Last reviewed: October 2026
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To hire employees in Philippines, you can use an employer of record (EOR), open a local entity, or engage independent contractors. Most companies making a first hire use an EOR such as Deel, because it avoids setting up a Philippine entity and its payroll registrations before you know the hire will work out.
The cost does not stop at salary. Employers owe SSS, PhilHealth, and Pag-IBIG contributions every month, plus a mandatory 13th month pay due by December 24. In our worked example below, mandatory employer contributions come to about 13.4% of a ₱25,000 monthly salary, before 13th month pay.
This guide reflects the rules as of October 2026, including the Metro Manila minimum wage that took effect on September 26. Where we could not confirm a figure in a primary source, we say so instead of guessing. It is general information, not legal, tax, or payroll advice. SuiteScorecard is not a law firm or accounting firm, Philippine wage orders and contribution rates change often, and the rules differ by region. Have Philippine counsel or a local payroll provider confirm the figures here before you make an offer or run payroll.
Why companies hire in the Philippines
The Philippines runs a rules-based employment system: fixed statutory contributions, a mandatory annual bonus, and defined leave. That makes the full cost of a hire easier to model than in markets where benefits are negotiated case by case.
The flip side is employee protection. In claims over service incentive leave, holiday pay, and 13th month pay, the burden is on the employer to prove it paid. If you hire employees in Philippines, keep payroll records from the first day.
We have not verified labor market statistics such as talent pool size, English proficiency, or attrition for this guide, so we do not quote them. Get those from a recruiter or official statistics before you set a hiring plan.
Your three options to hire employees in Philippines: EOR, local entity, or contractors
Employer of record (EOR)
An EOR becomes the legal employer in the Philippines. It issues the contract, runs payroll, remits SSS, PhilHealth, and Pag-IBIG, and pays the 13th month, while you direct the daily work. Providers such as Rippling and Deel compete here, so ask each vendor to confirm Philippine coverage, the monthly fee, and termination terms in writing before you sign.
If you are unsure whether you need an EOR or a PEO, our explainer EOR vs PEO: Which One Does Your Company Actually Need? walks through the difference.
Local entity
You incorporate a Philippine company, then register as an employer with the tax authority and the three social agencies. Coverage under Pag-IBIG is automatic for employees covered by SSS, with no waiver or opt-out. Entity setup cost and timeline are undisclosed in the sources we reviewed, so get a quote from a local corporate services firm.
An entity usually makes sense once you have a steady team and a long-term commitment. It also means you own every filing and every labor dispute.
Independent contractors
Contractors carry no employer contributions, no 13th month, and no leave. They also carry the highest legal risk if the relationship looks like employment. We cover that in the misclassification section below.
Employment contracts and probation
Philippine law distinguishes probationary employees from regular employees, and the standards for becoming regular should be given to the employee at engagement. We could not confirm the current maximum probation length in a primary source during this research, so check the Labor Code or ask counsel before you draft. Philippine contract requirements are specific, and a clause that works elsewhere can be unenforceable or create liability here, so have local counsel review the contract before the first signature.
A solid contract should cover:
- Pay basis: whether the rate is daily or monthly, since that changes the overtime and holiday math.
- Probation standards: what the employee must achieve to become regular.
- Schedule: hours, rest day, and any night shift.
- Leave and benefits: statutory minimums plus anything you add.
- Confidentiality and IP: assignment of work product.
Statutory entitlements apply from day one of service where the law says so. For example, the 13th month pay covers rank-and-file employees with at least 30 calendar days of service.
Working hours, overtime, and public holidays
The standard working day is eight hours. Premium rates, taken from the multipliers in DOLE’s benefits handbook, work out as follows:
| Situation | Pay rate |
|---|---|
| Overtime, ordinary day | 125% of hourly rate |
| Night shift, 10 PM to 6 AM | 110% of hourly rate |
| Rest day or special day worked | 130% of daily rate |
| Regular holiday worked | 200% of daily rate |
| Regular holiday on rest day | 260% of daily rate |
For 2026, there are 11 regular holidays and 8 special non-working days. Regular holidays are paid even if unworked, except in retail and service establishments regularly employing fewer than ten workers. Special non-working days follow a no work, no pay basis unless your policy says otherwise. The multipliers above come from a secondary summary of the DOLE handbook, and how they stack (for example overtime on a holiday that falls on a rest day) is a payroll question with its own rules. Confirm every rate against the current DOLE handbook or with your payroll provider before you pay.
