Employer of record in the Philippines: costs, rules and how to hire
Hire someone in the Philippines without opening your own Philippine company.
An employer of record (EOR) can handle local employment while you manage the person’s work. Start by confirming the provider’s coverage and the arrangement available for your specific hire.
By Employ Borderless · We help you understand and compare EOR services.
How does an employer of record in the Philippines work?
Three parties, two contracts: the EOR employs the person under a local employment contract, your company signs a service agreement with the EOR and directs the day-to-day work. Which arrangement is legal and sensible in the Philippines is decided by the questions below.
Your company
Choose the person, agree their role and manage their daily work.
The employer of record
Handles the agreed employment, payroll and HR services through the employing entity named in your contract.
Your employee
Works with your team under a local employment contract with the EOR’s employing entity.
- Do you already have an entity in this country?
- How many people are you hiring, and for how long?
- Is the work genuinely independent, or is it a job?
- Who carries the employment risk if the arrangement is challenged?
What each route means in full
- Your own entity
- Choose it when: You already have a company here, or you are committing to a substantial local team for the long term.You become the legal employer. You arrange payroll, benefits, filings and employment support yourself, and you carry the setup and running cost.
- Employer of record
- Choose it when: You have a person to hire here, want them employed properly, and do not want to open a company for it.The provider is the legal employer through its own entity. You direct the work and pay one invoice covering salary, employer costs and the service fee.
- Independent contractor
- Choose it when: The work is genuinely independent: their own business, their own methods, their own clients.A contract for services, not employment. The label does not decide the status; how the person actually works does, and getting it wrong is reclassified after the fact.
Hiring in the Philippines: the short version
Say you are hiring a customer support lead in Cebu at ₱50,000 a month. The statutory add-ons are easy to list and easy to underbudget: SSS at 10% of a capped salary credit is ₱3,500, PhilHealth at half of 5% is ₱1,250, the employees' compensation charge is ₱30, the Pag-IBIG match in the 2023 DOLE handbook is ₱100, and the mandatory thirteenth month accrues at ₱4,167 every month. That is ₱59,047 a month, or ₱708,560 a year, before company leave, benefits, equipment and the provider fee.
Two things shape the decision more than the contribution rates. The minimum wage is a daily rate set region by region, and Metro Manila's newest wage order is listed by NWPC as awaiting a court decision, so the floor for the workplace has to be confirmed rather than assumed. And contracting arrangements sit under Labor Code articles 106 to 109 and DOLE Department Order 174-17, which means the question to put to any provider is which Philippine entity employs the person and under which arrangement.
Your first hire in the Philippines in five decisions
Five things settle a Philippine hire, and each figure below is worked through further down.
- Entity or EOR. No fixed headcount decides it. Start from whether the provider's arrangement lawfully covers the role under the contracting rules, then compare the annual cost with running SSS, PhilHealth, Pag-IBIG and BIR administration yourself.
- Employee or contractor. Contracting and subcontracting are regulated arrangements, and a contracted worker left without an assignment for three months is owed separation pay, so a contractor label carries obligations of its own.
- Budget line. On ₱50,000 a month: ₱3,500 SSS, ₱30 employees' compensation, ₱1,250 PhilHealth, ₱100 Pag-IBIG and ₱4,167 thirteenth-month accrual, giving ₱59,047 a month.
- Notice reality. An authorized-cause termination needs one month of written notice to the employee and to DOLE, with separation pay of half a month or one month per year of service depending on the cause.
- Realistic start. After the employing entity, the wage order, the SSS, PhilHealth and Pag-IBIG registrations and the payroll cut-off are settled, not from an advertised onboarding window.
EOR, entity, or contractor in the Philippines?
Philippine employer cost is easy to compute and easy to underestimate, because two of the largest items are not percentages. SSS is capped on a ₱35,000 salary credit, PhilHealth is capped at a ₱100,000 salary, and the thirteenth month is a flat twelfth of salary whoever employs the person. On ₱50,000 a month the statutory add-ons come to ₱9,047, which is ₱708,560 a year including the thirteenth month.
What can a ₱50,000 monthly salary cost?
This full-year illustration assumes a rank-and-file employee in Metro Manila with an unchanged salary, the SSS schedule effective 1 January 2025, the 2024 to 2025 PhilHealth rate and the Pag-IBIG match recorded in the 2023 DOLE handbook.
| Budget item | Monthly | Annual illustration |
|---|---|---|
| Gross salary | ₱50,000 | ₱600,000 |
| Thirteenth-month pay, one twelfth of basic salary | ₱4,167 | ₱50,000 |
| SSS employer share, 10% of the ₱35,000 salary credit cap | ₱3,500 | ₱42,000 |
| Employees' compensation, employer only | ₱30 | ₱360 |
| PhilHealth employer share, half of 5% | ₱1,250 | ₱15,000 |
| Pag-IBIG employer match, 2023 handbook figure | ₱100 | ₱1,200 |
| Subtotal before the items below | ₱59,047 | ₱708,560 |
| Company leave above five days, benefits, equipment and provider fee | Add the agreed costs | |
Employee deductions are separate money: on the same salary the employee pays ₱1,750 to SSS, ₱1,250 to PhilHealth and ₱100 to Pag-IBIG before withholding tax, and adding those again overstates the employer cost.
