Guide to Hiring Employees in the Philippines 2022
April 28, 2022
Hire in Philippines
Philippines PEO &
Employer of Record
Hire & manage teams remotely in Philippines without a local entity. We handle HR compliance, payroll & taxes so you can focus on your business.
Business Language
Filipino, English
Salary Currency
Philippine Peso (PHP)
Payroll tax
11.75%
Payroll Cycle
Monthly
Time zone
UTC +8
Capital city
Manila
Hire Employees in Philippines
NNRoad provides employer of record (EOR) & professional employment organization (PEO) services to ensure that your business in Philippines complies with local labor laws and regulations. We process monthly payroll and act as the Employer of Record, taking on all local employer liabilities.
The NNRoad Advantage ☺
Pay as you go
No set-up or overhead costs to global expansion.
Global account manager
One point of contact for all of our 50+ serviced countries and regions.
Compliance
Ensured compliant contracts and operations.
Fast Onboarding
Start working with your remote employees/contractors within a week.
Foreigner Visas
NNRoad assists with overseas foreign hires visa needs.
Platform
Access your payroll reports and employee pay stubs on our portal.
Employer of Record in Philippines
Employer of Record (EOR) services are for companies who do not have a legal entity in Philippines, but who want to hire localy. Employment and full liability are outsourced to NNRoad.
01.
Candidate Selection
You interviews & select the candidates you want to hire in Philippines.
02.
Employee Onboarding
We sign a local labor contract with your employees based in Philippines.
03.
Compliance & Payroll
We manage monthly payroll, mandatory benefits & all HR compliance in Philippines.
04.
Payroll Reporting
See all payroll reports on our platform & focus on your business in Philippines.
Recruiting process outsourcing – including but not limited to resume screening, shortlisting candidates, coordination for interviews, and assistance for salary negotiation.
Hiring and termination of employees/local labor contracts (contract administration – engagement, extension termination and conversion to permanent hire).
On-boarding and off-boarding employees following labor law practice.
Complete payroll solution and benefit administration
Employee management – employee record retaining, time keeping, bonus and allowance management, expense and claims, and leave employee database management accordingly to the local law.
Mandatory insurance compliance (i.e. pension, labor and health insurance) according to the local labor laws.
Payment management (Invoicing customers/clients and vendor payments).
Work VISA application assistance, if needed.
Local individual income tax reporting.
Payroll & PEO in Philippines
Professional Employment Organization (PEO) services are for companies who have a legal entity in Philippines, and want to outsource their payroll. Employment liabilities are shared between your organization and NNRoad.
01.
Compliance & Payroll
We manage monthly payroll, mandatory benefits & all HR compliance in Philippines.
02.
Payroll Reporting
See all payroll reports on our platform & focus on your business in Philippines.
Registering the necessary company and personnel information for payroll calculation in the payroll software and system
Monthly Payroll Processing
Year-End Adjustment and Annual Declaration
Taxes & Payroll in Philippines
Employee Income Taxes:
Individual income tax rates in Philippines are based on progressive tax brackets.
In the Philippines, individual income tax is imposed on the taxable income of individuals, including resident and non-resident citizens, and aliens who are engaged in trade or business in the country. The tax is calculated based on a progressive tax rate schedule, with the highest rate being 35%. Taxable income includes salaries, wages, bonuses, commissions, and other forms of compensation received by individuals.
Certain types of income, such as passive income from investments, are subject to final taxes and are taxed at a flat rate of 20%. In addition, individuals are required to file an annual income tax return and to pay any taxes owed by the deadline set by the Bureau of Internal Revenue. The Philippines has several tax incentives and relief measures in place to help individuals and businesses lower their tax burden.
Incomes at or bellow 250,000 PHP per year are not taxed.
Tax Brackets
0%: 0 – 250k PHP
20%: 250k – 400k PHP
25% + 30k PHP: 400k – 800k PHP
30% + 130k PHP: 800k – 2000k PHP
32% + 490k PHP: 2000k – 8000k PHP
35% + 2410k PHP: >8000k PHP
20%: 250k – 400k PHP
25% + 30k PHP: 400k – 800k PHP
30% + 130k PHP: 800k – 2000k PHP
32% + 490k PHP: 2000k – 8000k PHP
35% + 2410k PHP: >8000k PHP
Sample Calculation
Due to the complicated nature of the individual income tax in the Philippines, please contact us for queries.
Employer Costs in Philippines
Employer costs in the Philippines refer to the expenses incurred by an employer in maintaining their workforce. These costs typically include salaries and wages, benefits such as health insurance and retirement plans, training and development expenses, taxes, and other associated expenses such as recruitment and office space. The Philippines is an attractive destination for foreign investors due to its low cost of living and a large pool of highly-skilled English-speaking workers.
Employers must also abide by local labor laws and regulations, including minimum wage laws and employee benefits requirements, which can impact their overall cost structure. To remain competitive, many companies in the Philippines adopt a mix of cost-saving measures, such as outsourcing and automation, while also investing in employee development and training programs to improve productivity.
Employer Contribution
Employers must pay contributions based on the salary of their
75 – 1,180 PHP to Social Security
1.4% – Health Insurance
2% – Home Development Mutual Fund
Employee Contribution
36 – 580 PHP to Social Security
1-2% – Home Development Mutual Fund
1.375%: Health Insurance
Benefits & Insurance in Philippines
Benefits and insurance in the Philippines refer to the additional compensation and protection provided by employers to their employees beyond their regular salaries and wages. Some common benefits and insurance in the country include:
Health Insurance: Many companies in the Philippines offer health insurance to their employees, which provides coverage for medical expenses in case of illness or injury.
