Payroll & Employment Guide: Philippines

Employment Contract

Employment contracts must be written and include:

• Working hours
• Compensation
• Paid leave
• Notice periods
• Termination terms
• Statutory benefit enrolment

Notice Periods:

• Typically 30 days

Termination of Employment:

Permitted for:

• Just cause (misconduct)
• Authorized cause (redundancy, retrenchment)
• Contract expiry

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Employee Benefits

Mandatory Benefits:

• Paid annual leave (depending on tenure)
• Sick leave
• 13th-month pay (mandatory)
• Social Security System (SSS)
• PhilHealth (health insurance)
• Pag-IBIG Fund (housing savings)
• Maternity and paternity benefits

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Leave Policies

Annual Leave:

• Typically 5–15 days (service-based)

Sick Leave:

• 5–15 days depending on company policy

Parental Leave:

• Maternity leave: 105 days
• Paternity leave: 7 days

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Healthcare

PhilHealth provides national healthcare coverage.

Many employers provide HMO (private medical insurance) as an additional benefit.

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Taxes in Philippines

Uses progressive income tax under the TRAIN law.

Personal Income Tax Rates:

0%–35% progressive

Tax Allowances & Reliefs:

• Personal exemption (embedded in tax tables)
• Optional deductions
• Tax shields for certain benefits

Payroll in Philippines

Base Salary:
Must meet regional minimum wage requirements.

Payment Schedule:
Semi-monthly or monthly, depending on the company.

Additional Payments:

• 13th-month pay (mandatory)
• Performance bonuses

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Taxes and Social Security

SSS:
Retirement, disability, benefits

PhilHealth:
Health insurance

Pag-IBIG:
Savings & housing

Employer and employee contribute jointly.

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Payroll Reporting

Monthly:

• SSS contributions
• PhilHealth payments
• Pag-IBIG contributions
• Withholding taxes

Annual:

• BIR Form 2316
• Annual employer declarations

Payroll Currency:PHP

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Legal Regulations

Philippine labour laws cover wages, working hours, leave, and termination.

Total Employment Cost:
Employer contributions add 10–15% to gross salary.

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Work Permits & Visas for the Philippines

Foreign nationals need:

• Alien Employment Permit (AEP)
• 9(g) Work Visa
• Special Work Permit (for short engagements)

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Employer of Record in Philippines

EOR services in the Philippines allow companies to hire employees legally without establishing a local entity, while ensuring full compliance with Philippine labor laws. This enables businesses to expand into the Philippines quickly and cost-effectively.All local employment responsibilities are managed on your behalf, reducing administrative and compliance risks.

Your EOR handles:

• Employment contracts compliant with Philippine labor laws
• SSS, PhilHealth, and Pag-IBIG contributions
• Payroll processing and salary disbursements
• Monthly tax withholding and statutory compliance
• HR support and employment administration

EOR in U.S.

PEO Services in Philippines

PEO services in the Philippines support companies with a local entity by managing HR, payroll, and compliance functions. This helps employers streamline workforce operations while retaining direct control over their employees. Local HR expertise ensures ongoing compliance with Philippine labor laws and regulations

PEO services assist with:

• HR administration and employee record management
• Payroll processing and statutory deductions
• Benefits administration and employee support
• Compliance with Philippine labor laws and employment regulations

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