Ask for a complete provider quote
- The employing Philippine entity and the legal basis of the arrangement under articles 106 to 109 and Department Order 174-17.
- The wage order and sector class applied to the workplace, and whether a pending order such as NCR-27 has been priced in.
- The thirteenth-month accrual, shown monthly, and the December or school-year payment schedule.
- The SSS salary credit, the PhilHealth rate for the payroll year and the current Pag-IBIG amount.
- Holiday pay for twelve regular holidays and the premium treatment of special days.
- The service fee, deposit, currency, exchange-rate method and invoice tax.
- The process and cost of ending employment, including separation pay, or moving the hire to your own entity.
Compare providers on the same gross salary and benefits, because an advertised fee does not establish the employment budget, and there is no universal headcount at which you should switch to direct employment.
Moving from an employer of record to your own Philippine entity
Plan the move around the thirteenth month and years of service, because both accrue and both are what the employee will ask about. Hirers usually switch once the Philippine team is large enough that per-employee fees exceed the cost of running SSS, PhilHealth, Pag-IBIG and withholding administration themselves.
Settle in writing before the move: how the accrued thirteenth-month pay and the service incentive leave balance are paid or carried; whether service with the provider counts towards retirement pay, which is due at 60 to 65 after five years of service; and who carries separation pay if the employment ends rather than transfers, since an authorized-cause termination needs one month of notice to the employee and to DOLE and half a month or one month of pay per year of service.
I have not read a Philippine government source in this pass on whether a change of employer preserves continuity of service, so I am not going to state a rule. Treat continuity as something you document rather than inherit, and take Philippine advice before you move anyone.
Source: Social Security System, paying contributions, captured 22 September 2026.
Read this in full under “What catches employers out in the Philippines”.
How to hire employees in the Philippines
An employer of record employs your hire through a Philippine company, signs the contract, runs payroll and holds the SSS, PhilHealth and Pag-IBIG registrations, while you direct the work. The part to settle before an offer is the legal basis: contracting and subcontracting arrangements are governed by Labor Code articles 106 to 109 and DOLE Department Order 174-17, and the DOLE handbook treats a contracted worker who goes three continuous months without a service assignment as entitled to separation pay. The provider's name for the service settles none of that, so ask which entity employs the person and how the arrangement complies.
I was not able to read Department Order 174-17 itself from a government server for this guide, because the DOLE and Official Gazette sites refuse requests from our systems, so this page states what the DOLE handbook says about it and no more. Put the registration and compliance question to the provider in writing and keep the answer.
From an agreed role to the first payroll
- Define the duties, the workplace and the region, because the wage order and the sector class follow the workplace.
- Verify the employing Philippine entity and the legal basis for the arrangement.
- Collect the hire's tax identification number and SSS, PhilHealth and Pag-IBIG numbers, or have the employer register the person where none exist.
- Agree the written terms: salary against the wage order, the schedule against the eight-hour day, leave above the five-day floor, the thirteenth-month treatment and the notice arrangements.
- Set the paydays and the payroll cut-off, and agree who supplies variable pay and approves overtime and leave.
How long the first hire takes, and what sets the date
Registration sets the date in the Philippines more than the contract does, because the employer cannot remit SSS, PhilHealth or Pag-IBIG contributions for a person who is not registered with each fund, and a person without a tax identification number cannot be put on a withholding run. So rather than a number of weeks, here is the sequence, in the order the steps actually gate each other. Work backwards from whichever one is unresolved in your case, because that is the one holding your date and the rest will not be.
- Agree the offer and the workplace, and identify the wage order and sector class that apply there.
- Collect the identity, tax and fund numbers, which is the step candidates most often delay.
- Confirm the employing entity's own SSS, PhilHealth and Pag-IBIG employer registrations cover the hire.
- Sign the written terms and, where the role is supervised inside your team, settle the contracting basis before the start rather than after.
- Land the start date on the payroll cut-off so the first pay period and the thirteenth-month accrual begin in the same cycle.
Ask which of those steps is outstanding rather than how long onboarding takes, because the honest answer is the outstanding step.
Read this in full under “What catches employers out in the Philippines”.
What should you budget for hiring in the Philippines?
Your budget includes salary, employer contributions, agreed benefits and the EOR fee. Ask for a quote for the actual role and salary.
- Gross salary
- Employer contributions
- Benefits and other costs
- EOR service fee
- Gross salary: 100
- Employer social contributions: 2.5%
- Benefits and EOR fee: quoted per hire
The numbers behind this figure
| Cost | Amount |
|---|---|
| Gross salary | 100 |
| Employer social contributions | 2.5% |
| Benefits and EOR fee | Quoted per hire |
Source: ISSA, 2024
Published EOR base fees among providers covering the Philippines range from $49.99 to $699 per employee/month. These are provider base prices, not a quote for this hire or the total employment cost.
