How to hire and pay EMPLOYEES IN

The Philippines

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This guide was last updated on
December 19, 2022
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Before hiring

EMPLOYEES IN
The Philippines

Before hiring employees in The Philippines, there are a few important things you’ll need to know. Firstly, in The Philippines, employers are not legally required to grant employees paid sick leave. Instead, employees can use "service incentive leaves" as sick leaves.

It’s also important for employers to know that in The Philippines, employees are entitled to severance pay only if they were terminated by the employer for authorized causes. Depending on the basis for termination, severance may be up to one month’s salary multiplied by their length of service in years.

We know this might sound overwhelming—but it doesn’t have to be. A solution like Oyster eliminates the barriers for you. With Oyster, you can automate compliance across 180+ countries, easily managing HR and payroll—all in one, easy-to-use platform. 

Get an overview of what you need to know when hiring in The Philippines below.

At a Glance

CURRENCY

PHP

OFFICIAL LANGUAGE

FILIPINO, ENGLISH

PAYROLL FREQUENCY

BI-MONTHLY/MONTHLY

PUBLIC HOLIDAYS

18

(based on region;
see here
)

EMPLOYER TAXES

2.375%

of gross salary

13th / 14th SALARY

Employers pay 1/12 of employees' annual salary as 13th salary

Good to know

  • Employees in The Philippines get a 13th month salary, which is 1/12th of their annual salary. This can either be paid in full around the 24th of December, or can be split into two, half of which is paid at the beginning of the school year in June. The 13th month salary is not to be confused with an optional Christmas bonus that some employers can choose to offer.
  • Employees in supervisory or managerial positions are excluded from overtime pay.
  • Employees get five days of paid vacation leave after every 12 months of service. This is called the "service incentive leave" and can be taken as holiday or sick leave. 

Employment in

The Philippines

Working hours and overtime

Employees in The Philippines work eight hours per day and six days a week (totalling 48 hours per week).

Overtime work beyond eight hours a day is compensated with an additional 25% of the regular basic rate (30% on special holidays).

Employees in supervisory or managerial positions are excluded from overtime pay.

Employment contracts
Probationary period

In The Philippines, the probationary period is six months. 

Pensions
Notice period

For resignations, employees must provide a minimum of 30 days notice.

The notice period for dismissals over an authorized cause (business or health reasons) is 30 days.

Dismissals over just cause (employee misconduct or neglect) do not require a notice period.

IP protection and non-compete agreements

The legal validity of non-compete agreements is decided on a per-case basis. To be legally enforceable, they must be limited and reasonable in time, place and scope. Employers are not obligated to pay the employee during the non-competition period.

Employment cost calculator

Holidays

View a list of recognized public holidays in the Philippines here.

View a list of recognized public holidays in the Philippines here.

Employer tax

An employer’s social contributions in The Philippines includes:

  • Health Insurance (PHIC): 1.375%
  • Home Development Mutual Fund (HDMF): 2.0%

Employers are also required to make social security contributions of 73.70 PHP - 1,178.70 PHP depending on the employee’s salary.

Individual tax

In The Philippines, employees pay between 0% and 35% in taxes depending on their income bracket. They also pay into social security, Home Development Mutual Fund (HDMF), and Health Insurance (PHIC). 

Termination of employment

Employees are entitled to severance pay only if they were terminated by the employer for authorised causes. Depending on the basis for termination, severance may be up to one month’s salary multiplied by their length of service in years.

Start hiring employees in

The Philippines

Setting up a business entity everywhere you want to hire a new employee isn’t scalable—it takes too long and the legal fees are high. At the same time, understanding and adhering to the local labor laws and employee expectations can be complex and time consuming. And it’s hard to find reliable information on up-to-date employment information for all the countries where you’re considering hiring. Not to mention tracking down invoices and managing employee contracts over email and spreadsheets—that gets messy fast. 

We can’t afford to take risks when it comes to compliance—we need to make sure we follow the local guidelines, especially when it comes to taxes and legalities. 

With Oyster, you can manage HR and payroll, and automate compliance across 180+ countries—all in one, easy-to-use platform.

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