Guide to employing in Philippines

Philippines

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Capital City

Manila

Currency

Phillipine Peso, PHP, (1 = 100 Sentimo)

Population Size

109,000,000

Language Spoken

Filipino, English

Overview

Expanding your business into a foreign market can be a costly and time-consuming task, and having to navigate the intricacies of local labour laws on top of that can be challenging for any business.

XPANDIUM is your trusted Employer of Record in the Philippines. We provide complete employer of record, payroll, and benefit administration solutions for any business wanting to hire and manage employees compliantly without having to establish a legal entity in the Philippines.

When you partner with XPANDIUM’s EOR platform in the Philippines, we will seamlessly handle compliant onboarding, payroll, tax payments, and benefits administration for your employees through our own PEO entity. Leaving you to focus on the vital part – optimizing your workforce and unlocking your business’ full potential.

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Xpandium - Hire your employees in Philippines

The labour market in the Philippines is regulated by laws aimed at protecting the rights of both employer and employee. These laws outline rules and procedures for various aspects of employment, including new hires, work schedules, holidays, paid leave, and contract termination.

In the Philippines, it is standard practice to provide employees with written employment contracts outlining employee responsibilities, salary, benefits, and termination procedures to ensure transparent labour practices. Additionally, new hires are provided with offer letters stipulating the employee’s compensation and benefits in order to promote fairness throughout the hiring process.

Navigating this legal framework can be a daunting task and will require employers to have a deep understanding of local labour laws, and non-compliance can lead to fines and penalties.

XPANDIUM is your leading partner of employer of record services in the Philippines. We provide assistance and support to help your business seamlessly navigate the complexities of hiring and employment in the Philippines.

When you partner with XPANDIUM, we will ensure your company complies with and stays current with any labour code changes.

Employment Contract

Employment relationships may be agreed on for

fixed term employment (temporary) or
indefinite duration (open-ended, permanent).

Probation period

Probation period is optional and cannot exceed 4 months.In case of fixed-term contracts, the probation period can not be more than 50% of the term of the contract.

Working hours

Full time employment is considered 8 hours per day and 40 hours per week in Philippines. Less hours will mean part-time work.

Hours worked above 8 hours per day / 40 per week or on public holidays are considered overtime. Employer and Employee must agree on working overtime.

Overtime hours cannot exceed a total of 8 hours within a 7 days’ period and must be compensated during payroll for overtime as per local law.Parties may agree that the overtime hours over a 4-months’ time-frame schedule be an average 12 hours for every 7 calendar days.

Minimum wage

The current minimum wage is 584 EUR for full-time employment or 3.84 EUR for hourly work in Philippines.

13th month salary

Not required.

Benefit package

In Philippines, there are no obligatory fringe-benefits that an Employer must offer, however a custom benefit plan may be set up for your team (see more details at the Benefit section).

Payroll Cycle

Salaries are payrolled and paid on a monthly basis.

Health insurance in Philippines

The health insurance system in Philippines is a solidarity-based social insurance system. This means it provides healthcare for everyone, including persons insured by employment agreement. Estonia is covered by health care and treatment is equally available in all regions. Employees can order a European Health Insurance Card or its replacement certificate in the State Portal.

Employer taxes

33.8% total employment cost in Philippines.

Public Holidays

There are 18 national holidays that are observed in the Philippines. Additionally, each one of the local municipalities has its own regional or local public holidays. Employees have the right to take leave on the holiday that corresponds to their workplace location.

Usually, public holidays that fall on a weekend are not carried forward unless officially declared otherwise by the Government.

In the Philippines, employers categorize public holidays as either “regular holidays” or “special holidays”.

Regular holidays are public holidays where employees receive paid time off, and if they are required to work on these days, an additional 100% holiday rate applies for the initial 8 hours, and any overtime beyond 8 hours is compensated at an additional 260% of the hourly rate.

Special holidays signify unpaid days off, but if an individual works on such a day, they are entitled to receive a salary (150% overtime rate for the first 8 hours, and any overtime hours beyond 8 entail an extra 195% of the hourly rate).

It's worth noting that certain religious holidays follow cycles and will be labeled as "Tentative" until their exact dates are confirmed closer to the holiday.

NAME

DATE

INFO

New Years Day

January 1

Independence Day

February 24

Good Friday

April 2

Friday before Easter Sunday

Easter Monday

April 4

Varies yearly

Labor / Spring Day

May 1

Pentecost

May 23

Victory Day

June 23

Jaanipäev

June 24

Philippines Day

August 20

Philippines Restoration of Independence

Christmas Eve

December 24

Christmas Day

December 25

2nd Day of Christmas

December 26

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Popular benefits in Philippines

There are no compulsory fringe benefits that employers need to offer employees in the Philippines. However, an employer of record service provider in the Philippines can help you design competitive benefit packages in order to attract talent.

This means that you may offer employees one or more of the following additional non-salary benefits:

Healthcare benefits

Paid holidays

Employee development and training

Education assistance

Transportation and meal allowances

Employee discounts

Work-life balance (flexible work schedules)

Career advancement opportunities

By partnering with XPANDIUM’s EOR services in the Philippines, your business can offer its employees enticing compensation packages as part of its competitive edge.

