Global PEO Services (GPS) helps companies hire employees in the Philippines without establishing a legal entity. All human resources, benefits, payroll, and tax needs for the employees are managed by the Global PEO, while the new hires and headquarter teams focus on your business goals.
When hiring employees in the Philippines, establishing a subsidiary or branch office is not always the best route, as it’s often a lengthy and expensive process. Hiring via a Professional Employer Organization (PEO), or Employer of Record (EOR), is a faster and often more effective option – especially when starting up in a new country.
Global PEO Services hires the employees on your behalf, legally contracting them through our subsidiary in accordance with labor laws in the Philippines. As a result, the burden of compliance is on us and the employees can begin work for your company in a matter of days. PEOs/EORs provide you with a streamlined option for hiring employees, testing markets, and responding to growing business needs in the Philippines. With Global PEO Services, you get control without taking on legal entity liabilities, contractor risks, or sacrificing on talent or speed to market.
The Philippines is the 3rd largest economy in the Association of South East Asian Nations (ASEAN) and the 13th largest in Asia. Emerging as a newly industrialized country, the country’s economy is moving from agriculture to services and manufacturing at a brisk pace. Exports include transport equipment, electronic products, garments, copper goods, coconut oil, and fruits. Healthy macroeconomic environment aided by low debt to GDP ratio, low inflation, and a spike in exports has helped the economy expand. The government is actively pursuing several legislative reforms to improve the business environment and generate more jobs.
Currency: Philippine Peso
Principal Language: Filipino
Government: Presidential Democratic Constitutional Republic
Capital City: Manila
Major Cities: Quezon, Caloocan, Davao, Cebu
No specific requirements for employment contracts are mentioned in the Labor Code. Workers can be hired for a trial period which cannot be more than 6 months unless they are a part of an apprenticeship program and a longer trial is required. Employers are required to inform workers of the minimum performance standards required for regular employment at the time of hiring. Workers can only be terminated if they fail to meet these standards.
The regular work schedule comprises 8 hours. Night shifts or any work between 10 p.m. and 6 a.m. is compensated by a minimum 10% of regular wages. Employers must give at least a day off in a week. Working more than 8 hours a day is considered overtime. Overtime pay is 25% of regular wages. Remuneration is 30% for working overtime on holiday.
Female employees are entitled to a minimum of 2 weeks of maternity leave before the expected date of delivery and 4 weeks after delivery or abortion, provided the employees have worked for at least 6 months over the past 12 month period.
If an employee is rendered unfit for work due to illness caused by delivery, pregnancy, or miscarriage, and has no unused leave credits from which an extended leave can be given, the maternity leave is extended without pay.
Employers must provide 7 days of paid paternity leave to married male employees after the child’s birth or wife’s miscarriage, regardless of their employment status. The leave is limited to the birth of an employee’s first 4 children.
Though labor code has no provisions for sick leave, employers generally provide sick leave through collective bargaining agreements. Employees who do not have any sick leave, qualify for social security sickness benefit if they have contributed for at least 3 months in the last 1 year and have suffered an injury or illness that renders them unfit for work for at least 4 days. The sickness benefit is paid at the rate of 90% of regular wages for a maximum of 120 days in a year.
Parental Leave for Single Parents
Employees can take up to 7 days of parental leave in a year with full pay. They qualify for this leave if they:
- complete at least 1 year of service
- notify the employer about using this leave within a reasonable period
- present a Solo Parent Identification Card obtained from the Department of Social Welfare and Development office
Leave for Victims of Violence against Women and Their Children
Employees who are victims as specified in the Republic Act No. 9262 are entitled to a leave of up to 10 days with full pay. The leave can be extended if the need arises as mentioned in the protection order issued by a court or Barangay. The leave benefit also covers the days an employee has to attend medical and legal matters.
Special Leave Benefits for Women under the Republic Act No. 9710
Female employees are entitled to a special leave of 2 days (on account of surgery for gynecological disorders) with full pay based on total monthly wages, regardless of civil status or age, if they have completed a minimum of 6 months of continuous employment during the last 12 months. If an extended leave is required, employees can use their earned leave credits. This leave is non-cumulative and non-convertible to cash.