Employer contribution benchmarks · 2026
These stored OECD benchmarks help with initial planning. Earnings ceilings, employee circumstances and later changes can affect the actual charge; use the EOR’s itemised quote for your budget.
| Contribution | Rate |
|---|---|
| Social Security System (SSS) | 9.5% |
| PhilHealth | 2% |
| Pag-IBIG Fund (HDMF) | 2% |
Separate employer contributions from employee deductions
| Item | Employer side | Employee side |
|---|---|---|
| SSS social security | 10% of the salary credit, capped at a ₱35,000 credit | 5% of the same credit |
| Employees' compensation | ₱10 up to a ₱14,500 credit, ₱30 from ₱15,000 | None |
| PhilHealth, 2024 to 2025 schedule | 2.5% of basic salary between ₱10,000 and ₱100,000 | 2.5% on the same base |
| Pag-IBIG | ₱100 match in the 2023 handbook; current amount by Fund circular | At least ₱100 |
| Income-tax withholding | Withheld and remitted by the employer | Based on the employee's taxable income |
The SSS credit above ₱20,000 and up to ₱35,000 funds the member's individual Pension Booster account, so on a ₱50,000 salary the employer pays ₱3,500 and the employee ₱1,750 regardless of how much higher the salary goes. PhilHealth stops rising at a ₱100,000 salary. The thirteenth month is not a contribution but it is the largest add-on: a twelfth of salary, every year.
What an employer of record adds to the employment cost
Budget the provider fee as a third line, next to gross pay and the employer contributions above. Across the market it runs from $99 to $799 per employee per month, or 8 to 20% of salary, and where a quote sits in that range is decided by the work rather than by the country: headcount, how much of the administration you hand over, and whether the provider is pricing a single hire or a team. I treat a quote at the bottom of the range as a question rather than a win, because the cheap number is usually the one with the fewest things inside it.
What the fee buys is the employment itself: the employing entity, the payroll run, the SSS, PhilHealth and Pag-IBIG filings and the employer-side administration. What it does not buy is the cost of employing the person. Gross pay, the thirteenth-month accrual, the employer contributions and the leave and holiday pay are all yours, and in the Philippines the thirteenth month alone adds a twelfth of salary whoever employs the hire. Ask for a quote that separates the fee from the pass-through costs, priced in pesos, because a single blended figure hides which half moves when pay changes.
Source: Social Security System, paying contributions, captured 22 September 2026.
Read this in full under “What catches employers out in the Philippines”.
Average salary in the Philippines by occupation
Gross monthly earnings of employees per ISCO-08 occupation group, in PHP, from the ILO's official labour statistics. These stored survey figures for the Philippines have reference year 2023. Use these survey earnings to benchmark an offer before an EOR quote turns it into total employer cost.
| Occupation group | Monthly (PHP) | Approx. USD |
|---|---|---|
| All occupations | 17,605 | $316 |
| Managers · ISCO 1 | 36,496 | $656 |
| Professionals · ISCO 2 | 33,501 | $602 |
| Technicians and associate professionals · ISCO 3 | 23,483 | $422 |
| Clerical support workers · ISCO 4 | 20,817 | $374 |
| Service and sales workers · ISCO 5 | 14,767 | $265 |
| Skilled agricultural, forestry and fishery workers · ISCO 6 | 11,696 | $210 |
| Craft and related trades workers · ISCO 7 | 15,472 | $278 |
| Plant and machine operators and assemblers · ISCO 8 | 15,943 | $287 |
| Elementary occupations · ISCO 9 | 11,534 | $207 |
Source: ILOSTAT, the International Labour Organization's statistics database (average monthly earnings of employees, both sexes), reference year 2023.
How to hire through an EOR in the Philippines
- Step 1
Define your hire
Prepare the role, work location, salary, working hours and target start date.
- Step 2
Confirm the local hiring route
Ask the provider to confirm that its employing arrangement fits this role and location, including any restrictions.
- Step 3
Review the full quote and contract
Check the legal employer, total costs, benefits, responsibilities and exit terms before signing.
- Step 4
Complete onboarding
Coordinate employment documents, required checks, equipment and the payroll cut-off with the EOR.
- Step 5
Keep employment changes coordinated
Manage the work and tell the EOR about proposed pay, leave, contract or termination changes before they take effect.
What should the EOR arrange before your hire in the Philippines starts?
Confirm the employment terms, work eligibility, payroll and pension arrangements before the start date. Ask which local rules and agreements apply to your employee.
What catches employers out in the Philippines
Six points decide whether a Philippine payroll is right, and four of them are dated. Ask the provider to name the rule that applies to the actual workplace and payroll year rather than the national default.
| Point | Why it changes the decision |
|---|---|
| Regional wage orders | Metro Manila's Wage Order NCR-27 lists ₱718 to ₱755 a day from 25 July 2026 and ₱743 to ₱780 from 20 January 2027, and NWPC notes its implementation is awaiting a court decision; Central Visayas is ₱500 to ₱540. |
| Thirteenth month | A twelfth of basic salary for every rank-and-file employee with a month of service, due by 24 December; it is pay, not a bonus. |
| PhilHealth schedule | The DOLE handbook's 5% schedule runs to 2025; the rate for the current payroll year comes from a PhilHealth circular the provider should name. |
| Pag-IBIG amount | The handbook records ₱100 matched by ₱100; the Fund sets the current amount by circular. |
| Holiday density | Twelve regular holidays paid at 100% unworked and 200% worked, plus special days on no work, no pay with a 30% premium when worked. |
| Double indemnity | Paying under a wage order means paying double the unpaid benefits, and the criminal liability survives the payment. |
Probation is a seventh point. Our fact store records a six-month probation period from a secondary source rather than from a government text, so treat it as something to confirm in the contract rather than a rule this page vouches for.
Source: National Wages and Productivity Commission, current regional daily minimum wage rates, captured 22 September 2026.
