Mercans Logo
SUBMIT RFP CONTACT US
Philippines countryintel banner
Country Intel

Employer of Record and Payroll Services in Philippines Philippines flag

mercans logo

Mercans-owned legal entity
union We have our own legal entity to protect your business from risk and provide you and your employees with a distinctive experience.

Services available

  • Employer of record
  • Contractor management
  • Global payroll
  • In-country payroll
Global Payroll Team
Written by Global Payroll Team
Last updated May 1, 2026
Expert Reviewed
Philippines map

eor

Mercans offers complete payroll, PEO and HR services in Philippines

An archipelagic country in Southeast Asia, the Philippines has a diverse cultural heritage shaped by indigenous, Spanish, American, and Asian influences. It remains an attractive destination for investment due to its large labor force, strong services sector, strategic location, and growing digital economy.

The country offers business opportunities across manufacturing, infrastructure, technology, transportation, and business process outsourcing. Investors should, however, remain mindful of local regulatory, labor, and security considerations when entering the market.

eor

Doing Business in the Philippines

The Philippine government continues to encourage investment through agencies such as the Department of Trade and Industry and the Board of Investments. The country remains a competitive destination for services, manufacturing, and export-oriented operations, although employers should carefully assess local registration, labor, tax, and immigration requirements.

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

Banking hours vary by institution, although banks generally operate during weekday business hours and many services are available digitally.

Working Week

The standard working week is commonly 8 hours per day for 5 or 6 days per week, depending on the employer’s schedule.

Labor Law

The main source of employment law is the Labor Code of the Philippines, which governs hiring and termination, conditions of work, working time, overtime, employee benefits, and labor relations. The Labor Code also recognizes the right to self-organization and collective bargaining.

Main Industries

Electronics, semiconductors, BPO, food manufacturing, construction, tourism and services

GDP Growth

4.4%

Dates & Numbers

mm/dd/yyyy

Official State Name

The Republic of the Philippines

Population

112.73 million

Capital

Manila

Major Languages

Filipino, English

Currency

Philippine peso

Internet Domain

.ph

International Dialing Code

+63

loader-image
Philippines
Manila, PH
10:04 pm, May 4, 2026
30°C
few clouds
66 %
Wind Gust: 0 mph
Clouds: 20%
Sunrise: 5:32 am
Sunset: 6:13 pm

eor

Payroll

The Philippines uses a two-tier wage system consisting of mandatory regional minimum wages and a productivity-based pay component. Minimum wages are region-specific and reviewed by the Regional Tripartite Wages and Productivity Boards. Employers must also administer 13th month pay, social security contributions, PhilHealth and Pag-IBIG obligations, and other statutory payroll requirements.

It is acceptable to provide employees with online payslips

Payslip

Payroll and employment records should be kept in line with applicable labor and tax rules

Reports

Employees who have rendered at least one year of service are entitled to five days of paid service incentive leave

Annual Leave

There is no general statutory paid sick leave under the Labor Code, but eligible employees may claim SSS sickness benefits

Sick Leave

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 generally required for termination due to authorized causes

Employee Termination

Must be paid on or before 24 December.

13th month salary

Minimum wages are region-specific. In NCR, the daily minimum wage is PHP 695 for non-agriculture and PHP 658 for certain smaller establishments

Minimum Wage

Overtime pay is calculated at 125% of the employee’s regular pay

Overtime

Separation pay depends on the ground for termination and may range up to one month’s pay per year of service in certain authorized-cause cases

Severance Pay

eor

Tax and Social Security

Residents and foreigners may be taxed on employment income depending on their tax status and source of income. Employers in the Philippines must also comply with statutory social contributions, including Social Security System, PhilHealth, Employees’ Compensation, and Pag-IBIG requirements, as applicable.

Tax

Resident citizens are generally taxed on worldwide income, while non-residents and foreign nationals are generally taxed on Philippine-source income. The tax treatment of foreign employees depends on their residence status and the nature of the income earned.

25%

Corporate Income Tax

35%

Personal Income Tax

12%

Sales Tax

12%

VAT

Social Security

The social security system is a state-run social insurance program for workers in the private, professional, and other sectors. Employers should also consider PhilHealth, Employees’ Compensation, and Pag-IBIG obligations where applicable.