Benefit planning process includes

XPANDIUM is your expert employer of record providers in the Philippines. We offer specialized payroll services to ensure your business complies with all local regulations and standards. Here is how we will simplify your payroll process:

Gathering Employee Data: We pay attention to detail when collecting all the information for setting up your payroll. This meticulous approach forms a foundation for payroll processing and timely salary distribution.

Tax Regulation Compliance: At XPANDIUM, we prioritize adhering to the tax laws in the Philippines, including income tax, withholding tax, and other related taxes. Our streamlined payroll system handles tax filings efficiently, minimizing errors and ensuring all tax obligations are met.

Accurate Employee Classification: Properly classifying employees is crucial for tax withholdings and contributions. We take care in categorizing full-time employees, part-time workers, and contractors to avoid any misclassification issues.

Comprehensive Documentation: As part of our payroll services, we provide your employees with documentation that clearly outlines their gross income, tax deductions, benefits, and contributions.

Types of Leaves

Paid leave

Employees are entitled to 28 days.

Public holidays

There are 12 public holidays in Philippines.

Sick leave

An employee is entitled to 182 sick-leave days yearly while enrolled in the national social security system.

Payment is 70% of the employee’s average salary, which is paid by the Employer from the 4th day of sickness but from the 9th day the payment is taken over by the State.

Pregnancy and maternity leave

Expecting women can have a total of 20 weeks / 140 days.

Maternity leave may include and start 70 days prior to giving birth. State health insurance covers maternity leave with 100% payment.

Parents receive a one-time 320 EUR allowance for child birth and in case of triplets the payment is 1,000 EUR per child.

Paternity / paternal leave

The father is entitled to 10 working days off for paternity leave which can be granted within 2 months of the expected child’s birth date. After the birth, fathers are entitled to 2 months of paternity leave with the payment of 100% average salary payment, however it is capped at 3 times of the minimum wage amount.

Other / Child Adoption leave

Employees are entitled to a special leave if adopting a child under the age of 10.

Other / Child care leave

Any parent may take paid leaves for taking care of a child.

Leave varies based on the age of child:

3 days - up to 2 children under the age of 14
6 days - 3+ children under the age of 14

Payment for days taken is calculated based on the minimum wage.

Employment termination

Employers have the below options to terminate an employment contract in Philippines:

Termination under probation period

Termination by the Employer is immediately effective with a special 15 days’ written notice to the Employee.

Resignation by Employee

Employees may freely terminate their employment contract with a written notice of minimum 14 days to 1-month notice.

Termination by Employer with notice

An employment agreement may be terminated by the Employer by notice with below period of notices.

If employment period is

up to 1 year period: 15 calendar days
from 1 to 5 years of employment: 30 calendar days
from 5 to 10 years of employment: 60 calendar days
10+ years of employment: 90 calendar days

Termination of fixed term contract

If termination is due to Employer’s redundancy, the employee is entitled to the salary that they would have received from the date of termination to the expiry date of the contract.

Termination by mutual consent

The termination by mutual consent allows the Employer and Employee to agree freely in a written agreement with each other on the conditions of termination.

Expiry of employment contract

When the employment contract expires then such employment is automatically terminated.

Severance pay

Employee is entitled to severance pay if the Employer terminates the contract due to redundancy. The severance pay is the average salary calculated based on the latest 6 months salary.

Employees are entitled to receive higher amounts of severance pay depending on the length of employment with the Employer:

From 5-10 years of employment: +1 month salary
over 10 years of employment: +1 month salary

How Employer of Record (EOR) Works in the Philippines

XPANDIUM offers Employer of Record (EOR) services in the Philippines, which serves as a solution for businesses seeking to hire, onboard, and support employees across borders. When you partner with XPANDIUM, your employees will work on behalf of your company just like they are in-house staff, while XPANDIUM takes care of employment responsibilities.

With XPANDIUM, you can ensure that your workforce complies with labour laws. We handle payroll administration and salary payments and manage employment-related tax filings and returns.

Make the process of hiring employees in the Philippines easier by partnering with XPANDIUM. Contact us today for a tailored solution.

Payment in Poland

Hiring and managing employees across borders can be a complex process, and understanding and adhering to local employment laws is crucial for any business.

Payroll in the Philippines goes beyond calculating and distributing salaries. Employers have the responsibility to comply with tax deadlines and contribution obligations, and failure to comply with these regulations and maintain accurate tax records could result in fines and interest charges.

XPANDIUM offers payroll services in the Philippines specifically designed to streamline this process. Our specialized solutions ensure that your business remains compliant with tax laws and contribution regulations. Our team of experts takes care of all aspects of payroll in the Philippines, including salary calculations, tax filings, and employee contributions, effectively reducing your workload.

With XPANDIUM's assistance, you can confidently manage your team while ensuring that your payroll in the Philippines is accurately compliant with regulations and processed on time.