Minimum wage and typical salaries
Minimum wages are set region by region. Under Wage Order NCR-28, DOLE raised the Metro Manila non-agricultural minimum from ₱695 to ₱755 per day effective September 26, 2026. Agricultural workers and covered small retail, service, and manufacturing establishments move to ₱718.
On a six-day week, ₱755 per day works out to roughly ₱19,693 a month. Note that an earlier order, NCR-27, was tied up in court, and the National Wages and Productivity Commission says its implementation awaits a final decision. Check the NWPC site for the latest rate before you finalize an offer.
Rates outside Metro Manila differ and several regions have scheduled increases, so look up the region where your employee will work. We have not verified market salary benchmarks for specific roles, so use a current compensation survey for pay bands. Minimum wage is a floor, not an offer.
Mandatory benefits and employer costs
The true cost to hire employees in Philippines is salary plus three monthly social contributions, a small injury-compensation charge, and the 13th month pay.
| Contribution | Employer | Employee |
|---|---|---|
| SSS | 10% | 5% |
| PhilHealth | 2.5% | 2.5% |
| Pag-IBIG | 2% | 2% |
| Employees’ Compensation (EC) | ₱10 or ₱30 flat | None |
| 13th month pay | 1/12 of basic pay | None |
Each has a base or cap you need to know:
- SSS: 15% in total, applied to a monthly salary credit between ₱5,000 and ₱35,000.
- EC: ₱10 where the salary credit is below ₱15,000, and ₱30 at ₱15,000 and above.
- PhilHealth: a 5% premium split equally, on a salary floor of ₱10,000 and a ceiling of ₱100,000.
- Pag-IBIG: 2% each on a salary base capped at ₱10,000, so ₱200 maximum per side. Employees earning ₱1,500 or less pay 1%.
Here is the arithmetic for an employee on a ₱25,000 monthly salary:
| Item | Employer cost per month |
|---|---|
| SSS including EC | ₱2,530 |
| PhilHealth | ₱625 |
| Pag-IBIG | ₱200 |
| Contributions subtotal | ₱3,355 (about 13.4%) |
| 13th month accrual | ₱2,083 |
| Total on top of salary | About ₱5,438 (roughly 22%) |
The example is our own arithmetic from the published rates, rounded, and it is illustrative only. Contribution tables, salary credit brackets, and caps are revised regularly, so compute actual remittances from the current SSS, PhilHealth, and Pag-IBIG tables or let your payroll provider do it. The 13th month pay is one-twelfth of basic salary earned in the calendar year. It excludes overtime, night differential, holiday pay, and unused leave credits unless your policy treats them as basic pay. DOLE says it must be released no later than December 24, and the rule extends to employees who resigned or were terminated during the year.
Leave entitlements
| Leave | Entitlement | Note |
|---|---|---|
| Annual (service incentive) | 5 days, paid | After one year of service |
| Sick | No separate statutory leave | Incentive leave can cover illness |
| Maternity | 105 days, full pay | Optional 30 unpaid days |
| Maternity, solo parent | 120 days total | 15 extra days |
| Miscarriage | 60 days, full pay | Includes emergency termination |
| Paternity | 7 days | Married fathers, RA 8187 |
| Solo parent leave | 7 working days | Qualified solo parents |
| VAWC leave | Up to 10 days | Qualified victims |
| Public holidays | 11 regular, 8 special | Special: no work, no pay |
Service incentive leave is not owed to employees who already get at least five days of paid vacation leave, to field personnel, or to those in establishments regularly employing fewer than ten employees. Unused credits convert to cash at year end or on separation. Many employers simply offer more than five days of vacation leave to stay competitive.
Maternity leave is paid through the SSS benefit, which the employer advances and then claims back. Up to seven days can be transferred to the child’s father or an alternate caregiver. A House bill filed in June 2026 proposes 105 days of paternity leave, but we found no evidence it has become law, so confirm before you set policy.
Termination, notice, and severance
Dismissal in the Philippines requires a lawful ground and a fair process. Just causes, such as serious misconduct, are employee-fault grounds. Authorized causes, such as redundancy or closure, are business grounds and usually carry separation pay. DOLE lists separation pay among the statutory monetary benefits.
We could not confirm current notice periods or the separation pay formula in a primary source during this research, so we do not state them here. Get the exact formula from the Labor Code and DOLE guidance before you issue any notice. Skipping a required step can turn a valid dismissal into an unlawful one. Illegal dismissal claims in the Philippines can carry back wages and reinstatement, so do not terminate a Philippine employee without local counsel reviewing the ground, the notices, and the computation first.