15%

Social Security Rate

10%

Social Security Rate for Employers

5%

Social Security Rate for Employees

eor

eor

Employment Law

The Labor Code is supported by employment-related laws, Supreme Court decisions, and regulations issued by the Department of Labor and Employment. Workers protected by Philippine employment law include regular employees, project workers, seasonal workers, casual or temporary workers, fixed-term employees, and probationary employees.

Employment Agreement

Not all employment agreements need to be in writing, although written terms are advisable and are required in certain cases. Employers should maintain employment records that can be reviewed by labor authorities where required.

Working condition

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.

Leaves

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 for the first four deliveries of his legitimate spouse, subject to the law. Eligible employees may also be entitled to service incentive leave and solo parent leave under applicable legislation.

Employment termination

An employee may be lawfully terminated when there is a just cause or authorized cause and when the prescribed processes for termination are followed. Just causes include gross misconduct, gross neglect of duties, fraud, breach of trust, and when a crime or offense has been committed by the employee against the employer.

eor

30 days

Minimum notice period for termination due to authorized causes

eor

Varies annually

Total number of public holidays

eor

48

Working hours per week

eor

Not statutory

Total number of days for Compassionate & Bereavement Leave

eor
eor

Immigration

There are a number of visa types available for immigrants and non-immigrants, including employment-related visas and special permits. Foreign nationals intending to work in the Philippines commonly require a pre-arranged employment visa and may need a provisional work permit while the visa application is pending.

eor

Residency permits

A provisional work permit may be issued to a foreign national while a decision is pending on their pre-arranged employment visa application. A 9(g) pre-arranged employment visa may be granted for an initial validity of one, two, or three years depending on the employment contract, and may be extended.

Work Permit Validity

1 to 3 years

Required Documents

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.

Compliant, reliable, error-free and touchless payroll in Philippines

Build the best team and hire top talent compliantly in Philippines. Get in touch with Philippines payroll outsourcing & PEO specialists for a free consultation!

This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
Tell us where you want to grow.
Our team regional experts are here to support you with global expansion plans.

    I’m interested in

    Sample message

    1. We want to expand in $country

    2. We want you to employ 'X' number of employees on our behalf

    3. Contract duration – 3/6/9/12/18/24 months

    4. Number of legal entities (if any exist today)

    5. Employment type: EOR employee or contractor?

    6. Any benefits requirement or “standard statutory only”?


    FAQs

    What is an Employer of Record (EOR) in the Philippines and how does it work for foreign companies?

    An Employer of Record in the Philippines, provided by Mercans, acts as the official employer for your workforce in the country. Mercans handles employment contracts, payroll administration, tax filings, and compliance with local employment laws. This enables international companies to hire professionals in the Philippines without having to establish their own legal entity.

    Why should businesses use an EOR instead of establishing a legal entity in the Philippines?

    Using Mercans as your EOR in the Philippines allows businesses to begin operations immediately while saving time and costs associated with setting up a local company. Mercans ensures full compliance with labor and tax regulations, allowing organizations to focus on strategic growth while Mercans manages HR, payroll, and legal responsibilities.

    How does payroll outsourcing in the Philippines ensure compliance with tax and labor laws?

    Mercans’ payroll outsourcing in the Philippines ensures compliance by managing all statutory payroll obligations. This includes accurate salary calculations, withholding tax, social security, health insurance, and other mandatory contributions. Mercans continuously updates its payroll systems to align with Philippine legislation, ensuring accuracy, transparency, and compliance.

    Can an Employer of Record in the Philippines hire employees and manage work permits for international companies?

    Yes. Mercans can hire employees on behalf of international businesses and handle all procedures related to work visas and permits for expatriate staff. This allows companies to employ both local and foreign professionals legally and efficiently within the Philippines.

    What are the main benefits of using EOR and payroll services in the Philippines for global expansion?

    The primary advantages of Mercans’ EOR and payroll services in the Philippines include faster market entry, reduced administrative burden, cost efficiency, and guaranteed compliance with employment and tax laws. These services provide global companies with access to local expertise and streamlined workforce management for successful expansion into the Philippine market.

    Learn how we can help you comply with Local labor law
    Discover the best-in-class Payroll solution
    Countries we serve