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.
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.
Under Article 294 of the Labour Code, there are four possible types of employment arrangement:
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.
Under Article 282, Title I, Book VI, an employer may terminate an employment for any of the following causes:
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:
For Health, Safety and Social Welfare, please consult Book IV of the Labour Code.
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.