If you use an EOR, ask who bears termination costs and how they are quoted. That clause matters more than the monthly fee when a hire does not work out.
Payroll, taxes, and currency
Pay is in Philippine pesos (₱). Employers must give payslips showing gross pay, deductions, and net pay. You deduct the employee share of SSS, PhilHealth, and Pag-IBIG, add your share, and remit the full amount each month. PhilHealth, for example, expects the employer to remit both halves.
Employers also withhold income tax from salary. We have not verified the current income tax brackets from the tax authority, so we do not list them. Confirm withholding tables with your payroll provider or the Bureau of Internal Revenue before your first pay run. Tax registration, withholding, and remittance obligations are the employer’s responsibility, and penalties for late or incorrect filings sit with you, not with this guide, so get a Philippine accountant involved before the first payroll.
Payroll is where teams that hire employees in Philippines most often slip: late 13th month, missed remittances, or the wrong overtime multiplier. Build a calendar for the December 24 deadline and the monthly remittances now.
Contractor misclassification risk in the Philippines
Calling someone a contractor does not decide the question. Philippine authorities look at the actual relationship, especially how much control you exercise over how, when, and where the person works. A contractor on your schedule, using your tools, taking your instructions, looks like an employee.
The exposure is back pay for the 13th month, leave, and holiday pay, plus unpaid contributions. Because the burden of proving payment sits with the employer, you would struggle to defend a gap without records. Companies that hire employees in Philippines as contractors to save on-costs are usually trading about 22% in payroll load for open-ended legal liability.
Use contractors for defined projects with their own methods and multiple clients. Use an EOR or entity for anyone you manage like a team member. Classification is decided on the facts of each engagement under Philippine law, and the description above is a summary, not a test you can apply on your own. If you already have contractors in the Philippines who look like employees, have local counsel review them before you change anything, since converting them does not by itself settle past periods.
Best employer of record platforms for Philippines
If you want to hire employees in Philippines without a local entity, these are the platforms we would shortlist. We have not verified Philippine fees or contract terms for any of them, so treat the order as a starting point and request written quotes. Our Suite Score methodology explains how we grade vendors on pricing, security, support, and legal protection.
- Deel: a strong first quote to request if you may also add contractors or other countries, since one vendor can cover both. Ask for Philippine pricing, the contract term, and termination cost in writing.
- Rippling: worth a quote if you want HR, IT, and payroll in one system, as covered above. Confirm Philippine EOR availability and who owns the local entity.
- Remote: a useful comparison quote. Check how it handles the 13th month, SSS claims, and offboarding.
Whichever you choose, ask each vendor to confirm in writing how it handles the 13th month, maternity benefit advances, and the termination process. If a vendor will not disclose entity ownership or pricing, we record it as undisclosed.
Frequently asked questions
Can a foreign company hire employees in Philippines without an entity?
Yes, through an EOR, which employs the person locally on your behalf. You can also engage genuine independent contractors, but that carries misclassification risk if you control their work.
What is the minimum wage in Manila in 2026?
Under Wage Order NCR-28, the Metro Manila non-agricultural minimum is ₱755 per day from September 26, 2026. Covered agricultural and small establishments are at ₱718. Check the NWPC for further changes.
When is 13th month pay due?
No later than December 24 each year. It equals one-twelfth of basic salary earned in the calendar year and applies to rank-and-file employees with at least 30 calendar days of service.
How much do employer contributions add to payroll cost?
On a ₱25,000 monthly salary, SSS, EC, PhilHealth, and Pag-IBIG add about ₱3,355 a month. Adding a monthly accrual for the 13th month brings the load to roughly 22%. The percentage falls as salaries rise because of the SSS and Pag-IBIG caps.
Is paternity leave going to increase?
Current law gives 7 days. A bill proposing 105 days was filed in 2026, but we found no evidence it has passed. Check the status before you finalize your policy.
Can we use this guide to set up Philippine payroll ourselves?
Use it to understand the structure and estimate the cost, not to run payroll or draft contracts. Several figures here come from secondary sources, some rules were in flux when we reviewed the page in October 2026, and others (notice periods, separation pay, tax brackets) we could not confirm at all. Have Philippine counsel and a local payroll provider or EOR confirm every number before you hire.