Thinking about hiring talent in the Philippines? It’s a smart move. The country has a huge pool of skilled, English speaking professionals, and its business process outsourcing industry is valued at a massive $38.7 billion. But expanding globally often comes with a major hurdle: setting up a local legal entity. This process can be slow, expensive, and a compliance nightmare.

This is where an employer of record Philippines service comes in. It’s a streamlined solution that lets you hire Filipino talent quickly and compliantly, without the headache of establishing a local company. Let’s break down everything you need to know.

What Exactly Is an Employer of Record in the Philippines?

An Employer of Record (EOR) is a third party organization that acts as the legal employer for your workers in a specific country. For your business, this means the EOR handles all the core HR and legal tasks on your behalf.

Think of it this way: you find the perfect candidate and manage their day to day work, while the EOR takes care of the rest. This includes:

• Running local payroll in Philippine pesos (PHP)
• Withholding and remitting taxes to the Bureau of Internal Revenue (BIR)
• Enrolling employees in mandatory government benefit programs like SSS and PhilHealth
• Drafting and maintaining locally compliant employment contracts
• Ensuring you follow all Philippine labor laws

Using an employer of record Philippines provider allows you to tap into the local talent pool almost instantly, sidestepping the lengthy process of registering a business, which can take several months.

How to Hire Through an EOR in the Philippines: A Step by Step Guide

Hiring with an EOR is designed to be fast and straightforward. Instead of waiting months to set up an entity, you can onboard new team members in as little as one to two weeks. Here’s how it usually works.

1. Choose an EOR Provider: First, you’ll need to select a partner that operates in the Philippines. Look for a provider with deep local expertise, transparent pricing, and a solid reputation for compliance.
2. Identify Your Candidate: You conduct the interviews and select the person you want to hire. You agree on the role, responsibilities, and salary, just like any other hire.
3. Provide Employee Details: You pass the new hire’s information to the EOR. This includes their full name, address, bank details, and government identification numbers for tax (TIN), social security (SSS), and health insurance (PhilHealth).
4. Sign the Employment Contract: The EOR drafts a fully compliant employment agreement that reflects Philippine labor laws. This contract is technically between the EOR and the employee, but it outlines their role working for your company.
5. Let the EOR Handle the Rest: Once the contract is signed, the EOR officially onboards the employee. They add them to their payroll, enroll them in all mandatory benefit schemes, and manage all ongoing administrative tasks. You simply pay a single monthly invoice that covers the employee’s salary, benefits, and the EOR service fee.

EOR vs. Legal Entity in the Philippines

Deciding between an employer of record Philippines and establishing your own company is a critical choice. Each path has its own advantages depending on your long term goals.

An EOR is ideal for testing a new market or hiring a small team without a large upfront investment. If you plan to scale to dozens of employees, creating your own entity might become more cost effective over time. Many companies start with an EOR and then transition to their own entity once they’re established. See how Rebet built a full engineering team in under five weeks.

How to Select the Best Employer of Record Philippines Provider

Choosing the right partner is crucial for a smooth experience. Here are the key criteria to consider when evaluating an employer of record Philippines service.

• Local Entity Ownership: Does the EOR own its legal entity in the Philippines, or does it work through partners? A directly owned entity often means more accountability and streamlined service.
• Transparent Pricing: Look for a provider with a clear and simple pricing model. A flat monthly fee per employee is often the most predictable. For example, Bolto offers a transparent flat fee of $599 per employee, so you always know what to expect.
• Technology and Platform: A modern EOR should offer a user-friendly global HR platform for onboarding, managing payroll, and tracking time off. This automation saves you significant administrative work.
• Compliance Expertise: Ensure the provider has a strong legal and HR team with deep knowledge of Philippine labor laws. Ask them how they stay updated on changing regulations.
• Customer Support: When employment issues arise, you need responsive, expert support. Check for a dedicated account manager and clear service level agreements (SLAs).

Philippine Labor Laws: A Guide for Global Companies

Navigating a new country’s legal landscape can be daunting. An employer of record Philippines handles the details for you, but it’s still wise to understand the basics.

Employment Contracts

While verbal agreements are recognized, a written employment contract is standard practice in the Philippines. The contract must comply with the Labor Code and should clearly define:

• Job title and responsibilities
• Salary and payment schedule
• Working hours
• Probationary period (up to 6 months)
• Benefits and leave entitlements
• Grounds for termination

The contract cannot offer terms that are less favorable than what the law requires. For instance, you cannot contract out of the mandatory 13th month pay.

Payroll and Tax Compliance

Employers in the Philippines must withhold income tax from employee salaries and make monthly contributions to three key government programs. For a deeper look at structuring multi-country payroll operations, see our Global Payroll Solutions Guide.

1. Social Security System (SSS): A pension fund providing retirement, maternity, and disability benefits. The 2024 contribution rate is 14% of salary, with the employer covering 9.5%.
2. PhilHealth: The national health insurance program. Contributions are typically split 50/50 between employer and employee.
3. Pag-IBIG Fund: A mandatory savings and housing loan program, with contributions usually split equally.

Failure to remit these taxes and contributions on time can result in significant penalties.

Mandatory Employee Benefits

Philippine law mandates several key benefits for employees, which are non negotiable.

• 13th Month Pay: This is a mandatory bonus equivalent to one month’s basic salary, paid on or before December 24th each year.
• Service Incentive Leave (SIL): Employees with at least one year of service are entitled to 5 days of paid leave.
• Holiday Pay: Employees receive full pay on regular holidays (around 12 per year). If they work on a regular holiday, they must be paid 200% of their regular wage.
• Maternity and Paternity Leave: Female employees receive 105 days of paid maternity leave, while married male employees get 7 days of paid paternity leave for the first four children.
• Social Security: Enrollment and contributions to SSS, PhilHealth, and Pag-IBIG are required for all employees.

