Hiring at a Glance

The Philippines is a major global BPO and services hub, with a large, English-speaking labor force experienced in international business practices. Employment is governed by the Labor Code and specific laws (RA 6715, 13th Month Pay law, etc.), which provide strong worker protections.

Key features include mandatory written contracts (even probation must be in writing), and statutorily required benefits like the 13th-month salary (one-twelfth of annual pay).

Employers must also make contributions to SSS (social security), PhilHealth (health insurance), and Pag-IBIG (housing fund) for each worker. Due to these obligations and strict termination procedures, many companies use an EOR in the Philippines to manage payroll and compliance seamlessly.

‍

Key Characteristics of Talent Market

• Young, educated workforce: Over half the population is under 25. Many Filipino graduates hold degrees in IT, engineering, and business. English fluency is a major strength.
  
• Service orientation: Decades of BPO culture mean many workers specialize in customer service, technical support, back-office finance, and healthcare support.
  
• Cost-effective labor: Wages are lower than in mature markets, making the Philippines attractive for call centers, shared services, and tech outsourcing.
  
• Diaspora outlook: Exposure to overseas culture (OFW remittances) creates a globally-minded workforce accustomed to international standards.
  
• Stable regulatory environment: The labor laws are well-established, and social benefits (like health insurance) are managed by government agencies, adding predictability.

‍

Most In-Demand Skills in 2026

• Customer & Technical Support: Call center agents, technical support specialists, and help-desk staff (English language skills are essential).
  
• Finance & Accounting: Accountants, auditors, and financial analysts for outsourcing firms and international subsidiaries. Shared-services centers demand payroll and compliance professionals.
  
• Information Technology: Software developers (especially .NET, Java, and mobile), QA/test engineers, and data analytics professionals. The Philippines’ tech industry is growing rapidly.
  
• Healthcare & Life Sciences: Medical technologists, clinical research associates, and pharmacists for outsourcing and local healthcare.
  
• Administrative & Management: Project managers, HR specialists, and business operations managers to support corporate functions.

‍

Top Universities Supplying Talent

• University of the Philippines (Diliman) – National University, strong in science and engineering.
  
• Ateneo de Manila University – Premier private institution with top IT and business programs.
  
• De La Salle University (Manila) – Renowned for engineering, computer science, and IT.
  
• University of Santo Tomas (UST) and University of San Carlos (Cebu) – Other noted sources of talent.

‍

Salary Benchmarks for Roles

Annual gross salaries (PHP):

• Software Engineer: ₱800,000–1,500,000. (Mid-level ₱800k–1M; senior up to ₱1.5M.)
  
• Data Analyst / IT QA: ₱700,000–1,200,000.
  
• Accountant / Finance Analyst: ₱600,000–1,000,000.
  
• Customer Service Representative (voice): ₱240,000–480,000 (approx. ₱20k–40k monthly).

‍

Employer of Record vs Legal Entity Setup in the Philippines

‍

To legally hire employees, a company must

• Register with Philippine authorities: Incorporate with the SEC (Securities and Exchange Commission) or as a branch/rep office. Obtain a BIR (tax) ID and register as an employer for tax withholding.
  
• Register new hires: Notify DOLE (Department of Labor) of new hires. Register each employee with SSS, PhilHealth, and Pag-IBIG within 30 days of hire. Pay and remit contributions (see next section).
  
• Tax withholding: Withhold and remit payroll taxes: employee income tax (after applying the monthly withholding table) and, for some foreigners, a 25% rate on foreign-sourced income.
  
• Employment contract: Provide a written employment contract (basic terms, salary, and benefits). Probation cannot exceed 6 months for rank-and-file employees.
  
• Mandated benefits: Pay at least the legal minimum wage or the rate in applicable CBA. Grant statutory leave (service incentive leave, maternity leave, etc.). Provide 13th-month pay (mandatory year-end bonus equal to 1/12 of annual basic salary).
  
• Labor law compliance: Follow Labor Code rules for work hours (typically 8/day, 5-6 days/week), overtime pay (125%–200% rates), and termination (just/authorized cause with due process).

‍

Cost of Entity Setup

Establishing a Philippine entity can be relatively expensive. Government incorporation fees alone are several thousand USD (about $2,500 for SEC registration plus mandatory deposit ~ $1,000+).

Foreign-owned companies often need a minimum capital of USD200,000 (though this can be reduced with conditions). Additional costs include local licenses (Barangay, Mayor’s permit), securing a physical office, and mandatory annual renewals.

Realistically, budgeting USD3,000–5,000 or more for initial setup is prudent. Ongoing costs (audits, labor insurance) add to the overhead. For this reason, many firms choose to hire through an EOR rather than incur the full setup expense.

‍

What Hiring Through an EOR Means in the Philippines

An Employer of Record (EOR) in the Philippines becomes the legal employer on paper, while the employee works exclusively for your company. You retain full operational control over responsibilities, performance, and deliverables, while the EOR assumes responsibility for all statutory employer obligations under Philippine labor and tax law.

