Doing Business & Hiring in the Philippines

Should you hire through an EOR or set up a Philippine entity?

Use an Employer of Record when you want people working in the Philippines without incorporating: the EOR employs them through its own entity, registers them with SSS, PhilHealth and Pag-IBIG, and carries the statutory exposure. Incorporate when you need to sign local revenue contracts, hold a licence, or sponsor work authorisation yourself at scale.

The Philippines is not a market where the paperwork is the hard part. What catches foreign employers is the obligation stack that attaches the moment a first employee starts: four separate statutory registrations, monthly remittance deadlines to four agencies, 13th month pay that is due whether or not the business made money, and a termination regime where the wrong label on a perfectly genuine business decision doubles the bill. None of that is difficult once it is running. All of it is expensive to retrofit.

Companies rarely get the Philippines wrong at the entity stage. They get it wrong three months later, at the first payroll cut-off after a wage order, or a year later, when a redundancy is served on the employee but not on the DOLE Regional Office.

EOR vs. your own Philippine entity

The clean side-by-side most employers actually need. For the mechanics of the EOR side, see our Philippines Employer of Record guide; if you already have local headcount and want a co-employment structure instead, see PEO in the Philippines.

Whichever path you take, the arithmetic is the same. Model it against the real numbers with our Philippines employment cost calculator, or read the sections below for where each figure comes from.

What are the statutory contributions in the Philippines in 2026?

Four of them. SSS takes 15% of the Monthly Salary Credit, split 10% employer and 5% employee. Employers also pay the EC premium of ₱10 or ₱30. PhilHealth is 5% of monthly income, shared equally. Pag-IBIG is 2% employer and 1% or 2% employee. Every one of them is capped.

SSS: the part that splits in two

SSS is one 15% rate but two funds. The regular SS programme covers the first ₱20,000 of Monthly Salary Credit; the portion above ₱20,000 and up to the ₱35,000 ceiling goes to the Mandatory Provident Fund, also known as WISP. At the ceiling the employer's ₱3,500 is therefore ₱2,000 of regular SS plus ₱1,500 of MPF — one payment, two lines. Rates and the MSC brackets follow SSS Circular 2024-006, which remains operative in 2026.

On top of that sits the Employees' Compensation premium: ₱10 where the MSC is below ₱15,000 and ₱30 from ₱15,000 upward. It is employer-only and must never appear as an employee deduction. The maxima are therefore ₱1,750 for the employee and ₱3,530 for the employer (₱3,500 plus the ₱30 EC premium).

PhilHealth: the component that caps last

PhilHealth confirmed the 5.00% premium for 2026 on 6 May 2026. It is shared 50/50, with an income floor of ₱10,000 — a fixed premium of ₱500, so ₱250 each side — and a ceiling of ₱100,000, giving a capped premium of ₱5,000 and a maximum of ₱2,500 on each side. Because that ceiling sits far above the SSS and Pag-IBIG caps, PhilHealth is what keeps employer cost rising after everything else has flattened.

Pag-IBIG: small, capped, and frequently mis-keyed

Under HDMF Circular 460 the employee pays 1% where monthly compensation is ₱1,500 or less and 2% above that; the employer always pays 2%. Both are computed on a Maximum Fund Salary of ₱10,000, so each side caps at ₱200 per month. It is the smallest of the four and the one payroll systems most often carry forward at the wrong base after a salary increase.

If you have a Philippine entity and want the monthly run, the four remittances and the reports off your plate, our payroll outsourcing in the Philippines handles it end to end.

What is the maximum employer statutory cost per employee?

₱6,230 per employee per month. Because every Philippine contribution has a ceiling, employer statutory cost stops growing entirely once salary passes roughly ₱100,000 a month. Above that point a raise costs you the raise and nothing else. Almost nobody publishes this capped total, which is why so many Philippine budgets are modelled as an open-ended percentage.

How ₱6,230 is built

The employee side caps too, at ₱4,450 a month, giving a combined statutory ceiling of ₱10,680. For a senior hire this changes the shape of an offer: past the cap, gross salary and total employer cost move together one-for-one, which makes the Philippines unusually cheap at the top of the market compared with jurisdictions where employer contributions run uncapped. Model your own bands in the Philippines employment cost calculator.

What is the minimum wage in Metro Manila right now?

On 12 August 2026 the enforceable NCR minimum wage is ₱695 per day for non-agriculture and ₱658 for the small-establishment and agriculture tier. A wage order raising it to ₱755 exists, but a court has suspended it. Both numbers matter, and neither is safe to quote alone.

Wage Order NCR-27 in full

Daily rates, National Capital Region. Tranche figures are the rates ordered by Wage Order NCR-27; their effectivity is suspended as described above. Status recorded 12 August 2026.

The practical drill for anyone running Philippine payroll this quarter: confirm the current status with the Regional Tripartite Wages and Productivity Board for your region before each cut-off, keep a written record of what you paid and why, and do not reverse an increase you have already granted. Regions outside the NCR run their own wage orders on their own timetables — a rate confirmed for Metro Manila tells you nothing about Cebu or Davao.

How does 13th month pay work?

It is total basic salary earned in the calendar year divided by 12, payable not later than 24 December, to every rank-and-file employee who worked at least one month during the year. Presidential Decree 851 makes it mandatory regardless of position, designation, employment status — or whether the company was profitable.

• Who is covered: all rank-and-file employees with at least one month of service in the calendar year, whatever their position, designation or employment status.
• Who is excluded: government employees; employers already paying an equivalent amount or more; household helpers; and employees paid purely on commission, boundary or task basis. Piece-rate workers are covered.
• Tax: exempt up to ₱90,000 when combined with other benefits.
• Reporting: the DOLE compliance report is due by 15 January.

