Philippines PEO & Employer of Record

WeHG provides an International PEO and world Employer of Record service in the Philippines to companies willing to get into the Philippines market or hire local/expat employees in this country.

The traditional approach requires setting a subsidiary in the Philippines.  Notwithstanding that, our solution allows you to start the operations in the Philippines within days hence save time and money.  WeHG would hire employees on your behalf while you maintain entire operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf.

Philippines fast facts

Population, million: 109
Land area: 299,000 km²
Capital: Manila
Local currency: Philippine peso (₱) (PHP)

GDP per capita:$ 8,573
GDP in currency:$ 933.913

Philippines, island country of Southeast Asia in the western Pacific Ocean. It is an archipelago consisting of some 7,100 islands and islets lying about 500 miles (800 km) off the coast of Vietnam. Manila is the capital, but nearby Quezon City is the country’s most-populous city. Both are part of the National Capital Region (Metro Manila), located on Luzon, the largest island. The second largest island of the Philippines is Mindanao, in the southeast.

Hiring, Negotiating and Doing Business in Philippines

Necessity of written employment contract

In general, employment contracts are written in English, but employers must provide dual language contracts, with the other language being Filipino, if the employee in question is a Filipino national. The aim is to ensure that both parties understand the exact terms of the arrangement. Furthermore, the contract must clearly state the employment terms relating to each employee type in order to avoid confusion or future disputes.

Different forms of engagement: employment, contracting, work with private entrepreneur

• Regular or Permanent Employment
  Regular or Permanent Employment is when an employee performs activities that are usually necessary or desirable in the usual business or trade of the employer. They enjoy the benefit of security of tenure provided by the Philippine Constitution and cannot be terminated for causes other than those provided by law and only after due process is given to them.
• Term or Fixed Employment
  Term or Fixed-Term Employment is when the employee renders service for a definite period of time and the employment contract must be terminated after such period expires. This type of employment is determined not by the activities that the employee is expected to perform but by the commencement and termination of the employment relationship.
• Project Employment
  Project Employment is defined when an employee is hired for a specific project or undertaking and the employment duration is specified by the scope of work and/or length of the project. A project employee may acquire the status of a regular employee when they are continuously rehired after the completion of the project or when the tasks they perform are vital, necessary, and indispensable to the usual business or trade of the employer.
• Seasonal Employment
  Seasonal Employment is when the work to be performed is only for a certain time or season of the year and the employment is only for that duration. This type is common practice to Retail, Food and Beverage, Hospitality, and other related industries as an augmentation to their workforce to cover for the demand during peak seasons.
• Casual Employment
  There is Casual Employment when an employee performs work that is not usually necessary or primarily related to the employer’s business or trade. The definite period of employment should be made known to the employee at the time they started rendering service.

Philippines Employment Contract

Types of employment agreements

In the Philippines, the following are the recognized types of contracts (regarding types of employment): (1) regular; (2) casual; (3) project; (4) seasonal; (5) fixed-term; and (6) probationary (Read more in Different forms of engagement: employment, contracting, work with private entrepreneur section).

• Regular employment, where an employee continues working for an indefinite period;
• Probationary employment, where an individual is subject to a period of observation and evaluation, with the aim to assessing their suitability for permanent employment;
• Project-based employment – this comprises fixed period, term-based or seasonal employment based on when the project expires, its length and whether it is a seasonal or incidental activity.
• Employment contracts are required in the case of each of these types of employment. While they may be oral or written, they must satisfy the essential requirements and minimum statutory standards laid down in the Labour Code. Any element of an employment contract that fails to do so is considered invalid.

Philippines working hours

No employee in the Philippines must work for over 8 hours a day. He is worthy of a 1-hour lunch break daily, without fail. However, a worker is only required to work for a maximum of 8 hours per day from the office. There are no laws that mandate his working hours from home.

Working hours include the time during which the employer is required to be at the workplace, all hours that he is asked to work, and the breaks in between to avoid burnout.

Overtime

Since the maximum work hours allowed in the Philippines are 8-hours, in case an employee works for longer, he must be paid extra. This includes additional compensation of 25% of his regular work wage.

According to the law, the employer must pay extra compensation on work performed within the regular 8 hours during non-working days (rest days, regular and special holidays).

Vacation leave in Philippines

All employees must have a rest period of at least 24 consecutive hours after every six regular work days. As per the scheduling of the employer, a weekly rest day is subject to a collective bargaining agreement. The weekly rest day follows the rules and regulations of the Secretary of Labor and Employment.

Note that the employer must respect the rest preference of employees if it is related to their religion.

