Horizons ensures day-to-day guidance to help your business navigate Philippine labor laws and regulations. We also provide mandatory monthly payroll requirements, and absorb all local employment liabilities. Partnering with our Philippines PEO is the quickest and most cost-effective way to enter the Philippine market.

Facts & Stats

PEO Platform Hire in the Philippines, and pay employees through our platform or app.	PEO Cost Our Philippines PEO solution is the most affordable on the market.	Time-to-hire Fast onboarding in the Philippines, hire in as little as 12 hours.
Contracts We draft labor contracts compliant with Filipino labor law.	Local Benefits We administer all mandatory benefits and contributions in the Philippines.	180+ Countries It doesn’t stop with the Philippines — we are an international PEO

stay compliant with Philippines labor laws

Employment Laws

Employment contracts in the Philippines

Written employment contracts are standard practice in the Philippines. Businesses are required to provide a detailed written contract in the local Filipino language that clearly defines the employee’s duties, salary, benefits, and procedures related to termination.

Employers should also include letters of offer when hiring any new employees. Letters of offer must clearly define an employee’s salary and compensation in Philippine Pesos.

In the Philippines, probationary employment is permitted for up to six months. During this time, an employer can choose not to extend the employment relationship without recourse.

Horizons’ Philippines PEO has established relationships with local labor organizations and guarantee employment contracts maintain full compliance.

Fixed-term

Probationary period

6 months (maximum)

Termination notice period

During probation: none

After probation: 1 month

Severance

‘Separation pay‘: 1 month per year of service

Indefinite

Probationary period

6 months (maximum)

Termination notice period

During probation: none

After probation: 1 month

Severance

‘Separation pay‘: 1 month per year of service

Working hours in the Philippines

The typical work week in the Philippines is 40 hours, with the average work day being eight hours. If an employee works longer than eight hours in a work day, employers must pay overtime that is 1.25x the employee’s regular hourly rate.

For employees required to work on Sundays or paid holidays, overtime is paid at 1.3x the average hourly rate. The only circumstances where this may differ is when an employment contract stipulates otherwise.

Hire compliantly in Philippines without a local entity.

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Holidays in the Philippines

In the Philippines, there are two distinct types of holidays: regular holidays and special non-working days. Regular holidays are paid days off. If an employee is required to work on a regular holiday, they are entitled to 2x their average pay rate for any hours worked. Regular holidays include: Special non-working days are unpaid holidays that employees are not required to work. If an employee is ever required to work on a special non-working day, they are entitled to 1.3x their average pay rate for any hours worked. Special non-working days are subject to change each year. These days can include:

Holiday Schedule in Philippines [2023]

Philippines has a range of national public holidays that are celebrated annually. In 2023 these holidays are:

Date	Holiday name
1 Jan, 2023	New Year’s Day
2 Jan, 2023	Special non-working day after New Year
23 Jan, 2023	First Philippine Republic Day
25 Feb, 2023	People Power Anniversary
6 Apr, 2023	Maundy Thursday
7 Apr, 2023	Good Friday
8 Apr, 2023	Black Saturday
10 Apr, 2023	The Day of Valor
22 Apr, 2023	Eidul-Fitar (Tentative Date)
1 May, 2023	Labor Day
12 Jun, 2023	Independence Day
29 Jun, 2023	Eid al-Adha (Feast of the Sacrifice) (Tentative Date)
21 Aug, 2023	Ninoy Aquino Day
28 Aug, 2023	National Heroes Day
3 Sep, 2023	Yamashita Surrender Day
8 Sep, 2023	Feast of the Nativity of Mary
1 Nov, 2023	All Saints’ Day
2 Nov, 2023	All Souls’ Day
27 Nov, 2023	Bonifacio Day
25 Dec, 2023	Christmas Day
30 Dec, 2023	Rizal Day
31 Dec, 2023	New Year’s Eve

Taxes in the Philippines

In the Philippines, both employees and employers are required to contribute to the nation’s Social Security System (SSS). The current deduction rate is 11% of an employee’s monthly salary and must not exceed P16,000. Employers are responsible for 7.37% of this amount, whilst employees contribute 3.63%.

Social security system

The Philippine social security system provides employees and their families with protections in the event of disability, old age, sickness, and death. All workers under 60 who earn more than P1,000 a month must contribute to this fund. Contributions are automatically deducted from an employee’s salary on a monthly basis.

Health insurance

In the Philippines, mandatory universal healthcare is funded through payroll taxes and the general budget. Private health care is also available to those willing to pay for it.

To stay competitive, many employers in the Philippines offer private medical insurance. Some employers will also offer a taxable allowance to cover the cost of private medical insurance.

Vacation leave

Employees in the Philippines are entitled to five days of paid leave each year. However, many employers offer up to 15 day’s paid vacation per year. Employment contracts can establish rules for carrying over any unused portion of leave.

Sick leave

Technically. the Philippine government does not require employers to provide employees with sick leave. However, employment contracts often stipulate provisions that include coverage for sick leave.

During times of illness or injury, employees may be entitled to 90% of their average daily wages if they meet the following criteria:

The employee has exhausted all sick leave provided by their employer
The employee has paid at least three of the previous 12 monthly social security contributions – before the illness or injury arose
The employee was hospitalized for more than three days and is approved by the social security system

If sick leave is approved in these circumstances, employers are entitled to full reimbursement from the social security system.

Maternity and paternity leave

In the Philippines, mothers who have made at least three social security contributions within the last year are eligible for maternity leave. Maternity leave consists of two month’s paid leave and is available for a woman’s first four pregnancies.

If the delivery was caesarian, mothers are entitled to 78 day’s paid leave. The benefit is equal to the mother’s regular daily wage.