Source: DOLE Bureau of Working Conditions, Handbook on Workers' Statutory Monetary Benefits, 2023 edition, captured 22 September 2026.
What types of employment contracts exist in the Philippines?
The employee's category decides more than the contract's wording. The DOLE handbook applies most statutory benefits to rank-and-file employees and excludes managerial employees and members of the managerial staff, and it names probationary, regular, contractual and project-basis employment as the statuses a benefit can apply across. So record the duties, the reporting line and the status in writing, because the duties settle the category, not the job title.
Put the employment terms in writing
State the legal employer, the duties, the workplace and region, the start date, the basic salary against the applicable wage order, the schedule against the eight-hour day, the meal period, the leave above the five-day floor, the thirteenth-month treatment, the notice arrangements and any probation. The paternity-leave rule in the handbook lists the statuses an employee can hold, probationary, regular, contractual and project basis, which is the vocabulary to use in the contract.
Probation
Our fact store carries a six-month probation period for the Philippines from a secondary source. I have not read the Labor Code article itself from a government server in this pass, so confirm the period and the regularisation standard in the contract rather than relying on this page for it.
Managerial or rank-and-file
A managerial employee is one vested with powers to lay down and execute management policies or to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees, or to effectively recommend such actions; everyone else is rank-and-file. Thirteenth-month pay applies to rank-and-file employees, and overtime, premium pay and night shift differential exclude managerial employees who meet the handbook's tests, so the category moves real money.
Misclassification risk, and the rules the label sits under
The Philippines regulates contracting and subcontracting arrangements under Labor Code articles 106 to 109, implemented by DOLE Department Order 174, Series of 2017. The DOLE handbook also treats a worker in a contracting or subcontracting arrangement who has no service assignment for three continuous months as entitled to separation pay, which tells you these arrangements carry employment obligations of their own rather than escaping them.
I have not read Department Order 174-17 or a government penalty schedule for misclassification in this pass, so I am not going to list its tests or quote a figure. What a hirer does about it: decide the status on the working conditions you will actually impose, keep the direction of day-to-day work with whoever the contract says employs the person, and where the person will work inside your team under your direction, employ them through an entity that can lawfully do so.
Read this in full under “What catches employers out in the Philippines”.
What taxes and social contributions apply in the Philippines?
Three funds and one flat charge make up the ordinary employer contributions, and two of them are capped. SSS is 15% of the monthly salary credit up to ₱35,000, split 10% employer and 5% employee from 1 January 2025; PhilHealth is 5% of basic salary between ₱10,000 and ₱100,000, shared equally; Pag-IBIG is a flat matched savings contribution; and the employees' compensation charge is ₱10 or ₱30 a month, employer only.
Example: ₱50,000 monthly salary
SSS ₱3,500, employees' compensation ₱30, PhilHealth ₱1,250, Pag-IBIG ₱100 and the thirteenth-month accrual of ₱4,167 bring the employer's monthly cost to ₱59,047, or ₱708,560 a year, before company benefits, leave above the statutory floor and the provider fee. It is a partial budget example, not an all-in quote or a take-home calculation.
Income tax and payroll administration
The employer withholds income tax through payroll. Our fact store holds a top personal income tax rate of 35% and a corporate rate of 25% from PwC's 2026 summaries, and a 12% VAT rate; I did not capture the Bureau of Internal Revenue's withholding table from a government server in this pass, so ask the provider for the table and the tax year behind the payslip rather than applying the top rate to a whole salary. Separation pay for causes beyond the employee's control is exempt from income tax under the Tax Code, and the handbook cites the same treatment for thirteenth-month pay within the statutory ceiling.
What pay and leave should your offer in the Philippines cover?
Agree pay, working patterns, paid leave and benefits as part of the offer. These affect both your hiring budget and how you plan the employee’s work.
- Paid annual leave: 5 days
- Public holidays: 18 days
- The rest of the year: 342 days
The numbers behind this figure
| Entitlement | Days a year |
|---|---|
| Paid annual leave (statutory minimum) | 5 days |
| Public holidays (national) | 18 days |
| Total statutory paid days off | 23 days |
Source: National government, 2026; Employ Borderless research, 2026. Statutory minimums. Eligibility, accrual and collective agreements can change what an individual employee receives.
How does payroll and compensation work in the Philippines?
There is no single Philippine minimum wage. Regional Tripartite Wages and Productivity Boards set daily rates region by region and by sector class, so the floor follows the workplace. NWPC lists Wage Order NCR-27 for Metro Manila at ₱718 to ₱755 a day from 25 July 2026, rising to ₱743 to ₱780 on 20 January 2027, with its implementation awaiting a final court decision, and Wage Order ROVII-26 for Central Visayas at ₱500 to ₱540. What decides the offer is the order for the workplace first, then the market for the role.
Set pay against the wage order
Ask the provider to name the wage order, the sector class and the effective date used in the quote, and whether a pending order has been priced in. For context rather than a floor, our fact store holds an ILOSTAT average monthly wage of about ₱17,600 for 2023, a broad national figure that says nothing about an office or technology role, so price the role, city and experience separately.
Daily rates and monthly pay
The handbook converts a daily rate to a monthly one with a factor that depends on whether rest days are paid: 365 days for employees paid on rest days and holidays, 313 for those who are not, in each case divided by twelve. Twelve regular holidays are counted at twice the rate and special days at 1.3 when worked. Ask which factor the payroll uses, because it changes what a daily-rate hire actually earns in a month.