The Philippines has a highly employee-protective labor regime, governed primarily by the Labor Code of the Philippines, Department of Labor and Employment (DOLE) regulations, and extensive case law. Foreign companies often underestimate risks related to regularization, mandatory benefits, 13th-month pay, and termination rules, which can quickly escalate into labor complaints or reinstatement orders.

An EOR in the Philippines handles:

• Philippines-compliant employment contracts
  
• Payroll processing in PHP
  
• Withholding tax on compensation
  
• Social Security System (SSS) contributions
  
• PhilHealth contributions
  
• Pag-IBIG (HDMF) contributions
  
• 13th-month pay calculation and release
  
• Statutory leave and holiday compliance
  
• Terminations, notice, and due-process handling
  
• Correct worker classification (employee vs contractor)

This model works best for companies that want to hire in the Philippines quickly, avoid entity setup, or scale remote teams without inheriting local employer risk.

‍

Risk Involved in Both Models

The Philippines’ employment system is statute-driven, process-heavy, and strongly protective of employees, particularly around job security.

Key characteristics of Philippine labor compliance:

• Written employment contracts are mandatory
  
• At-will termination does not exist
  
• Probationary employment is tightly regulated
  
• Regularization occurs automatically if mishandled
  
• Labor tribunals often favor employees

Payroll or compliance errors can result in:

• Backdated statutory contributions
  
• Mandatory payment of benefits and wages
  
• Illegal dismissal claims
  
• Reinstatement orders or separation pay awards
  

‍

EOR Vs. Entity: When to use What?

‍

Why is an EOR the Most Efficient Way to Hire in Philippines?

The Philippines offers a large, English-speaking, globally experienced workforce but it also enforces strict labor protections that foreign employers must follow precisely.

An EOR is not simply a payroll provider. It is the legal employer recognized by Philippine authorities, responsible for labor compliance, tax filings, statutory contributions, and dispute handling while you retain control over day-to-day work.

This separation allows foreign companies to scale in the Philippines without inheriting employer obligations that can be costly and time-consuming to unwind.

‍

#1. EOR Simplifies Mandatory Benefits & Regularization Compliance

Philippine employment costs are driven by mandatory benefits and tenure-based protections, not just salary.

Employers must comply with:

• SSS, PhilHealth, and Pag-IBIG contributions
  
• 13th-month pay (mandatory)
  
• Service incentive leave
  
• Holiday pay and premium pay rules
  
• Regularization timelines

Example:

‍

‍

An EOR ensures benefits and employment status are handled correctly from day one preventing automatic liability.

‍

#2. EOR Eliminates Payroll, Tax & Statutory Misapplication Risk

Philippine payroll risk arises from statutory withholding accuracy and benefit treatment, not just gross pay.

‍

‍

Incorrect payroll handling can lead to:

• Retroactive contribution payments
  
• DOLE enforcement actions
  
• Employee complaints

EOR systems are built on Philippines-specific payroll logic, ensuring audit readiness.

‍

#3. EOR Reduces Legal Exposure During Termination & Exit

The Philippines does not permit at-will termination. Employers must establish:

• A valid legal ground (just or authorized cause)
  
• Written notices
  
• Opportunity to be heard
• Procedural due process

‍

‍

An EOR safeguards employers by:

• Drafting enforceable employment contracts
  
• Guiding lawful termination procedures
  
• Managing notices and documentation
  
• Acting as employer in labor proceedings

This protection is critical in a market where termination errors often lead to reinstatement with back wages.

‍

#4. EOR Saves Capital & Operating Cost Beyond Hiring

Maintaining a Philippine legal entity creates ongoing obligations regardless of team size.

‍

‍

EOR converts fixed compliance costs into variable, employee-based costs, enabling flexible scaling.

‍

EOR vs. PEO in the Philippines: How to Decide the Right Hiring Model?

A PEO in the Philippines cannot legally employ workers. A local entity is required.

• PEO: HR and payroll support only
• EOR: Legal employer + liability holder

‍

The decision comes down to one question:

Do you want to be the legal employer in the Philippines?

If not, the EOR model is the safest option.

‍

Payroll, Taxes, and Monthly Compliance

• Salary computation: Gross pay minus statutory deductions. Overtime (beyond 8 hours/day) is paid at 125% of hourly rate (30% on rest days, 200% on holidays). Night differential (10% extra for 10pm–6am) must be added if applicable.
  
• Mandatory deductions: Withhold employee portions of SSS, PhilHealth, and Pag-IBIG from payroll. Employers also contribute an equal (SSS, PhilHealth) or larger (Pag-IBIG) share. For example, current rates include ~8.5% employee + 8.5% employer for SSS, 1.5% employee + 3% employer for PhilHealth, and 2% flat for Pag-IBIG each.
  
• 13th-month accrual: Employers typically accrue the 13th-month pay monthly (1/12th of monthly salary), and pay it by December 24.
  
• Tax withholding: Apply the BIR withholding tax tables each month. Remit both the withheld income tax and employer contributions to SSS/PhilHealth/Pag-IBIG by the required deadlines (usually the 10th of the following month).
  
• Reporting: Submit monthly Reports of Contribution (SSS Form R-3), and monthly Alphalist (BIR Form 1604-CF by Jan 31). Issue annual Form 2316 (certificate of compensation/payment) to employees.
  