Working Hours, Overtime, and Holidays

The standard work schedule is 8 hours per day, five or six days a week. Any work performed beyond 8 hours is considered overtime and must be paid at a premium of at least 25% of the normal hourly rate.

The Philippines has two types of public holidays:

• Regular Holidays: Employees get a paid day off. If they work, they receive double pay (200%).
• Special Non Working Days: The principle is “no work, no pay.” If an employee works on this day, they are paid a 30% premium (130% of their regular rate).

Leave Entitlements

Beyond the 5 day Service Incentive Leave, the Philippines has several other legally mandated leaves:

• Maternity Leave: 105 paid days for female employees.
• Paternity Leave: 7 paid days for married male employees.
• Solo Parent Leave: 7 paid days for employees certified as solo parents.
• VAWC Leave: 10 paid days for female employees who are victims of violence.
• Special Leave for Women: A 60 day paid leave for women recovering from gynecological surgery.

Termination and Severance Pay

Philippine law provides strong security of tenure, meaning employees can only be dismissed for a “just” or “authorized” cause.

• Just Cause: Termination due to employee misconduct (e.g., serious misconduct, fraud, gross negligence). No severance pay is required, but strict due process must be followed.
• Authorized Cause: Termination due to business reasons (e.g., redundancy, retrenchment, business closure). The employer must provide 30 days’ notice and pay severance. Severance pay is typically one half to one full month’s salary for every year of service, depending on the reason.

Illegal dismissal can lead to orders of reinstatement with full back wages, making it crucial to handle terminations correctly. This is a key area where an employer of record Philippines partner provides immense value.

The High Cost of Misclassifying Workers in the Philippines

A common mistake global companies make is hiring full time workers as “independent contractors” to avoid paying benefits and taxes. This is known as misclassification, and it carries significant risks in the Philippines.

Philippine courts use a “four fold test” to determine if someone is an employee, with the most important factor being the control test. If you control how, when, and where the work is done, that person is likely an employee, no matter what their contract says.

If a worker is found to be misclassified, your company could be liable for:

• All unpaid back contributions to SSS, PhilHealth, and Pag-IBIG.
• Unpaid 13th month pay for every year of service.
• Back pay for unused leave entitlements.
• Severance pay if the relationship is terminated.
• Potential fines and penalties from government agencies.

Using an EOR eliminates this risk entirely by ensuring every team member is classified and employed correctly from day one. For companies looking to hire talent compliantly without the guesswork, platforms like Bolto provide an all in one solution for recruiting, onboarding, and payroll.

EOR vs. PEO in the Philippines: What’s the Difference?

The terms EOR and PEO (Professional Employer Organization) are often confused, but they serve different purposes.

• An EOR is for companies that do not have a legal entity in the country. The EOR becomes the sole legal employer of your staff.
• A PEO is for companies that already have a legal entity. A PEO enters a co employment relationship to help manage HR and payroll for your existing local company.

For a foreign business expanding into the Philippines without a local subsidiary, an employer of record Philippines is the correct solution.

How Much Does an Employer of Record Philippines Service Cost?

The cost of an EOR in the Philippines is typically a flat monthly fee per employee. This fee generally ranges from $200 to $700 USD. This service fee is charged on top of the employee’s gross salary and the employer’s share of mandatory social contributions.

While some providers have complex pricing tiers or charge a percentage of the salary, a fixed fee provides predictability and makes budgeting easier. For instance, Bolto offers a single flat rate of $599 per month for EOR services globally, which includes payroll, benefits, compliance, and dedicated support. This transparent approach helps startups and growing companies manage their international expansion costs effectively.

Ready to Hire in the Philippines?

Using an employer of record Philippines service is the fastest, safest, and most efficient way to build a team in this dynamic market. It allows you to focus on finding great talent and growing your business, while your EOR partner handles the complexities of local labor laws and administration.

Platforms that combine recruiting with EOR and payroll, like Bolto, offer a seamless experience from sourcing candidates to paying them compliantly. You can hire top engineers and other professionals in days, not months, and manage your entire global team from a single dashboard.

If you’re ready to explore the talent pool in the Philippines, book a demo with Bolto today to see how an all-in-one global hiring platform can accelerate your growth.

Frequently Asked Questions about Employer of Record Philippines

What are the main benefits of using an employer of record in the Philippines?

The primary benefits are speed, compliance, and cost savings. You can hire employees in days instead of the months it takes to set up a legal entity. The EOR assumes the legal responsibility for compliance with local labor laws, and you avoid the high upfront costs of incorporation.

How quickly can I hire someone with an EOR in the Philippines?

Once you have selected your candidate, you can typically have them onboarded and ready to work in one to two weeks. For example, Fiber AI hired five engineers in 10 days. The EOR handles all the administrative and legal paperwork swiftly.

Is an employer of record responsible for paying the 13th month pay?

Yes. The EOR, as the legal employer, is responsible for ensuring all mandatory benefits, including the 13th month pay, are calculated and paid correctly and on time to your employees in the Philippines.

Can I use an employer of record Philippines service for just one employee?

Absolutely. EOR services are perfectly suited for hiring a single employee. It’s a highly scalable solution that works whether you’re hiring one person or building out an entire team.

What happens if an employee managed by an EOR needs to be terminated?

The EOR will manage the entire termination process in full compliance with Philippine labor law. They will ensure the correct procedures for just or authorized cause are followed, calculate any required severance pay, and handle all offboarding paperwork to minimize legal risk for your company.