Paydays and the thirteenth month
Thirteenth-month pay is one twelfth of the total basic salary earned in the calendar year, due to every rank-and-file employee with at least one month of service, paid not later than 24 December, with the option of half before the school year opens. Our fact store records a semi-monthly pay cycle from a secondary source; agree the actual paydays and the payroll cut-off in the contract.
Hours, overtime and premiums
| Topic | Rule in the DOLE handbook |
|---|---|
| Normal hours | Eight hours a day; overtime is work beyond eight hours. |
| Overtime, ordinary day | Hourly rate plus 25%. |
| Overtime, rest day or special day | Hourly rate for that day plus 30%. |
| Work on a special day | Basic wage plus at least 30%, a total of 130%. |
| Work on a regular holiday | At least 200% of the daily wage; 100% when unworked. |
| Night shift differential | 10% of the regular wage for each hour between 10 p.m. and 6 a.m. |
| Meal period | At least one hour; at least 20 minutes in listed cases, counted as paid time. |
Managerial employees and members of the managerial staff who meet the handbook's tests are outside the overtime, premium and night shift rules, so record the actual category and schedule before agreeing cover across time zones.
Read this in full under “What catches employers out in the Philippines”.
What benefits and leave are employees entitled to in the Philippines?
The statutory paid leave floor is low and the family leave is generous, which is the combination that surprises hirers. Service incentive leave is five days a year after one year of service, while maternity leave is 105 days with full pay, so a competitive offer adds company leave above the floor and budgets the family leave properly.
Leave entitlements
| Leave | Statutory rule |
|---|---|
| Service incentive leave | Five paid days a year after one year of service, for sick, vacation or other purposes; managerial employees are excluded. |
| Maternity leave | 105 days with full pay per pregnancy, plus 15 days for a solo parent, plus an optional 30 unpaid days after live birth; 60 days for miscarriage or emergency termination. |
| Paternity leave | Seven days with full pay per delivery for a married male employee, any employment status. |
| Parental leave for solo parents | Up to seven working days a year with pay after six months of service. |
| Leave for victims of violence | Up to ten days with full pay, extendable under a protection order. |
| Special leave for women | Two months with full pay after surgery for a gynecological disorder, after six months of service in the last twelve. |
On maternity leave, SSS pays a daily benefit of 100% of the average daily salary credit and the private employer pays the difference up to full salary, so the employer cost is the gap between the SSS benefit and the salary rather than the whole salary.
Holidays
The handbook lists twelve regular holidays a year, paid at 100% when unworked and at least 200% when worked, and a set of special non-working days that follow no work, no pay with a 30% premium when worked. The dates move each year by proclamation, and our fact store counts eighteen public holidays for 2026 from a calendar dataset rather than from the proclamation, so confirm the year's list with the provider.
SSS benefits and retirement
SSS also pays a sickness benefit of 90% of the average daily salary credit and an unemployment benefit for involuntary separation after at least 36 monthly contributions, twelve of them in the preceding eighteen months, claimed within two months. SSS retirement is available from 60 for a member separated from employment. Separately, an employer owes retirement pay under the Labor Code at 60 to 65 after five years of service: at least half a month of salary per year, computed as 22.5 days per year, except in retail, service and agricultural establishments with ten or fewer employees.
Source: Social Security System, maternity benefit, captured 22 September 2026.
Source: Social Security System, sickness benefit, captured 22 September 2026.
Source: Social Security System, unemployment benefit, captured 22 September 2026.
Read this in full under “What catches employers out in the Philippines”.
What happens if you need to end employment in the Philippines?
Discuss the proposed change with the EOR before giving notice or promising an exit payment. Ask it to confirm the procedure, timing and costs for the employee’s circumstances.
The numbers behind this figure
| Obligation | Weeks of salary |
|---|---|
| Statutory notice | 4.3 weeks |
| Statutory severance | 23.1 weeks |
| Total statutory exit cost | 27.4 weeks |
The Philippines sits at number 17 of 190 countries for statutory exit cost in our Termination Cost Index.
What are the termination and compliance rules in the Philippines?
Ending employment for an authorized cause is a documented process with a price: written notice to the employee and to the DOLE regional office at least one month before the intended date, and separation pay that depends on the cause. Ending it for a just cause follows a different path that I have not read from a government text in this pass, so have the employer assess the ground and the procedure before any notice is given.
Notice and separation pay for authorized causes
| Authorized cause | Separation pay |
|---|---|
| Redundancy, installation of labour-saving devices, impossible reinstatement | One month of pay per year of service |
| Retrenchment to prevent losses, closure not due to serious losses, disease not curable within six months | Half a month of pay per year of service, and not less than one month |
| Contracted worker without a service assignment for three continuous months | Half a month of pay per year of service |
A fraction of at least six months counts as a whole year. The notice can be filed on the DOLE establishment report form or online through the DOLE Establishment Report System, and separation pay for a cause beyond the employee's control is exempt from income tax.
Retirement
An employee retiring at 60 to 65 after five years of service is owed at least half a month of salary per year of service, computed as 22.5 days a year, unless a collective agreement gives more; retail, service and agricultural establishments regularly employing ten or fewer employees are exempt.