Philippines Maternity Leave

Mothers in the Philippines are now entitled to 105 days of maternity leave under the new law.  The leave is fully paid, and an additional 30 days is available without pay if the employer is given 45 days’ notice prior to the end of the leave period.

Married, male employees can benefit 7 days of paternity leave with the first 4 days being paid (can be used for up to 4 children).  Further, the new law allows for the mother to transfer 7 days of her 105 days of maternity leave to the father, even if they are not married, for a total of 14 days of paid leave.

Philippines Severance Laws

There is no notice period prior to a dismissal for a just cause. The employer is only required to give a 30-day notice to the employee in the event of termination for business reasons or disease related reasons. Authorized dismissals also require a 30-day notice to the Department of Labour and Employment (DOLE)

Philippines Tax

• Similar to social security in the United States, the Philippines has a social security system which is a mandatory employee benefit.  The Philippines Social Security System consists of the following:
• Social Security System (SSS):  the SSS was created to provide private employees and their families with protection against disability, sickness, old age, and death. All persons under the age of 60 who earn income from employment of more than P1,000 per month are required to contribute to the SSS.  Employee contributions for social security are deducted from employee’s salary payments. These are withheld by the employer on a monthly basis.
• Home Development Mutual Fund (HDMF):  the HMDF is a provident savings system providing housing loans to private and Philippine government employees, and to self-employed persons who elect to join the Fund.
• Philippine Health Insurance Corporation (PhilHealth): PhilHealth is administered by the Philippine National Health Corporation, which is designed to provide employees with a practical means of paying for adequate medical care in the Philippines.
• Employers in the Philippines are required to make contributions to the above funds. The current monthly SSS contribution rate as of 2020 is maximum of PHP 1,630 from the employer and PHP 800 from the employee.

Health Insurance Benefits in Philippines

There is no statutory sick leave above what is mentioned above in The Philippines. That being said, employee contracts, company policy, and collective bargaining agreements often include sick leave benefits.

An employee who has paid at least three monthly Social Security contributions in the 12 month period prior to the illness or injury, is confined for more than three days in a hospital or elsewhere, and has the approval of the SSS, is entitled to be paid by his employer at 90% of his average daily salary per day of confinement, but only after all sick leave with pay due from the employer has been exhausted. The employer is entitled to 100% reimbursement from SSS. The employee must submit directly to SS to receive reimbursement.

Additional Benefits in Philippines

The 1987 Philippine Constitution recognizes and guarantees the following rights of workers:

• Self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with the law
• Security of tenure, humane conditions of work, and a living wage
• Participation in policy- and decision-making processes affecting the workers’ rights and benefits as provided by the law
• A just share in the fruits of production vis-à-vis the right of the employer to reasonable returns on investments

General market practice benefits/additional allowances

• A pool of English-speaking people who are highly trainable. Their capabilities and merits as blue-collar workers, technicians, professionals and managers have been confirmed in postings with foreign firms operating in the Philippines and overseas.
• A large potential market for consumer goods on account of its fast-growing population. Its ASEAN affiliation provides further opportunities for access to the ASEAN Free Trade Area (AFTA).
• The foreign-investor friendly posture of government. It has manifested its commitment to create conditions that attract foreign investments. Liberalized policies and regulations on foreign investments continue to be put in place.
• A conducive location for Asia-Pacific expansion programmers & production facilities, further supported by the governments’ grants of fiscal concessions.
• The opening of industries previously restricted like the telecommunications industry, transportation, banking, retail trade energy & post extractive petroleum processing & distribution industry, for the participation of foreign investors.
• The potential growth construction enterprises can be attained in the country because of the implemented build-operate-transfer (BOT) scheme by the government. The said scheme provides for the development opportunity of construction enterprises, investors funding the construction, operates the facility for a fixed term, recover their investments plus adequate rate of return and fees then transfer the facility to the government.
• Availability and accessibility of special economic zones and free ports in various parts of the country where infrastructure supports are adequately provided and locators are granted fiscal and non-fiscal incentives.
• The competitive edge of the information and communications technology (ICT) industry which includes call centers. The said industry is booming in the country and is generating employment opportunities for local citizens.

Philippines Holidays

There are 12 regular holidays, namely:

• New Year’s Day (1 January)
• Maundy Thursday (movable date)
• Good Friday (movable date)
• Eidul Fitr (movable date)
• Eidul Adha (movable date)
• Araw ng Kagitingan (Monday nearest 9 April)
• Labor Day (Monday nearest 1 May)
• Independence Day (Monday nearest 12 June),
• National Heroes Day (Last Monday of August)
• Bonifacio Day (Monday nearest 30 November)
• Christmas Day (25 December)
• Rizal Day (Monday nearest 30 December)

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.