end to the relationship without serving any notice on the employer for any of the following just causes;
    • Serious insult by the employer or his representative on the honor and person of the employee;
    • Inhuman and unbearable treatment accorded the employee by the employer or his representative;
    • Commission of a crime or offense by the employer or his representative against the person of the employee or any of the immediate members of his family;
    • Other causes analogous to any of the foregoing.
  4. Statutory Leave

    • Annual Leave: Except some cases, every employee who has worked at least one year is entitled to an annual leave of five days with pay. As a general rule, an employer can regulate the schedule of the annual leave of its employees;
    • Maternity Leave: Every female member of the Social Security System (SSS) who has paid at least three monthly contributions in the 12-month period immediately preceding her childbirth or miscarriage will be paid a daily maternity leave benefit equivalent to 100% of her average salary credit for 60 or 78 days, depending whether is a normal or caesarean delivery;
    • Paternity Leave: Every married male employee, regardless of employment status, is entitled to a paternity leave of seven days with full pay for the first four deliveries of his legitimate spouse with whom he is cohabiting;
    • Parental Leave: In addition to leave privileges under existing laws, parental leave of not more than seven working days every year shall be granted to any solo parent employee as defined in the law who has rendered service of at least one year;
    • Sick Leave: Philippine laws do not automatically grant employees sick leave, although there is nothing that prohibits the employer and employee from agreeing on the grant of sick leave through voluntary employer policy or collective bargaining agreements.
  5. Pension and Benefits

    For Health, Safety and Social Welfare, please consult Book IV of the Labour Code.

Outsourcing Employment Through a GEO Employer of Record Service

Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in the Philippines. For companies, which intend to employ their staff directly through their incorporated Philippine entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in the Philippines.

As a Global Employer Organization (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into the Philippines.

The Shield GEO solution is an attractive alternative where:

– the company is looking to employ staff quickly

– the company doesn’t have an appropriately incorporated entity in the Philippines

– the company wants to work within a defined budget

– the company wants to limit its initial commitment in the Philippines

– the company needs help with tax, employment, immigration and payroll compliance in the Philippines

Shield GEO can contract directly with the company to employ and payroll their staff in the Philippines. Shield GEO supplies local employment contracts for the staff which ensure that local statutory requirements are met covering issues such as termination, probation periods, leave entitlements and statutory benefits.  Shield GEO is able to advise companies how to cover local employment regulations whilst still providing consistent global employment policies. Understand more about outsourced employment through Shield GEO.

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