Wage compliance and penalties
Paying below the applicable wage order carries double indemnity: the employer pays double the unpaid benefits, the payment does not absolve criminal liability, and for a corporation the imprisonment penalty falls on its responsible officers. Ask the provider for the wage order and sector class behind every payslip, and for payment evidence for SSS, PhilHealth and Pag-IBIG.
Employees' compensation
The employer alone funds the Employees' Compensation Program through SSS, at ₱10 or ₱30 a month depending on the salary credit; it covers work-related sickness, injury and death and is separate from the SSS social security contribution.
Contracting arrangements
Contracting and subcontracting sit under Labor Code articles 106 to 109 and DOLE Department Order 174-17. This guide could not read that order from a government server, so it states only what the DOLE handbook says: the rules exist, and a contracted worker without an assignment for three continuous months is owed separation pay. Ask the provider to explain, in writing, which arrangement employs your hire and how it complies.
Source: Social Security System, paying contributions, captured 22 September 2026.
Read this in full under “What catches employers out in the Philippines”.
These are stored source rules, not a case-specific termination calculation. Confirm the applicable procedure and current requirements before acting.
Choose an EOR for your hire in the Philippines
Compare the employing entity, itemised costs, local support, payroll deadlines and what happens if you change or end the arrangement.
Questions about hiring in the Philippines
What does an employer of record do in the Philippines?
An employer of record employs your hire through a Philippine company, signs the contract, runs payroll and holds the SSS, PhilHealth and Pag-IBIG registrations, while you direct the work. Contracting arrangements are regulated under Labor Code articles 106 to 109 and DOLE Department Order 174-17, so ask which entity employs the person and under which arrangement.
Can I hire in the Philippines without setting up my own company?
Yes, through a provider whose Philippine entity lawfully employs the person under the contracting rules. Confirm the employing entity and the legal basis, and keep your own tax and business-registration position separate from the employee's payroll.
Is an EOR the same as a PEO?
No. With an employer of record the provider's Philippine entity is the legal employer; with a PEO or payroll service your business remains the employer and needs its own registrations. Compare EOR and PEO service models.
What is the minimum wage in the Philippines?
There is no single national rate. Regional wage boards set daily minimums by region and sector class. NWPC lists Metro Manila's Wage Order NCR-27 at ₱718 to ₱755 a day from 25 July 2026 and ₱743 to ₱780 from 20 January 2027, with its implementation awaiting a court decision, and Central Visayas at ₱500 to ₱540.
How much does an employee in the Philippines cost on top of salary?
On ₱50,000 a month: SSS ₱3,500, employees' compensation ₱30, PhilHealth ₱1,250, Pag-IBIG ₱100 and the thirteenth-month accrual of ₱4,167, giving ₱59,047 a month before company benefits and the provider fee. SSS and PhilHealth are capped, so the percentages do not scale with a senior salary.
Is thirteenth-month pay mandatory?
Yes, for every rank-and-file employee who worked at least one month in the calendar year: one twelfth of the total basic salary earned, paid not later than 24 December, with the option of paying half before the school year opens.
What are the SSS contribution rates?
15% of the monthly salary credit up to a ₱35,000 credit, split 10% employer and 5% employee, effective 1 January 2025. The part of the credit above ₱20,000 funds the member's Pension Booster account. The employer also pays ₱10 or ₱30 a month for employees' compensation.
What are the PhilHealth and Pag-IBIG contributions?
PhilHealth for 2024 to 2025 is 5% of basic salary between ₱10,000 and ₱100,000, shared equally, so ₱500 to ₱5,000 a month in total. Pag-IBIG is a matched savings contribution recorded as ₱100 each in the 2023 DOLE handbook; the Fund sets the current amount by circular.
How much paid leave does an employee get?
The statutory floor is five days of service incentive leave a year after one year of service, plus twelve regular holidays paid whether worked or not. Most employers add company leave above the floor.
How long is maternity leave?
105 days with full pay for every pregnancy, plus 15 days for a solo parent and an optional 30 unpaid days after live birth; 60 days for miscarriage. SSS pays 100% of the average daily salary credit and the employer pays the difference up to full salary. Paternity leave is seven days with full pay.
What are the working hours and overtime rules?
Eight hours a day, with at least one hour for a meal. Overtime on an ordinary day is paid at the hourly rate plus 25%, on a rest day or special day plus 30%, work on a regular holiday at 200%, and hours between 10 p.m. and 6 a.m. carry a 10% night shift differential. Managerial employees are excluded.
What notice and separation pay apply when employment ends?
For an authorized cause, written notice to the employee and to DOLE at least one month before the date, and separation pay of one month per year of service for redundancy or labour-saving devices, or half a month per year, minimum one month, for retrenchment, closure not due to serious losses, or disease.
Is there a probation period?
Our fact store records six months from a secondary source; this page did not read the Labor Code article from a government server, so confirm the period and the regularisation standard in the contract.
Can I hire a Filipino worker as a contractor instead?
Only where the work is genuinely independent. Contracting and subcontracting arrangements are regulated, and a contracted worker without a service assignment for three continuous months is owed separation pay, so a contractor label carries obligations rather than removing them. Where the person works inside your team under your direction, employ them.
How long does it take to hire?
