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Compliantly hire and expand your business in the Philippines
When it comes to employing and managing employees in the Philippines, there are specific procedures and regulations that must be followed.
The Philippines is an archipelagic country in Southeast Asia. In the western Pacific Ocean, it consists of 7,641 islands which are broadly categorized in three main geographical divisions from north to south: Luzon, Visayas, and Mindanao. The Philippines is bounded by the South China Sea to the west, the Philippine Sea to the east, and the Celebes Sea to the south. It shares maritime borders with Taiwan to the north, Japan to the northeast, Palau to the east and southeast, Indonesia to the south, Malaysia to the southwest, Vietnam to the west, and China to the northwest. It is the world’s twelfth-most-populous country, with diverse ethnicities and cultures.
Manila
Capital
$4,169
GDP per Capita
$475.947 billion
Total GDP
114,163,719
Total Population
0.710
Human Development Index
UTC+8
Time Zone
Filipino & English
Official Languages
Philippine Peso (PHP)
Currency
343,448 km2 (132,606 mi2)
Land Area
Here's what you need to know
Overall, employing workers in the Philippines requires careful attention to the specific requirements and regulations. Working with a local expert in employment and payroll can help ensure that you’re meeting all the legal requirements and providing a positive employment experience for your staff.
Employment contracts are mandatory in the Philippines and must be written in English or Filipino. They should clearly outline:
Job title, duties, and responsibilities
Salary and benefits (including 13th month salary)
Working hours and overtime pay
Leave entitlements (annual leave, sick leave, etc.)
Termination terms (notice period, severance pay)
Confidentiality clauses (if applicable)
Minimum Wage
The Philippines implements a regionalized minimum wage system. Rates vary by region and industry.
Payroll Terms
Salaries are typically paid monthly by the 15th working day of the following month. Payslips with a breakdown of gross pay, deductions, and net pay are mandatory.
Taxes
Income Tax:
The Philippines uses a progressive income tax system. Employees pay income tax based on their annual earnings, with rates ranging from 0% to 35%. Employers withhold income tax at source and remit it to the Bureau of Internal Revenue (BIR) along with mandatory contributions.
PhilHealth:
Mandatory contributions are made to the Philippine Health Insurance Corporation (PhilHealth) for healthcare coverage. Contribution rates are shared between employers and employees.
Pag-IBIG:
Contributions are made to the Home Development Mutual Fund (Pag-IBIG) for housing benefits. Contribution rates are shared between employers and employees.
Social Security System (SSS)
Both employers and employees contribute to SSS for social security benefits like pensions and disability payments. Contribution rates are based on the employee's salary bracket.
The Philippines has a standardized leave policy:
Annual Leave
Minimum of 15 days per year, increasing with service duration (up to 30 days).
Sick Leave
15 days of paid sick leave per year with doctor's certification.
Maternity Leave
Up to 105 days of paid maternity leave for female employees, followed by an optional unpaid parental leave (up to 1 year).
Paternity Leave
7 days of paid paternity leave for male employees.
Public Holidays
10-12 paid public holidays per year.
Probationary Period
The maximum probationary period is typically 6 months, though it can be shorter based on the employment contract.
Termination of Employment
Termination of employment should follow the terms outlined in the contract or the Labor Code of the Philippines. Notice periods and potential severance pay vary depending on the reason for termination and the employee's length of service.
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