The compulsory retirement age is 65. Employees aged 60 or more who have contributed for at least 120 months can retire with benefits. The minimum retirement pay is half of a month’s salary for each year of service.
Employees who have made 120 monthly contributions receive a monthly pension based on the number of contributions made, coverage period, and the number of dependent children. Those who have not made 120 monthly contributions get a lump sum based on the number of contributions made by them and their employer including interest.
All employers and employees below the age of 60 are required to register with the State Insurance Fund (SIF) for insurance coverage. Employees who are over 60 and contribute toward life insurance benefits provided under the Social Security System are also required to register with the SIF compulsorily.
Temporary Total Disability
Employees who sustain a work-related illness or injury that results in temporary total disability qualify for a disability benefit of 90% of their average daily wages for a maximum of 120 days. The period can be extended to 240 days if the condition requires more care or treatment. In case the condition remains same beyond 240 days, it is considered a permanent total disability.
Permanent Total Disability
Permanently disabled employees are entitled to a monthly benefit equal to the old age pension benefit that is determined using the number of contributions made to the Social Security System and the duration of membership. A supplemental allowance of 575 pesos each month and an extra 10% is granted for every dependent child up to 5.
Permanent Partial Disability
Employees who suffer a permanent partial disability due to work-related injury or illness receive the same benefits as those who suffer a permanent total disability, but with certain time limits. In case the time limit is less than a year for an employee’s injuries, the employee is given a lump-sum amount.
In case a work-related injury or illness results in an employee’s death, the deceased’s primary beneficiaries qualify for the amount equivalent to monthly pension and an extra 10% for every dependent child until they become 5 years old. The person who pays for the funeral is paid a funeral benefit of 10,000 pesos.
Mandatory Employee Benefits
The Social Security System in the Philippines consists of:
Social Security System (SSS)
The SSS protects against old age, sickness, disability, and death to private employees and their families. The Government Service Insurance System or GSIS is a similar system for government employees.
Home Development Mutual Fund (HDMF)
The HDMF, a provident saving system, provides housing loans to Philippine government employees, self-employed individuals, and private employees who join the Fund.
Philippine Health Insurance Corporation (PhilHealth)
PhilHealth, managed by the Philippine National Health Corporation, provides practical means to employees to pay for adequate medical care.
Coverage in the Philippines
Employees aged less than 60 who earn more than 1,000 pesos per month must contribute to the SSS. Government employees must contribute to the GSIS. Employees are required to make contributions to PhilHealth and the HDMF. Membership is optional only for self-employed individuals. Even foreign workers are required to contribute. Though opting out is allowed under some circumstances, but in practice, the costs and efforts required to justify the exemption far outweigh the savings in question.
How GPS can Help
With our Global PEO/Employer of Record services, companies can expand into Philippines and hire their employees without having to establish a branch office or subsidiary in Philippines.
- Your candidate is hired via our Philippines PEO. If needed, we can also help you find the right talent in any country with our comprehensive global staffing services.
- Your new employee begins work quickly as we take care of employment contracts, statutory and non-statutory benefits, and running their payroll - all in full compliance with Philippines laws.
- Global PEO Services experts manage all day-to-day operational issues such as employee expenses, and severance/termination if required.
- With no contractor risks, pass on the compliance burden to Global PEO Services.
Spin Off/M&A Support
- Ensure continuity of payroll, benefits and HR support when acquiring or spinning off a business with employees overseas.
24/7 Support in 150+ Countries
- Empower your teams with 24/7 support and a single point-of-contact model in which experienced client services directors are in continuous communication with information and advice.
- We are backed by a mix of 300+ multidisciplinary experts from HR, Payroll, Finance, Tax, and Legal domains who are ready to respond to the expected and unexpected needs of your business on the shortest notice.
Easy Visibility into Your Employee Time & Attendance and Benefits Data
With our Global PEO, you get access to Mihi, our proprietary SaaS solution for time and attendance, vacation, leave management and benefits enrollment and management. Mihi enables clients to have easy access to employee data in real time. It is designed specifically for companies with a global workforce, especially when working in multiple countries with low headcount.
Ready for Growth When You Are
When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance and staffing support. Learn more about our end-to-end international expansion services.