The date is set by registration rather than by the contract: the hire's tax and fund numbers, the employer's SSS, PhilHealth and Pag-IBIG registrations, the written terms and the payroll cut-off. Ask which of those is outstanding rather than how many weeks onboarding takes.
Does an EOR fee include the employment costs?
No. The fee, from $99 to $799 per employee per month or 8 to 20% of salary across the market, buys the employment administration. Gross pay, the thirteenth month, the employer contributions and the holiday and leave pay are pass-through costs, so ask for a quote that separates them, in pesos.
Check the facts behind this guide
Each reviewed fact links to its source and shows its validation date and effective period. Monthly review does not mean that every rule changes monthly. Statistical benchmarks retain their original data periods.
View sourced facts and review dates
| Fact | Value | Source | Effective / data period | Last validated |
|---|---|---|---|---|
| Use the regional wage order for the workplace | Minimum wages are daily rates set by regional wage boards, not one national figure. NWPC lists Wage Order NCR-27 for Metro Manila, effective 25 July 2026, at ₱718 to ₱755 a day on effectivity and ₱743 to ₱780 from 20 January 2027, and notes that its implementation is awaiting a final court decision. Central Visayas lists ₱500 to ₱540 under Wage Order ROVII-26. Identify the wage order and the sector class for the actual workplace before setting pay. | National Wages and Productivity Commission: current regional daily minimum wage rates | Philippines: private-sector employment, subject to the actual workplace, regional wage order, employee category and any more favourable contract or collective agreement | |
| Statutory leave is five days of service incentive leave | The statutory paid leave floor is service incentive leave: five days a year, usable for sick, vacation and other purposes, for an employee with at least one year of service. Managerial employees are among the exclusions. Most offers add company leave above that floor, so state the actual leave in the contract. | Department of Labor and Employment, Bureau of Working Conditions: Handbook on Workers' Statutory Monetary Benefits, 2023 edition | ||
| Eight hours a day, with paid overtime above it | The normal working day is eight hours. Work beyond eight hours on an ordinary working day is paid at the hourly rate plus 25 percent, and at plus 30 percent on a rest day or special day. Each hour between 10 p.m. and 6 a.m. carries a 10 percent night shift differential on top. Managerial employees are excluded from these rules, so record the actual schedule and category in the contract. | Department of Labor and Employment, Bureau of Working Conditions: Handbook on Workers' Statutory Monetary Benefits, 2023 edition | ||
| One month of written notice to the employee and to DOLE | A termination for an authorized cause, such as redundancy or retrenchment, needs written notice to both the employee and the DOLE regional office at least one month before the intended date, and separation pay is due: one month of pay per year of service for redundancy or labour-saving devices, half a month per year for retrenchment, closure not due to serious losses, or disease, and never less than one month in those cases. | Department of Labor and Employment, Bureau of Working Conditions: Handbook on Workers' Statutory Monetary Benefits, 2023 edition | ||
| SSS: 15 percent of the salary credit, 10 employer and 5 employee | SSS social security contributions are 15 percent of the monthly salary credit up to a ₱35,000 credit, split 10 percent employer and 5 percent employee, effective 1 January 2025. The credit is capped, so on a ₱50,000 salary the employer share is ₱3,500 a month and the employee share ₱1,750. Contributions on the part of the credit above ₱20,000 go to the member's individual Pension Booster account. | Social Security System: official contribution and benefit guidance | Philippines: private-sector employment, subject to the actual workplace, regional wage order, employee category and any more favourable contract or collective agreement | |
| Employees' Compensation is a small employer-only charge | The Employees' Compensation Program contribution is paid by the employer alone: ₱10 a month for a monthly salary credit of ₱14,500 and below, and ₱30 for ₱15,000 and above. | Social Security System: official contribution and benefit guidance | ||
| PhilHealth: 5 percent of basic salary, shared equally | PhilHealth premiums for 2024 to 2025 are 5 percent of the monthly basic salary between a ₱10,000 floor and a ₱100,000 ceiling, so ₱500 to ₱5,000 a month, shared equally between employer and employee. The schedule printed in the DOLE handbook stops at 2025, so ask the provider which PhilHealth circular sets the rate for the payroll year. | Department of Labor and Employment, Bureau of Working Conditions: Handbook on Workers' Statutory Monetary Benefits, 2023 edition | ||
| Pag-IBIG: a matched monthly savings contribution | Pag-IBIG Fund membership is mandatory for SSS-covered employees. The 2023 DOLE handbook records a minimum monthly savings contribution of ₱100 from the employee, matched by ₱100 from the employer. The Fund adjusts the amount by circular, so confirm the current figure with the provider rather than budgeting from the handbook. | Department of Labor and Employment, Bureau of Working Conditions: Handbook on Workers' Statutory Monetary Benefits, 2023 edition | ||
| Thirteenth-month pay is mandatory and due by 24 December | Thirteenth-month pay is mandatory for rank-and-file employees who worked at least one month in the calendar year: one twelfth of the total basic salary earned, paid not later than 24 December, with the option of paying half before the school year opens. Budget it as one twelfth of salary every month. | Department of Labor and Employment, Bureau of Working Conditions: Handbook on Workers' Statutory Monetary Benefits, 2023 edition | ||
