Mercans CountryIntel ® Philippines Payroll And HR Insights
An archipelagic country in Southeast Asia, the Philippines may be seen as one of the most westernized countries in Asia, boasting a rich heritage of Spanish, American and Malay cultures. There is a multitude of ethnic groups and foreign influences which have created a unique Filipino culture.
There are many reasons why the country presents a beautiful investment opportunity including a high overall standard of education, advantageous geographic position for certain industries including the transportation sector, rich natural resources including marine and mineral resources, and a business-friendly economy. However, a high degree of caution is advised, in the Philippines overall, due to crime and terrorism, with higher levels applicable in some areas.Download PDF
The Philippines government warmly encourages entrepreneurs and provides support in the form of, among others, privatization and cash investments. There is an attractive low cost for starting up businesses, approximately 50% lower than in the US. An attached agency of the Department of Trade and Industry (DTI), the Philippines Board of Investments (BOI) responsible for developing investments in the country, and leads the promotion of various industries and investment opportunities.
Entity Registration and Incorporation Requirements
Setting up a new business or expanding an existing one in the Philippines is straightforward. Choose how your company operates from a range of entity types that suit your individual circumstance.
Banking Hours: 10:00 am to 7:00 pm from Tuesday to Sunday.
The standard working week is from Monday to Saturday for eight hours per day.
The main source of employment law is the Labor Code of the Philippines (“Labor Code”) which sets out rules for hiring and termination of employees, conditions of work including maximum hours worked, overtime, employee benefits, and more. The Labor Code expressly recognizes the right to create a trade union.
Electronics assembly, aerospace, BPO, food manufacturing
Dates & Numbers
Official State Name
The Republic of the Philippines
International Dialing Code
There is a two-tiered wage system in place which maintains the mandatory minimum wage (as the first tier) which is supported by a voluntary productivity-based pay scheme (the second tier). The first tier sets the minimum wage, referring to official data on the poverty threshold and average wage rates as well as socio-economic indicators.
It is acceptable to provide employees with online payslips
Payroll reports must be kept for 10 years
Employees receive paid annual leave of five days
Employees receive paid sick leave of five days
105 days of paid maternity leave and seven days of paid paternity leave are available
Maternity & Paternity Leave
A minimum of 30 days notice is required
Must be paid on or before 24 December (Aguinaldo).
13th month salary
537.00 PHP per day
Overtime pay is calculated at 125% of the employee's regular pay
This is calculated as up to one month's salary multiplied by the length of service per year.
Residents and foreigners are taxed on their personal income. Individuals who are self-employed are also subject to income tax rates. The social security system is a state-run, social insurance program for workers in the private, professional, and other sectors.
Resident citizens are taxed on their worldwide income. However, non-residents and foreigners, whether residents in the country or not, are only taxed on income from sources within the Philippines. The rates of tax on the income of foreigners, whether they are residents or not, will depend on the nature of the income earned.
Corporate Income Tax
Personal Income Tax
While access to social security has become increasingly relevant, the Philippines faces major challenges in providing social security. A significant proportion of workers and their families remain uncovered.
Social Security Rate
Social Security Rate for Employers
Social Security Rate for Employees
The Labor Code is supported by numerous employment-related legislation, decisions, and rulings by the Philippines Supreme Court and administrative declarations or regulations set by the Department of Labor and Employment (“DOLE”). There are a few types of workers who are protected by employment law including regular employees, project workers whose employment is fixed for a specific project or undertaking, seasonal workers, casual or temporary workers, fixed-term employees, and employees who are under a period of probation.
Not all employment agreements need to be in writing. This is a requirement in some cases wherein there must be a written record that government inspectors can review. Examples of situations where a written agreement is required are the hiring of a domestic worker or where children are working in public entertainment.
DOLE has developed rules and regulations to ensure that companies create and maintain a safe and healthful workplace that provides full protection against all hazards in the work environment. Workers have the right to refuse work, without threat or reprisal from the employer, if DOLE determines that a situation presenting imminent danger exists.
Female employees are entitled to 105 days of maternity leave with pay. A male employee is entitled to paternity leave benefits of not less than seven days up to the first four deliveries of their spouse. Additionally, under the Solo Parents’ Welfare Act, solo parent employees are entitled to parental leave of not more than seven working days every year.
An employee may be lawfully terminated when there is a just cause and when the prescribed processes for termination are adhered to. Just causes include gross misconduct, gross neglect of employee duties, fraud, breach of trust, and when a crime or offense has been committed by the employee against the employer.
Minimum notice period for terminating an employee
Total number of public holidays
Working hours per week
Total number of days for Compassionate & Bereavement Leave
There are a number of visa types available for immigrants and non-immigrants including special visas. Foreign nationals who intend to go to the Philippines for employment can apply for a pre-arranged employee – commercial visa – which visa may also be extended. There is a special visa for employment generation which is available to a qualified non-immigrant foreign national who shall employ at least 10 Filipinos in a lawful enterprise or industry. Additionally, there is a special employment visa for an offshore banking unit which can be converted to a non-immigration visa for an offshore banking unit. This is available to a foreign national assigned by any foreign bank to work in its offshore banking unit in the Philippines.
A provisional work permit is issued to a foreign national while a decision is arrived at for their application for a pre-arranged employment visa. A foreign national who holds either a Temporary Visitor’s Visa or a Tourist Visa and who has stayed for over 59 days in the Philippines can apply for an Alien Certificate of Registration Identity Card (ACR I-Card).
Work Permit Validity
A completed application form
The employment contract and any related documents
A copy of the employee’s passport along with a valid visa
A copy of the business permit.
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