To hire employees in the Philippines, a foreign company either sets up its own Philippine entity and employs people directly, works with a contractor that employs and manages the team for it, or engages genuinely independent professionals. Whichever route you choose, Philippine law sets the minimum wage by region, requires SSS, PhilHealth and Pag-IBIG contributions and a 13th-month pay, and protects employees once they become regular. This guide walks through the routes, the steps, the 2026 costs and an onboarding checklist.
Three ways to hire in the Philippines
| Route | How it works | Watch out for |
|---|---|---|
| Your own entity | You set up a domestic corporation or register a branch, then employ people directly and run payroll | Set-up time, foreign ownership rules and ongoing filings with the SEC, BIR, local government and agencies |
| Contractor that employs the team | A contractor registered with DOLE takes on an agreed scope of work, employs the people who do it and supervises them | Under Article 106 and DOLE Department Order No. 174, labor-only contracting is prohibited; the contractor must control how the work is done |
| Independent professionals | Self-employed people deliver defined work under a service agreement and handle their own taxes | Someone who works under your control, on your schedule and with your tools may legally be an employee |
An employer of record in the Philippines is the second route. See Employer of Record in the Philippines for how we set it up, and our guide to starting a business in the Philippines for the first.
How to hire, step by step
- Choose the route. Decide whether you will employ through your own entity or have the work done by a contractor, and check that the arrangement matches how the work will really be managed.
- Fix the location and the minimum wage. Minimum wages are set by regional wage boards. In Metro Manila, Wage Order No. NCR-28 sets PHP 755 a day for non-agriculture workers from 26 September 2026; other regions are lower.
- Set the salary and benefits. Budget for the 13th-month pay, the employer’s SSS, PhilHealth and Pag-IBIG contributions, night shift differential if the role works nights, and any HMO health plan you offer.
- Write the employment contract. State the position, pay, hours, workplace and benefits. Probation may last up to six months, and the standards for becoming a regular employee must be explained at the start.
- Register the employee. The employer registers the employee with SSS, PhilHealth and Pag-IBIG and for income tax withholding with the BIR; the employee needs a TIN.
- Set up payroll. Wages are paid at least twice a month, no more than 16 days apart. Income tax is withheld every payday and contributions are paid monthly.
- Keep up through the year. Pay the 13th-month pay by 24 December, complete the annual tax adjustment, issue BIR Form 2316 by 31 January, and keep leave and payroll records.
What an employee costs in 2026
| Item | Rate in 2026 | Notes |
|---|---|---|
| SSS | Employer 10%, employee 5% | Of the monthly salary credit, up to PHP 35,000; employer also pays Employees’ Compensation of PHP 10, or PHP 30 from a credit of PHP 15,000 |
| PhilHealth | 5%, split equally | On salary from PHP 10,000 to PHP 100,000 a month |
| Pag-IBIG | 2% employer, 2% employee | On up to PHP 10,000 a month; up to PHP 200 each |
| 13th-month pay | One twelfth of the basic salary earned in the year | Paid by 24 December; with other benefits, tax-free up to PHP 90,000 a year |
| Income tax | 0% up to PHP 250,000 a year; 15%, 20%, 25% and 30% on higher bands; 35% above PHP 8 million | Withheld by the employer; minimum wage earners are exempt |
Example: on a monthly salary of PHP 50,000, the employer pays PHP 4,980 in contributions (SSS 3,500, Employees’ Compensation 30, PhilHealth 1,250 and Pag-IBIG 200) and sets aside PHP 4,167 a month for the 13th-month pay, so the monthly cost is about PHP 59,147 before benefits. The employee pays PHP 3,200 in contributions and about PHP 4,568 in income tax. Try your own figures in our Philippines salary and employer cost calculator.
Onboarding checklist
From the employer
- Job description, the region and city of work, and whether the work is office-based or from home
- Monthly salary in Philippine pesos, benefits and working hours, including any night work
- Employment contract with the probation standards
- Employer registrations with SSS, PhilHealth, Pag-IBIG and the BIR
From the employee
- Government-issued ID
- TIN, and SSS, PhilHealth and Pag-IBIG numbers if already issued
- BIR Form 2316 from any earlier employer in the same year
- Bank account details for salary
Hours, leave and holidays
- Normal hours are 8 a day. Overtime earns an extra 25% of the hourly rate, or 30% on a rest day or holiday
- Work between 10 pm and 6 am earns a night shift differential of at least 10%, which matters for support and back-office teams serving other time zones
- Employees get 5 days’ service incentive leave after one year; many employers give more
- There are 12 regular holidays a year plus special days declared each year; work on a regular holiday is paid at 200%
- Maternity leave is 105 days; paternity leave is 7 days; solo parents have additional leave
- Employees who work from home have the same rights as office-based staff under the Telecommuting Act (Republic Act No. 11165)
Probation, regular employment and ending employment
Probation may last up to six months. If the employer does not explain the standards for regular employment at the start, or the employee keeps working past six months, the employee becomes regular. A regular employee can be dismissed only for a just cause, such as serious misconduct, after a written notice and a chance to be heard, or for an authorized cause, such as redundancy or retrenchment, with 30 days’ written notice to the employee and to DOLE and separation pay of half a month or one month per year of service, depending on the cause. Employees who resign give 30 days’ notice. When employment ends, the employee receives final pay, the proportional 13th-month pay, a certificate of employment and BIR Form 2316.
Hiring foreign nationals
A foreign national generally needs an Alien Employment Permit (AEP) from DOLE and a 9(g) pre-arranged employment visa before starting work. The AEP process includes a labor market test to confirm that no qualified Filipino is available for the role. DOLE revised the rules in 2025 and centralised AEP processing in 2026, and in October 2026 announced further changes, including posting labor market test notices online and shorter processing times. Plan in months, not weeks, and confirm the current requirements for each case. See Hire Foreign Employees in the Philippines.
Rules for the full picture
For wages, leave, working time and termination in more detail, see our Philippines employment law guide. If your company already has a Philippine entity, Philippines payroll covers the pay cycle.
This guide is general information, reviewed November 2026, and not legal or tax advice. Rules change, so confirm each step with Philippine advisers or the agencies concerned before you act.
Planning a team in the Philippines? Tell us about the work and we will send a written proposal with the full-year cost. We will respond within 24 hours.