Married fathers are eligible for seven day’s paid paternity leave for their first four children. Paternity leave must be used within 60 days of the child’s birth.

Termination and severance

Employers in the Philippines can only terminate employees if there are suitable grounds for dismissal. This can include:

Serious misconduct
Gross and habitual neglect of duty
Willful disobedience
Fraud or breach of trust
Commission of a crime against the employer

No severance is required in any of the above circumstances.

There are authorized causes in which an employer can legally terminate an employee, with the employer required to pay a severance. Authorized causes include:

Replacement of labor-saving devices
Redundant placement
Closure of business
Disease or illness
Retrenchment to prevent losses

Due process is required in any of these cases. This requires that notice must be provided to the affected employee at least 30 days before the date of termination. Notice must also be sent to the Regional Office of the Department of Labor and Employment, in the region where the employer is located. Additionally, the worker is entitled to a hearing or conference in which they can lodge a defense to the charges, present evidence, or rebut evidence.

Severance pay is based on the reason for termination and is generally one month’s wages per year of service. As an example, if an employee has worked for a business for 10 years, the employee would be entitled to 10 month’s severance pay.

Employees also have the option of appealing to an arbitrator. If the employer is found to have not followed the proper procedures, the employee may be entitled to damages, back wages, and/or reinstatement.

Navigating employee terminations and handling severance packages can be complicated for companies expanding overseas for the first time. Horizons’ Philippines PEO can mitigate risk for foreign companies and provide guidance through this process.

hassle-free Philippines compensation & benefits

Compensation & Benefits

The Philippines compensation laws

Depending on where a business is located in the Philippines, the minimum wage will vary. For people living in the Philippines, it is estimated that a wage of least P9,064 is needed to make a living.

If employees work on either a Sunday or a paid holiday, they are entitled to an overtime rate that is 1.3x their regular hourly wage. If an employee works more than eight hours a day, they are typically entitled to overtime that is 1.25x their hourly wage. However, these figures may differ if an employee is part of a union or collective bargaining agreement.

Employers are also responsible for providing employees with a 13-month salary bonus. This is equal to one month’s salary and must be offered to employees prior to December 24. Most employers in the Philippines will present 13-month bonuses at the start of December. This is to ensure that employees have extra funds to purchase Christmas presents.

Minimum Wage Country Comparison Chart	(Per month in USD)
Switzerland (Geneva)	$4,000
Italy	$2,255
Australia	$1996
Algeria	$156
Uzbekistan	$22

Guaranteed benefits in the Philippines

It is incumbent on employers to provide their employees with a number of statutory benefits. As an example, employees in the Philippines must receive five day’s paid leave that can be used for either vacation or sick leave.

There are two types of holidays in the Philippines. These are regular holidays and special non-working days. Employees are entitled to receive paid leave for regular holidays and unpaid leave for any special non-working days.

The Philippines benefit management

Employers in the Philippines also need to be aware of certain supplemental benefits. Whilst these benefits aren’t compulsory, many employees will still expect them as part of their compensation.

For employers that offer these benefits, it can assist them to attract high-level talent. Such benefits can include medical allowances, transportation, and even housing. Some employers will also choose to offer their employees supplementary insurances. These can include disability, life, and private health insurance.

Benefits and compensation restrictions

For expanding businesses, the most significant restriction to benefits and compensation is the establishment of a local entity. Employers are typically unable to hire and pay employees without first establishing a subsidiary in the Philippines. This process can take months to complete, which causes large-scale business delays.

With Horizons’ Philippines PEO, you can begin operating in the Philippines in as little as 48 hours. We act as your employees’ Employer of Record, which means there’s no need to establish a subsidiary in the Philippines. And as the only global PEO with an in-house recruitment team, we can help you source, hire, and onboard top local and international talent.

Hire in Philippines in 12h
without your own local entity.

With Horizons, you get quick service, transparent pricing, and expert support.

FAQs

What is the difference between a Philippines PEO and a Philippines EOR?

A Philippines PEO and a Philippines EOR are two types of companies which specialize in providing human resources services to businesses in Philippines.

The main difference between a Philippines PEO and a Philippines EOR is in the scope of their services.

Philippines PEOs provide a full range of HR services, including payroll, benefits administration, and employee recruiting—all under one roof as a co-employer. Engaging a Philippines PEO is essentially outsourcing your HR duties in Philippines.

Philippines EORs actually take over as the legal employer of your employees based abroad. Philippines EORs become responsible for labor compliance for your employees in Philippines.

At Horizons, we offer both PEO and EOR services in Philippines. Get in touch now and let us know what service you are seeking.

Can a PEO in Philippines hire both local and foreign nationals to work in Philippines ?

A PEO in Philippines can feasibly hire both local and foreign nationals to work in Philippines.

However, the ability of Horizons to sponsor your foreign national employee in Philippines may be limited due to visa quotas practiced in many countries.

Contact us with your requirements and our Global Mobility team with review the case and get back to you within 2 business days.

How long does Horizons' Philippines PEO service take to hire an employee?

In most cases, Horizons’ Philippines PEO can hire & onboard your employee within 24 hours. The actual start date of the employee will depend on their notice period obligation to their previous employer as well as any relevant hiring rules in Philippines.

Is it possible to get a work visa in Philippines ?

It is possible to get a work visa in Philippines. Horizons’ Global Mobility team is a dedicated team of work visa experts. They assess the details of each case to determine feasibility and costs before Horizons applies for the work visa on behalf of your employee. If the Global Mobility team determines that your case is feasible, the process is smooth and transparent. Visa spots in Philippines are limited, however—get started today to secure your employees’ visa spot.

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