What leave and premium pay are employees entitled to?

The statutory leave floor is thin — five days of Service Incentive Leave a year — but parental leave is generous and premium pay is where payroll actually goes wrong. Maternity leave runs to 105 days on full pay, and a regular holiday worked is paid at 200% of the daily rate.

Service Incentive Leave (Article 95)

Five days with pay per year, available after one year of service and convertible to cash if unused. The exclusions are wide: government employees, managerial employees, field personnel, persons in personal service, employees who already enjoy five or more days of paid vacation leave, and establishments with fewer than 10 employees. Most professional employers offer materially more than the floor, and the market expects it.

Maternity leave (RA 11210)

• 105 days on full pay for live childbirth — whatever the mode of delivery, and regardless of the employee's civil status.
• +15 days (120 in total) for qualified solo parents under RA 8972.
• 60 days on full pay for miscarriage or emergency termination of pregnancy.
• An option of 30 further days unpaid.
• Up to 7 days transferable to the father — married or not — or to an alternate caregiver.
• No limit on the number of availments.

Paternity leave (RA 8187)

7 days on full pay for married male employees cohabiting with their spouse, for the first four deliveries. Note the difference from the maternity rule: the transferable seven days under RA 11210 are available to a father whether or not he is married, while RA 8187 paternity leave is not.

Premium pay rates

Labor Code Articles 86–93, reconfirmed by DOLE Labor Advisory 12-25. These are the multipliers payroll gets wrong most often, particularly the rest-day and holiday combinations.

How do you terminate employment lawfully?

For authorised causes under Articles 298 and 299, serve written notice on both the employee and the DOLE Regional Office at least 30 days before the effective date. Serving only one of the two is fatal. Then pay the separation pay attached to the specific ground you actually relied on.

Separation pay by ground

A fraction of at least six months counts as a whole year in every one of those calculations — a detail that quietly moves the number for anyone terminated in the second half of their service year.

Two more mechanics worth writing into your process: the 30-day clock runs to the effective date, not to the conversation, and the DOLE notice goes to the Regional Office with jurisdiction over the workplace. Just causes under Article 297 carry no separation pay, but they carry their own procedural due-process requirements — do not treat "just cause" as the cheap route.

What work authorisation do foreign employees need?

Two approvals, not one. The Alien Employment Permit from DOLE gives the right to hold the job; the 9(g) visa from the Bureau of Immigration gives the right to stay in the country for it. The AEP is a mandatory supporting document for the 9(g) petition, so the sequence is always AEP first.

• Filing has moved. Since June 2026, AEP applications are no longer received by DOLE Regional Offices. The Bureau of Local Employment at the DOLE Central Office in Intramuros, Manila handles the process centrally, under Administrative Order 199, s. 2026 and Department Order 248-B, s. 2026.
• The deadline is early. File within 10 working days of contract signing. Statutory processing time is 15 working days from payment of the fee, expressly unchanged by the transfer — though advisers are warning of transition delays, so build in a buffer.
• Validity is a minimum of one year, tied to the length of the contract, and capped at three years per issuance, renewable.
• Exemptions are no longer self-executing. Nationals in exempt or excluded categories must now obtain a DOLE Certificate of Exemption or Certificate of Exclusion before starting work. This is the change foreign employers miss most often.
• Fees are set by DOLE and should be confirmed with the Bureau of Local Employment before you budget.

Pending applications that were sitting with a Regional Office when the transfer happened were transmitted to the BLE and resume at their existing stage, with the remaining processing period preserved — no resubmission and no penalty.

Full guide to the Alien Employment Permit → — covering the exempt and excluded categories, labour market testing and publication, the Understudy Training requirement, the AEP-to-9(g) sequence, and the penalties for working without one.

What are the 2026 public holidays?

As of 12 August 2026: 12 regular holidays, 8 special non-working days, and 1 special working day. The distinction is a payroll one, not a calendar one — regular holidays are paid even when not worked, special non-working days are not.

List as of 12 August 2026. Ad hoc local and electoral holiday declarations are made through the year; re-check before publishing a payroll calendar.

Pair this table with the premium-pay rates above before you plan a December schedule: 24, 25, 30 and 31 December fall into three different pay categories within eight days.

Common mistakes

1. Modelling employer statutory cost as an open-ended percentage of salary. It caps at ₱6,230 a month, and PhilHealth is the only component still moving between an MSC of ₱35,000 and ₱100,000 of salary.
2. Quoting a bare minimum wage figure. On 12 August 2026 the ordered NCR rate is ₱755 and the enforceable one is ₱695 — and the gap is being litigated.
3. Clawing back a wage increase already paid after the TRO landed. DOLE's position is that the worker has a vested right in what was paid.
4. Deducting the EC premium from the employee. It is employer-only, ₱10 or ₱30, and never a deduction.
5. Treating 13th month pay as a discretionary bonus, or as something a loss-making year excuses. It is statutory, due by 24 December, with a DOLE report by 15 January.
6. Serving a redundancy notice on the employee but not on the DOLE Regional Office. Both notices, both at least 30 days ahead.
7. Labelling a redundancy as a retrenchment to halve separation pay — and then being unable to prove the losses that retrenchment requires.
8. Letting an exempt foreign national start work without a DOLE Certificate of Exemption or Exclusion. Exemption stopped being self-executing in 2026.
9. Carrying the Pag-IBIG base forward after a salary increase. Both sides are computed on a Maximum Fund Salary of ₱10,000, so the cap is ₱200 each — but the rate band on the employee side changes above ₱1,500.

Frequently asked questions