You've found a strong candidate in Manila. Now you need a compliant way to employ them, and you don't have a local entity.
That's how many companies start hiring in the Philippines. Some are already distributed and want a wider talent pool. Some have chosen the Philippines for a specific skill set. Others want to test the market with one or two hires before building a bigger presence.
The roles go well beyond customer support. Companies employ Filipino talent in customer success, finance and accounting, admin support, software engineering, and training. Increasingly they hire at senior levels too.
That's where an employer of record (EOR) comes in.
What an EOR does in the Philippines
An EOR is an organization that acts as an employer for legal and tax purposes. EORs perform human resources and legal functions, managing tasks like payroll, taxes, compliance, and benefits for your remote employees. These third-party organizations take responsibility for all formal employment tasks, allowing you to quickly hire workers in global markets.
Simply put, there are many benefits that can come from partnering with an EOR. Talent based in the Philippines becomes much more accessible once you have one of these organizations on your side, which can also eliminate the typical stressors of global employment. For example, Oyster handles all aspects of overseas employment on your behalf, including:
- Benefits
- Compliance with local laws
- Onboarding
- Offboarding
- Payroll
- Time off management
What's different about employing in the Philippines
The most common mistake is assuming Philippine employment works like US employment with a currency conversion. It doesn't. 13th-month pay, Philippine holidays, service incentive leave, and night shift differential all follow their own rules.
The real adjustment isn't just the hiring process itself, but it's understanding the compliance layers.
While sourcing talent from the Philippines can grant you access to talented tech professionals and many other skilled workers, there are important differences from U.S. hiring practices to keep in mind. Here are a few considerations for hiring talent in the Philippines.
Paid time off and leave
Philippine law doesn't require separate paid sick leave. Instead, employees earn five days of service incentive leave each year after 12 months of service. They can use it for illness or vacation.
Other statutory leave includes:
- Up to 105 days of paid maternity leave per pregnancy, and 60 days for miscarriage or emergency termination of pregnancy
- Seven days of paid paternity leave for married fathers, for the first four deliveries of their legal spouse
Because five days is a low baseline, extra paid time off is one of the most common ways employers make an offer stand out. More on that below.
13th month pay
13th-month pay isn't a discretionary Christmas bonus. It's a statutory benefit. Rank-and-file employees who've worked at least one month in the calendar year must receive it no later than December 24.
It equals one-twelfth of the basic salary earned during the calendar year. The key word is basic. The Department of Labor and Employment (DOLE) excludes overtime, premium pay, night shift differential, holiday pay, and certain allowances from basic salary. For someone on the same salary from January to December, 13th-month pay works out to one extra month of basic pay. Someone who starts mid-year gets a prorated amount.
Most employers pay it as a single lump sum in December. Some split it into a mid-year installment and a year-end balance.
13th-month pay and other benefits are tax-exempt up to ₱90,000 combined. Anything above that is taxable.
How to budget for it: treat 13th-month pay as an accrued cost from day one, not a December surprise. Build it into the annual budget for the role. Make sure your offer and contract show base salary and 13th-month pay as separate items.
Working hours and overtime
Philippine law sets normal working hours at eight a day, and the work week can run to six days, or 48 hours. In practice, most global companies and many local businesses run a five-day, 40-hour week.
The bigger issue for global employers is time zones. If your Filipino team member covers US business hours, their schedule may trigger premium pay.
Probationary and notice periods
The probationary period in the Philippines is six months. Employees must provide a minimum of 30 days’ notice for resignations, while businesses are required to provide the same amount of notice for dismissals for authorized causes. Dismissals for just causes, such as habitual neglect of duty or employee misconduct, do not require a notice period; however, a specific process must be followed before employment can be terminated. Employees are entitled to severance pay, but only if they were terminated for authorized causes. This could amount to up to one month’s salary for each year of service.
Find out more about hiring in the Philippines in our complete guide.
Whether you’d like to hire in the Philippines or elsewhere, Oyster simplifies the process with our contractor management and global hiring tools. We eliminate the hassle of onboarding, payments, and paperwork.
Benefits that make an offer competitive
Beyond the statutory minimum, the most common benefits in competitive Philippine offers are:
- Private health coverage (HMO), including dependents
- Extra paid time off and paid sick leave
- Allowances for internet and mobile costs
- Wellness or professional development support
HMO coverage carries the most weight. For many candidates, it shapes how they evaluate an offer as much as base salary does, and sometimes more.
Employees vs. contractors
The Philippines has a large freelance workforce, and it's tempting to start with a contractor agreement for a single hire. But the label in the contract doesn't decide the relationship. Philippine courts use the four-fold test:
1. Who selected and engaged the worker
2. Who pays their wages
3. Who can dismiss them
4. Who controls how the work is done
Control carries the most weight. If someone works as an integrated member of your team, follows your processes, and works under your direction in an ongoing role, calling them a contractor doesn't make them one.
If the arrangement is challenged, you may owe back benefits, statutory contributions, and taxes. Genuine independent contractor relationships do exist. Look at how the work actually happens, not what the contract says. Not sure where a role falls? Try Oyster's misclassification analyzer.
What onboarding looks like
Here's how it works for Jitasa, which regularly employs accountants in the Philippines through Oyster:
1. The customer submits the employment details in the Oyster platform: personal information, compensation, start date, and job title
2. The new team member completes their onboarding documents, usually in a day or two. Most of that time goes to gathering government IDs.
3. Oyster drafts a locally compliant employment agreement within about 24 hours
4. Oyster answers any questions, and the contract is signed
For Jitasa, a smooth run takes about five to six days from offer acceptance to signed contract. It helps that Jitasa uses standardized employment terms for every team member. Oyster now employs Philippine team members through its own local entity, which removes the extra days that coordinating with partners used to add.
Candidates sometimes ask whether they're being hired as a contractor or a full-time employee. Jitasa now states up front that every new hire is a full-time employee.
What your new hire will ask: when they'll be paid, what leave they get, whether they get 13th-month pay, whether they have HMO coverage and for how many dependents, and who to contact if something goes wrong. Your company is on the other side of the world, and there's no HR office down the hall. Clear answers to those questions give your new hire confidence from day one.
What's changed since 2022
Philippine compliance isn't something you set up once. Three changes since 2022 affect your costs:
- Minimum wages keep rising. Each region sets its own wage order, so there's no single national figure. In Metro Manila (NCR), the non-agricultural minimum rose from ₱645 to ₱695 a day in July 2025, and to ₱755 in July 2026.
- SSS contributions went up in January 2025. The total rate is now 15%: 10% from the employer and 5% from the employee. The maximum monthly salary credit rose to ₱35,000. This affects payroll costs for every existing employee, not just new hires.
- DOLE updated occupational safety and health requirements in 2025, including health and safety training obligations for employers.
Demand has shifted too. The Philippine IT and business process management sector reached roughly 1.9 million workers in 2025, according to IBPAP, and more of that growth is in higher-value work. More companies now ask where to find the right skills and how to build a lasting team around them, not just how to hire at a lower cost.
How much does it cost to hire in the Philippines?
Check out our cost of hiring in the Philippines tool to work out how much tax you and your employee might have to pay on top of salary payments.
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.
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