Hiring in the Philippines requires you to be aware of the local employment laws, benefits, payroll, and taxes.

Employee Contract

As a general rule, employment in the Philippines does not require a formal or written contract. A consensual contract may be agreed upon by both parties with the exception of contractors and subcontractors which written contracts are required. Written contracts are generally written in English, however, the employer must provide a Filipino contract if the employee is a Filipino Citizen. This is to clarify points and agreements for the employee under the contract.

All contracts, consensual or written, must adhere to The Labor Code of the Philippines.

Probation Period

The probationary period for employees ranges from 1–6 months.

Employee Leaves

Annual leave/Earned Leave — 5 days

Maternity Leave — 15 weeks

Payroll

Payroll Cycle

Workers are paid twice a month. Paydays are generally once every two weeks and must not exceed 16 days for the second.

Minimum Wage

The minimum wage in the Philippines is 570 PHP per day.

Overtime Pay

Any hours exceeding the regular 8 working hours per day are considered overtime and should get paid at 25% over their standard rate. The rate jumps to 30% when working overtime on a rest day, special or regular holiday.

Bonus- 13th Month Pay

All regular employees are entitled to a 13th-month pay provided that they have worked at least one (1) month during the calendar year. The pay must at least be 1/12 of the total basic salary earned for the year. It must be paid by December 24th.

Employee Benefits

Full-time employees in the Philippines are ensured to have insurance benefits such as

• Social Security (SSS)
• Medical (PhilHealth)
• Housing benefits (PAG-IBIG)
• Provident Fund

VAT

VAT in the Philippines is 12%.

Termination Process

Letting go of an employee in the Philippines is by no means an easy task. Before you terminate one of your employees, you must follow The Labor Code of the Philippines. You can only dismiss an employee if:

They have behavioral issues such as:

• Incurred serious misconduct;
• Willful disobedience;
• Gross and habitual neglect of duty;
• Fraud or breach of trust;
• Commission of a crime or offense against the employer, his family, or representative;

Or the company is retrenching or expanding with the following reasons:

• Installation of labor-saving devices
• Redundancy
• Retrenchment to prevent losses
• Closure and cessation of business; and
• Disease / illness

Notice Period

The notice period before termination is up to 3 months for permanent employees and 1 month for probationary employees.

Severance Pay

Terminated employees are entitled to a severance pay package adhering to The Labor Code of the Philippines. The computation of the severance pay depends on the cause of termination except relating to behavioral issues.

• One month pay or at least ½ month pay for every year of service whichever is higher (a fraction of 6 months is considered a whole year) including the available allowances with the position
• Separation pay is exempt from taxation

Visa and Immigration

If you’re looking to work as an expat in the Philippines, there are two primary relevant visas you can acquire. These visas depend on the nature of your contract or dealing with the company.

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