Retirement Plans: Employers may offer retirement plans, such as a provident fund or a pension plan, to their employees to provide for their financial security in old age.
Housing Allowance: Some companies provide a housing allowance to their employees to help defray the cost of housing.
Meal Allowance: Some companies offer meal allowances to their employees to help cover the cost of food.
Transportation Allowance: Companies may provide transportation allowances to their employees to help defray the cost of transportation to and from work.
These benefits and insurance are intended to provide additional financial security and support to employees and their families. They can vary greatly based on company policy, the size of the company, and the industry in which it operates. The Philippine government, through the Department of Labor and Employment, regulates the provision of benefits and insurance to ensure that employees receive fair and just treatment and benefits.
Healthcare Insurance
The Philippines has a universal healthcare funded with payroll taxes called PhilHealth. Private healthcare is also common and affordable. The Private Healthcare system is used by 30% of the population and many employers offer benefits for private medical insurance.
Working Hours in Philippines
Working Hours Per Week
The work week in the Philippines is 48 hours per week, and 6 to 5 days per week. Work days cannot exceed 12 hours and employees must be given a 1 hour lunch break.
Overtime
Overtimes, night shifts, and holidays are compensated with a premium pay. The Philippine government also requires employers to provide their workers with at least one day off per week, in accordance with the country’s policy on promoting work-life balance. Employers are also required to comply with mandatory rest periods and meal breaks during the workday.
Termination Laws in Philippines
The Philippine Labor Code provides both the employer and the employee the right to terminate the employment relationship. An employer may terminate an employee for just or authorized causes, such as poor performance, theft, or violation of company policies. On the other hand, an employee may resign for any reason and is entitled to receive separation pay if the employment period is more than one year.
The termination process must be carried out in accordance with due process, which includes informing the employee in writing of the grounds for termination, and giving the employee an opportunity to contest the termination. Employers must also comply with the provisions of the Labor Code regarding payment of severance benefits, such as back wages, unused leaves, and other benefits, in the event of termination. The termination laws in the Philippines aim to protect the rights of workers and ensure a fair and orderly process for termination of employment.
Severance
To end an employee contract, a one month’s notice must be given and a severance payment is due unless the reason for termination is redundancy. Otherwise, the terminated employee is entitled to a half-month salary for each year worked.
If the reason for termination is sick leave, the relevant public health authorities need to issue a letter stating that the employee cannot heal within a six month period.
Employment Contract in Philippines
An employment contract in the Philippines is a legal agreement between an employer and an employee that outlines the terms and conditions of employment, including job duties, compensation, benefits, and termination procedures. The Philippine Labor Code requires that all employment contracts, whether verbal or written, must be based on mutual consent between the employer and the employee, and must not contravene the provisions of the Labor Code or any existing laws.
A written employment contract is considered to be a more comprehensive and binding agreement, as it clearly sets forth the expectations and obligations of both the employer and the employee. It can also be used as evidence in the event of disputes between the parties. The terms and conditions of employment contracts in the Philippines may vary based on the nature of the job, the industry, and the size of the company.
It is important for both the employer and the employee to fully understand the terms of the employment contract before signing, to ensure that the agreement is fair and equitable for both parties. The Philippine government, through the Department of Labor and Employment, regulates the terms and conditions of employment contracts to ensure that employees receive fair and just treatment and benefits.
Employment Contract
The Labor Code of the Philippines dictates the guidelines for all employee/employer relations, specifically on issues such as wages, post-employment benefits, labor standards, safety and health, and conciliation and arbitration procedures.
Probation Period
Under the Labor Code, probationary employment shall not exceed 6 months from the date the employee started working unless it is covered by an apprenticeship agreement stipulating a longer period.
Types of Leaves in Philippines
The Philippines provides various types of paid leaves to its employees as a way to promote work-life balance and ensure their well-being. Some of the most common types of paid leaves in the country include:
Annual Leave
Annual leave in the Philippines is a mandatory 5 days, altho 15 days is the norm for competitive companies. Every employee is also entitled to paid public holidays on top of the annual leaves.
Sick Leave
Sick leaves in the Philippines are treated as annual leave days according to the law, although most companies will offer 15 sick leave days as well as 15 annual leave days.
Maternity Leave
New mothers in the Philippines are entitled to 60 days (78 days in case of caesarean delivery) paid at full salary. The employer can request reimbursement from state social security.
Paternity Leave
New fathers in the Philippines are entitled to 7 days of paid paternity leave following the birth of their child.
Other types of Leaves
Women who are victims of violence are entitled to 10 days paid leave.
Women who undergo surgery due to gynecological disorders are entitled to 2 months’ full pay from their employer.
Public Holidays in Philippines
There are 2 types of holidays in the Philippines: regular holidays and Special no-work holidays. Regular holidays are paid days off work. Employees working during regular holidays are entitled to 200% of their regular wages. Special no-work holidays are non-paid days off work. Employees working during special no-work holidays are entitled to 130% of their regular wages.
Public Holidays
Resources
Guide: Payroll in the philippines in 2022
April 28, 2022
How to Hire Employees in The Philippines
December 21, 2018