| Twelve regular holidays, paid whether worked or not | Regular holidays are paid at 100 percent of the daily wage even when unworked, and work on a regular holiday is paid at least 200 percent. The DOLE handbook lists twelve regular holidays in a year. Special non-working days follow no work, no pay, with a premium of at least 30 percent when worked. The dates are set each year by proclamation. | Department of Labor and Employment, Bureau of Working Conditions: Handbook on Workers' Statutory Monetary Benefits, 2023 edition | ||
| At least one hour off for a meal | Employees get not less than one hour off for a regular meal. A meal period of at least 20 minutes is allowed in listed cases, including non-manual work, and a shorter period counts as paid hours worked. | Department of Labor and Employment, Bureau of Working Conditions: Handbook on Workers' Statutory Monetary Benefits, 2023 edition | ||
| Maternity leave is 105 days with full pay | Maternity leave is 105 days with full pay for every pregnancy, plus 15 days for a solo parent and an optional 30 further days without pay after a live birth; 60 days with full pay for miscarriage or emergency termination. SSS pays a daily benefit of 100 percent of the average daily salary credit, and the private employer pays the difference between that benefit and full salary. | Department of Labor and Employment, Bureau of Working Conditions: Handbook on Workers' Statutory Monetary Benefits, 2023 edition | ||
| Paternity leave is seven days with full pay | Paternity leave is seven days with full pay for a married male employee for each delivery of his lawful wife, including miscarriage, regardless of employment status. | Department of Labor and Employment, Bureau of Working Conditions: Handbook on Workers' Statutory Monetary Benefits, 2023 edition | ||
| Solo parents get seven working days of paid leave a year | A qualified solo parent employee gets up to seven working days of paid parental leave a year after six months of service, regardless of employment status. | Department of Labor and Employment, Bureau of Working Conditions: Handbook on Workers' Statutory Monetary Benefits, 2023 edition | ||
| Ten days of paid leave for a victim of violence | A woman employee who is a victim of violence under the VAWC law is entitled to up to ten days of leave with full pay, extendable under a barangay or court protection order. | Department of Labor and Employment, Bureau of Working Conditions: Handbook on Workers' Statutory Monetary Benefits, 2023 edition | ||
| Two months of special leave after gynecological surgery | Under the Magna Carta of Women, a female employee with at least six months of service in the last twelve gets a special leave benefit of two months with full pay after surgery for a gynecological disorder. | Department of Labor and Employment, Bureau of Working Conditions: Handbook on Workers' Statutory Monetary Benefits, 2023 edition | ||
| Separation pay: half a month or one month per year of service | Separation pay for an authorized cause is half a month of pay per year of service for retrenchment to prevent losses, closure not due to serious losses, or disease, and never less than one month in those cases. It is one month of pay per year of service for redundancy, installation of labour-saving devices, or impossible reinstatement. A fraction of at least six months counts as a whole year. | Department of Labor and Employment, Bureau of Working Conditions: Handbook on Workers' Statutory Monetary Benefits, 2023 edition | ||
| Retirement pay at 60 to 65 after five years of service | An employee retiring at 60 to 65 after at least five years of service is owed retirement pay of at least half a month of salary per year of service, computed as 22.5 days per year including the thirteenth-month and leave components. Retail, service and agricultural establishments regularly employing ten or fewer employees are exempt. | Department of Labor and Employment, Bureau of Working Conditions: Handbook on Workers' Statutory Monetary Benefits, 2023 edition | ||
| SSS pays maternity, sickness and unemployment benefits | SSS pays a maternity benefit of 100 percent of the average daily salary credit for 105 days, 120 for a solo parent and 60 for miscarriage, and a sickness benefit of 90 percent of the average daily salary credit. An unemployment benefit exists for involuntary separation after at least 36 monthly contributions, twelve of them in the preceding eighteen months, claimed within two months of separation. | Social Security System: official contribution and benefit guidance | ||
| SSS retirement from 60 | SSS retirement is available from 60 for a member who has separated from employment, with 65 the compulsory age under the SSS schedule; special lower ages apply to mineworkers and racehorse jockeys. | Social Security System: official contribution and benefit guidance | ||
| Paying under a wage order carries double indemnity | Paying below the applicable wage order carries double indemnity: the employer is ordered to pay double the unpaid benefits owing, without that payment absolving criminal liability, and where the employer is a corporation the imprisonment penalty falls on its responsible officers. | Department of Labor and Employment, Bureau of Working Conditions: Handbook on Workers' Statutory Monetary Benefits, 2023 edition | ||
| What an EOR does in the Philippines, and the rules behind it | An employer of record employs your hire through a Philippine company, signs the contract, runs payroll and holds the SSS, PhilHealth and Pag-IBIG registrations, while you direct the work. Contracting and subcontracting arrangements are governed by Labor Code articles 106 to 109 and DOLE Department Order 174-17, and a contracted worker left without a service assignment for three continuous months is owed separation pay. Ask the provider which Philippine entity employs the hire, under which arrangement, and how that arrangement complies with those rules. | Department of Labor and Employment, Bureau of Working Conditions: Handbook on Workers' Statutory Monetary Benefits, 2023 edition | ||
| Wage boards set the rate region by region | Daily minimum wages are set region by region by Regional Tripartite Wages and Productivity Boards and apply by sector class, so the rate follows the workplace and the establishment's classification, not the company's head office. | Department of Labor and Employment, Bureau of Working Conditions: Handbook on Workers' Statutory Monetary Benefits, 2023 edition |