• Recordkeeping: Maintain employment records, tax returns, and contribution receipts. Failure to remit on time can incur penalties.
  

‍

Salary Structure Compliance Risks

• 13th Month Pay: Must be equivalent to 1/12 of the basic salary earned in the year. If an employee has an incomplete year, pro-rate accordingly. Underpaying or delaying the 13th-month pay is a common violation.
  
• Contributions base: Social contributions (SSS/PhilHealth) should be based on the full monthly salary. Some employers err by excluding allowances or part-time supplements; these must be included up to statutory caps.
  
• Work hours/overtime mispay: For non-exempt rank-and-file employees, failing to pay overtime or premiums at correct rates (125%, 130–200% on special days) will breach labor law. Mis-labeling overtime pay as part of “basic salary” to understate actual overtime premium is a risk.
  
• Termination pay: If terminating without lawful cause, employers must pay separation pay (half-month per year or more). Skipping due process (no notice/hearing) can trigger costly reinstatement orders.

‍

Monthly Payroll Operations

• Gross-to-net calculation: Process each employee’s basic salary, allowances, overtime and deductibles. Include accrual of 13th month.
  
• Statutory deductions: Deduct employee SSS, PhilHealth, Pag-IBIG contributions and income tax.
  
• Employer contributions: Add the employer’s share of SSS, PhilHealth, Pag-IBIG. Remit these amounts to respective agencies by the due dates (SSS/PhilHealth by the 10th of the next month, Pag-IBIG by end of next month).
  
• Payslips: Prepare monthly payslips detailing gross earnings, deductions, and net pay for each employee.
  
• Government filings: File monthly and annual reports (SSS contribution report, BIR remittance forms, Alphalists). At year-end, distribute Form 2316 to all employees and submit annual reconciliation to BIR.
  
• Records: Keep payroll register, tax receipts, and employee files. Prepare for possible DOLE or tax audits by ensuring all mandatory contributions and withholdings have been made accurately.

‍

Step-by-Step Onboarding Process With an EOR in the Philippines

Hiring in the Philippines requires strict alignment with labor law, tax authorities, and social security agencies. Below is a compliant onboarding framework through Bolto EOR.

‍

1. Confirm a Fully-Compliant Philippine Employment Entity

Verify that the EOR employs staff through a registered Philippine entity authorized to hire employees and register them with all statutory bodies.

‍

2. Validate Role, Employment Type & Work Location

Confirm job role, probationary status, and work location. These details affect regularization timelines and statutory benefits.

‍

3. Request a Full Cost-to-Company Breakdown

The quote should include:

• Gross salary
  
• Employer statutory contributions
  
• 13th-month pay treatment
  
• Tax withholding
  
• EOR management fee
  

Accurate forecasting avoids compliance surprises.

‍

4. Submit Hiring & Growth Forecast

Provide headcount plans to anticipate payroll volume and compliance workload.

‍

5. Generate Philippines-Compliant Employment Contract

Contracts must include:

• Job scope and compensation
  
• Probation terms
  
• Leave and holiday entitlements
  
• Termination and due-process clauses
  

EOR-drafted contracts align with Labor Code requirements.

‍

6. Register Employee with Authorities

The EOR registers the employee with:

• Bureau of Internal Revenue (BIR)
  
• SSS
  
• PhilHealth
  
• Pag-IBIG
  

Registration must be completed before payroll begins.

‍

7. Run Payroll & Maintain Ongoing Compliance

The EOR manages:

• Monthly payroll
  
• Tax and statutory filings
  
• Leave and benefit tracking
  
• Compliance documentation
  

Regulatory changes are monitored and applied automatically.

‍

Build Your Philippines Team with Bolto EOR

Expanding into the Philippines should not require navigating one of Asia’s most employee-protective labor systems alone.

Bolto’s Employer of Record model absorbs that complexity so you can focus on building teams, not managing enforcement risk.

‍

Local Employment Compliance, Fully Managed

Bolto assumes legal employer responsibility in the Philippines, managing:

• Labor Code-compliant contracts
  
• Payroll, tax, and statutory contributions
  
• Mandatory benefits and leave
  
• Labor authority interactions
  

You control execution and outcomes, Bolto carries statutory liability.

‍

Hire Without Entity Setup or Long-Term Commitment

Entity setup in the Philippines creates fixed obligations even if hiring plans change.

With Bolto EOR, you can:

• Hire in weeks
  
• Scale remote teams confidently
  
• Exit without entity wind-down

‍

Transparent Costs, No Compliance Surprises

Bolto provides upfront cost visibility with no hidden statutory charges, penalty pass-throughs, or retroactive corrections.

‍

Full Employee Lifecycle Support

From onboarding to lawful termination, Bolto manages:

• Employment documentation
  
• Due-process termination steps
  
• Labor dispute handling
  

This shields your company from direct litigation and compliance exposure.

‍

Built for Risk-Controlled Growth in the Philippines

The Philippines rewards hiring but penalizes procedural mistakes. Bolto’s EOR model enables compliant growth without inheriting employer liability.