Understanding employee benefits in the Philippines: What employers need to know

The Philippines is a top destination for companies growing global teams. Its large pool of English-speaking talent and competitive labor costs make it a smart choice for roles like data entry, customer service, and digital marketing.

But building a strong, sustainable team means understanding more than just the market. Legal requirements, employee expectations, and social and cultural norms all shape what benefits and compensation should look like—and for many employers, those standards differ significantly from what they’re used to.

In this guide, we’ll explain employee benefits in the Philippines to help you create a work culture that attracts and retains top Filipino talent. 

Who’s entitled to benefits in the Philippines?

Under Philippine labor law, employee benefits primarily apply to individuals in a formal employer-employee relationship. This includes rank-and-file workers—whether full-time, part-time, or contractual. Most statutory benefits also extend to managerial staff, though some labor protections differ. Independent contractors and freelancers aren’t legally entitled to the same benefits, although employers must still follow minimum wage requirements.

Full-time vs. part-time and contractor work in the Philippines

Full-time employees are generally entitled to a more comprehensive set of government benefits in the Philippines. These typically include Social Security System (SSS) coverage (retirement, disability, and other social insurance), PhilHealth (the country’s national health insurance), and contributions to Pag-IBIG Fund (a government-managed savings and housing program). They also receive a mandatory year-end bonus equal to one month’s salary, known as 13th-month pay, and various types of paid leave, including service incentive leave, maternity leave, and other types of leave required by law (more on all these benefits below).

Part-time and contractual workers also qualify, though benefits may be prorated or adjusted based on contract length. Still, as long as there’s a valid employer-employee relationship—meaning the worker is classified as an employee rather than an independent contractor—the labor code guarantees access to key statutory benefits in the Philippines.

Meeting legal requirements like these is a must, especially when worker classification isn’t always straightforward. Oyster helps you get it right—and then go further. As a global employment platform, Oyster ensures compliance while helping companies offer benefits tailored to role responsibilities, cost of living, experience level, and local norms. With Oyster Total Rewards, employers can build compensation strategies that support retention and strengthen their position in competitive hiring markets.

Types of employee benefits in the Philippines

To build a happy, high-performing team in the Philippines, employers need to understand what benefits are expected—and what can give you a competitive edge. From government-mandated essentials to thoughtful allowances, here’s how to show your Philippines-based workers you value them. 

Mandatory or statutory government benefits in the Philippines

These benefits are legally required under Philippine labor laws. All employers must provide these to eligible employees to remain compliant. 

13th-month pay

Employers are required to pay eligible regular employees a 13th month of pay, regardless of their job type, rank, or employment classification, as long as they work for at least one month during the calendar year. This extra pay is equal to one-twelfth of their total basic salary earned within the year. Eligible employees must receive their 13th-month pay no later than December 24 annually.  

Eligibility for 13th-month pay typically extends to most workers. However, some local labor laws may exempt certain categories of employees, such as purely managerial staff, commission-based workers, or independent contractors. Employers should consult local regulations to determine exact eligibility requirements.

Social Security System (SSS) contributions

The SSS provides financial protection to Filipino employees for sickness, maternity, disability, unemployment, retirement, and death. Contributions are mandatory for employees under 60 and entitle members to benefits like cash allowances, pensions, and funeral support. Work-related injuries and illness are also covered under a separate Employees Compensation (EC) program. 

Pag-IBIG Fund contributions

The Pag-IBIG Fund helps Filipino workers build long-term savings and access affordable housing loans. Employees and employers are required to contribute if SSS covers them. Members can grow savings through regular or optional contributions, apply for short-term loans, and borrow money for home financing under more flexible terms than private banks typically offer.

PhilHealth contributions

PhilHealth, the national Philippine health insurance program, provides Filipino citizens with access to affordable medical care. Funded through mandatory contributions from employers and employees, it covers hospitalization, outpatient procedures, and select preventive services. 

Parental leave

Parental leave is a type of leave in the Philippines granted to mothers and fathers alike. Mothers receive 105 days of paid leave for each pregnancy, including cases of miscarriage or termination of the pregnancy, with an optional 30 additional days of unpaid maternity leave. Mothers must take mandatory leave in the Philippines of at least 60 days after childbirth. Solo mothers receive an extra 15 days of paid leave to use before delivery, after delivery, or both. 

