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 our Philippines PEO, while the new hires and headquarter teams focus on your business goals. Using a Philippines PEO is the fastest and most efficient way to develop a workforce in the Philippines.
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 Philippines labor laws. 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.
Philippines - Country Overview
The Philippines is the 13th largest economy in Asia and the third-largest in the Association of Southeast Asian Nations (ASEAN). The Philippine economy is rapidly transitioning from agriculture to services and manufacturing as it emerges as a newly developed country. Transport equipment, electrical products, clothes, copper goods, coconut oil, and fruits are among the items exported. The economy is doing well thanks to a healthy macroeconomic climate with low inflation and a surge in exports.
Philippine Peso (₱)
Presidential Democratic Constitutional Republic
Employment Contracts in the Philippines
In the Philippines, an employment contract can be either in writing or verbal.
The Labor Code of the Philippines contains no requirements for written contracts.
Some of the details typically mentioned in the written contract include:
- Names of both parties
- Employment start date
- Job title and description
- Location and hours of work
- and more
The different types of employment relationships are:
- Permanent Employment – Employees recruited to undertake duties that are typically necessary or desirable for the employer’s usual business are considered regular or permanent employees, according to the Philippine Labor Code.
- Fixed-Term Contracts – An employee hired for a specific project that has a set completion or termination date when employment begins.
- Temporary Employment – Per the Philippine Labor Code, temporary workers are casual workers who perform seasonal work. Laborers hired for a single season are temporary workers.
In the Philippines, a probationary period is typically 6 months.
Working Hours in the Philippines
Employees are required to work 8 hours per day. Night shifts or any work between 10 p.m. and 6 a.m. is compensated by a minimum of 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 and the overtime pay in the Philippines is 25% of regular wages. Compensation is 30% for working overtime on holiday.
Employee Leave in the Philippines
Employees are entitled to the following leaves:
- Annual leave in the Philippines – Per the Philippines’ Labor Code, employees who have worked for at least 1 year are allowed 5 days of paid leave.
- Maternity leave in the Philippines– Female employees receive a minimum of 2 weeks of maternity leave before and 4 weeks after delivery or abortion, provided the employees have worked for at least 6 months over the past 12-month period.
- Sick leave in the Philippines – The labor code does not have provisions for sick leave, but collective bargaining agreements generally provide it. Social security sickness benefits are available to employees who have contributed to social security for at least 3 months in the past year and who have been unfit for work for at least 4 days due to an injury or illness. A maximum of 120 days of sickness benefits are paid in a year at 90% of regular wages.
- Paternity leave in the Philippines – Employers must provide 7 days of paid paternity leave to 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.
- 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 under the Republic Act No. 9262 receive a paid leave of up to 10 days that can be extended if necessary.
- Special Leave Benefits for Women under the Republic Act No. 9710 – Female employees receive a special leave of 2 days of paid leave for surgery related to gynecological disorders. There is no minimum employment period required, and the leave is available to employees of all ages and civil statuses.
The following are the statutory national holidays in the Philippines:
- Jan. 1: New Year’s Day
- Maundy Thursday
- Good Friday
- Bravery Day
- Labor Day
- Independence Day
- Christmas Day
- Rizal Day
The government announces several special holidays each year. These days off are unpaid and may change from year to year. These are:
- Chinese New Year
- End of Ramadan
- Festival of Sacrifice
- Monday nearest Aug. 21: Ninoy Aquino Day
- Last Monday in August: National Heroes Day
- Nov. 1-2: All Saints Day
- Monday nearest Nov. 30: Bonifacio Day
- Dec. 24: Christmas Eve
- Dec. 31: Last Day of the Year
Employee Termination in Philippines
The employee may terminate the employment relationship by giving the employer one month’s advance written notice.
The termination of an employment relationship can take place by the completion of a project (or a phase of that project).
Global Mobility in Philippines
There are typically the following categories of visas in the Philippines:
- Temporary visit visa
- Transit visa
- Investor/ Treaty trader visa
- Diplomatic visa
- Employment visa (prearranged)
- Permanent resident visa
- Student visa
- Special non-immigrant visa
- Seaman’s visa
The Philippine government issues 3 options for foreigners seeking work permits in the Philippines and they are:
- Alien employment permit (AEP) – issued by the Department of Labor and Employment (DOLE)
- Special work permit (SWP) – issued by the Bureau of Immigration
- Provisional work permit (PWP) – also issued by the Bureau of Immigration
Employee Benefits in the Philippines
The compulsory retirement age in the Philippines 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 receive a monthly pension based on their contributions, coverage period, and the number of dependent children after 120 monthly contributions. If an individual hasn’t made 120 monthly contributions they receive a lump sum based on the number of contributions including interest made by them and the employer.
All employees below the age of 60 are required to register with the State Insurance Fund (SIF) for insurance coverage. Additionally, it is mandatory for employees over 60 to contribute toward life insurance benefits provided under the Social Security System in the Philippines and must register with the SIF.
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 the same beyond 240 days, it is considered a permanent total disability.
Permanent Total Disability
Permanently disabled employees receive 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 the 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 of less than a year of injury, an employee is given a lump-sum amount.
If an employee dies due to work-related injury or illness, their primary beneficiaries receive the equivalent of a monthly pension and an extra 10% until their children turn 5. The person who pays for the funeral is paid a funeral benefit of 10,000 pesos.
Mandatory Employee Benefits in the Philippines
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 (GSIS) is a similar system for government employees.
- Home Development Mutual Fund (HDMF)
HDMF 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 for 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.