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Looking to Hire an Employee in Philippines?

There are many things you will need to know before you hire in Philippines but here’re our top 3:

1. Employment in Philippines 

Employer and Employee Social Security in Philippines

The employer Social Security contribution is 7.37% per employee, per month, and the employee contribution is 3.63% of monthly salary. The monthly maximum contribution is PHP 1208 for the employer and PHP 581 for the employee.

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2. Tax in Philippines

Tax Rates in Philippines

Income tax rates in Philippines range from 5-32% depending on gross income. Some expat employees for multinationals may use a flat tax regime of 15%.

Corporate Tax in Philippines

The corporate tax rate in Philippines is 30% of taxable profit.

3. Payroll in Philippines 

Social Security Registration

Both the employer and employee must register with the Social Security System online.

13th/14th month bonus

A 13th month bonus in Philippines is mandatory, and an additional ‘Christmas’ 14th month bonus is customary.

It’s going to be hard to employ someone remotely. Here’s what else you should be worried about:

The risk of non-compliance is very high, especially when employing in a new country like Philippines

Employing in an unfamiliar country like Philippines can be overwhelming. The burden and risk of non-compliance is all on you and your company and you need to be careful when navigating the employment and tax laws of Philippines. The information you’re looking at may be inaccurate, outdated or in another language. The consequences of non-compliance in Philippines are far too high to not invest time and money in thoroughly understanding the Philippines’ jurisdiction.

Involving tax and immigration providers early is the number 1 most preferred method to manage compliance risks for companies, with 72% stating that they are focusing on outsourcing these services early on in the assignment.

There are many hidden costs that you may have overlooked

When employing in Philippines, it is highly like that you may fail to factor in some costs involved while estimating a budget for the assignment. Usually, these costs occur during the course of employment and tend to be country-specific. They are often unpredictable and unavoidable resulting in the assignment being far more expensive than the business intended it to be. Hiring just one employee in Philippines doesn’t justify the effort and cost it takes for a company to learn everything from scratch about employing in Philippines.

Outsourcing services is the most preferred way for global mobility professionals to contain costs with 71% stating that they have already made outsourcing changes in an effort to maximise cost savings. Unsurprisingly, outsourcing is preferred over reducing the number of assignments/transfers or improving in-house administrative processes as a method to save costs.

These considerations are common when hiring an employee in any new country. In our years of experience employing in Philippines we have helped our clients with several other problems specific to Philippines. Here’re a few examples:

Other Issues Our Clients Have Encountered When Employing in Philippines

Philippines Department of Labor and Employment (DOLE) Regulations

DOLE is the agency in the Philippines that oversees all employment-related rules and regulations. There are some unique restrictions on outsourcing due to the widespread and controversial use of ‘seconded’ or sub-contracted workers in Filipino businesses. The bottom line is that contracting firms must be certified by DOLE as compliant with labor laws, or they cant outsource employment of any type.

The issue for multi-nationals that want to outsource employment in the Philippines is that they have to confirm that the contracting firm has DO-174 certification and is not engaged in illegal seconding. The certification has to be renewed every two years, so the contracting firm can show they are in current compliance.

Shield GEO’s local employer of record in Philippines is fully DO-174 certified and compliant.

Philippines Tax Residency and Tax Rates

There are several classifications of expat workers in Philippines, depending on the length of stay. For aggregate stays of less than 180 days in a calendar year, a 25% tax withholding will apply, and for longer stays the regular tax rates of 5-32% will apply. The special 15% tax rate only applies to managerial and technical employees of multinationals, offshore banking units and petroleum services.

Work Permits and Visas

To work in the Philippines, an expat will need both an Alien Employment Permit (issued by DOLE) and a 9G Employee Visa (obtained from the Bureau of Immigration). To be issued a 9G visa, there must be Philippines corporate employer to sponsor and validate the type of employment. A provisional work visa is available while the 9G visa is being approved.

The Employer of Record Solution 

As you can see from this overview, the process of hiring even one employee in Philippines can be a real challenge for any HR department. This is why the Shield GEO Employer of Record (EOR) solution is a cost-effective and simple way to address your payroll, tax and immigration requirements. The EOR becomes the legal employer of your worker in Philippines, with a registered entity that is already in place and prepared to take care of your employment needs.

Our team members can offer personal service, quick communication and the expertise of our regional partners to ensure that our EOR service is delivered seamlessly to support your staff assignments. We do have account managers and a principal office in Asia-Pacific, giving your HR department regional support for Philippines employment.

Here is a quick summary of what you can expect from your Shield GEO regional account manager:

  • A single point of contact for all employee or HR issues and questions

  • Assistance with meeting Philippines’ requirements for the employment contract

  • Advice on changes in legislation

  • Obtaining visas and work permits sponsored by our Philippines EOR

  • Full compliance with Philippines payroll, immigration and employment laws

  • Outsourced payroll: Monthly payroll and employment administration

For a HR department located in the home country, the Shield GEO team becomes a local, dedicated resource to handle every aspect of your employee assignments. This allows you to focus on supporting your staff’s project and performance needs, while we take care of the multiple employment administration tasks for you.

 Need more information about employing in a new country? Learn more about:

Looking to hire an employee in Philippines? Get in touch.

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