Meanwhile, married male employees are entitled to seven days of paid paternity leave for up to the first four deliveries of their spouse, provided they’re living together at the time. This includes childbirth, miscarriage, or termination of the pregnancy. The leave must be used within 60 days of the child’s birth or the medical event.

Overtime pay

Employees who work beyond the standard eight-hour workday are entitled to overtime compensation. On regular workdays, employees receive a minimum of 25% above the hourly rate, while on rest days or special working holidays, the rate increases to at least 30% above the employee’s hourly wage. 

Service incentive leave

Employees who have completed at least one year of service with the same employer receive five days of paid service incentive leave (SIL), which they can use for vacation time or sick leave. It’s noncumulative, meaning unused leave doesn’t carry over to the following year, but employees receive the cash equivalent of any unused SIL at year’s end.

Additional benefits 

Offering additional perks might add to the cost of hiring in the Philippines, but they also boost employee satisfaction and set your company apart. Here are a few common additions that show your commitment to worker well-being:

Competitive salary

According to data collected in 2022, the average salary in the Philippines was roughly USD 4,068. But top talent—especially remote professionals in the Philippines—often expect more than the baseline. Offering a salary that exceeds industry norms signals that your business is serious about attracting and keeping the best of the best. 

Additional paid leave

Philippine labor law guarantees just five days of service incentive leave per year, a cap that falls short of international standards. Offering extra PTO, whether for vacation, personal days, or wellness, helps your company stand out in a competitive hiring landscape. 

Allowances

Cash or in-kind support for transportation, meals, or internet can also improve employee productivity and morale. These are referred to as De Minimis Benefits in the Philippines—small-value, employer-provided perks that aren’t subject to income or withholding tax.

Bonuses

While employees receive their mandatory 13th-month pay no later than December 24, many employers also offer additional Christmas or mid-year bonuses. These performance- or profit-based incentives show appreciation for employees’ work and help maintain morale throughout the year.

Laws and regulations employers need to know

Hiring in the Philippines requires compliance with local labor laws. For companies expanding into the country, here are the key regulations to be aware of:

• Labor Code of the Philippines: This is the official primary law governing employment, covering everything from minimum wage and work hours to employee benefits and participation in the national health insurance program. It establishes the baseline for fair treatment and worker protection. 
• Laws on mandatory contributions: Employers must register employees and make regular contributions to SSS, PhilHealth, and Pag-IBIG Fund. These contributions fund programs like retirement, health care, and housing.
• Tax laws: Employers are responsible for withholding and remitting income taxes on behalf of employees. They must also issue BIR Form 2316 annually. Failure to comply can result in severe penalties or legal consequences. 

Navigating labor laws and tax compliance in the Philippines can be complex—especially for companies just entering the market. Partnering with an employer of record (EOR) in the Philippines simplifies the process, ensuring compliance, managing employee benefits, and reducing the administrative burden of building and supporting a distributed team. 

Best practices for offering employee benefits in the Philippines

Offering competitive employee benefits in the Philippines is tricky, especially if you don't have the right systems in place. Follow these best practices to keep operations smooth, legal, and meaningful for your team. 

• Stay compliant with Philippine labor laws: Always ensure all benefits and compensation align with current local regulations. Regularly review and update policies to reflect legal changes and avoid penalties or disputes. 
• Hire trustworthy benefits administrators: Partner with trusted professionals or EORs who understand the nuances of Philippine benefits administration. A knowledgeable partner can manage enrollments, claims, and employee questions more efficiently. 
• Offer customizable employee benefits: Employees have diverse needs. Providing flexible benefits packages allows team members to choose the options that work best for their personal situations. And that helps them feel valued and makes them more likely to stay.
• Use HR technology to optimize operations: Digital HR tools help automate complex tasks, from managing benefits to calculating taxable deductions. They’re useful no matter where your team is based—but especially in countries with tax and labor laws that may be unfamiliar or difficult to navigate.

Hire and pay international employees with Oyster

Tapping into the Philippine labor market gives you access to a skilled, English-speaking workforce that’s known for adaptability and dedication. But managing statutory benefits, compensation, and compliance can distract you from building the best team. Oyster’s EOR service simplifies hiring in the Philippines, from payroll and benefits to compliance with local labor laws.

Book a demo to see how Oyster makes it easy to hire, pay, and support your global team in 180+ countries—including the Philippines—so you can grow with confidence.

About Oyster

Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.

Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.