What Are Employee Benefits?
Employee benefits are additional perks offered to employees beyond their basic salaries. They are indirect payments that benefit employees through social security, health insurance, and paid leave. While these are statutory benefits mandated by labor laws, many companies offer supplemental benefits to retain the team.
Employee benefits vary based on the nature of work, employee demographics, and the size of the organization. So, when designing an employee benefit package, it must consider the best interests of everyone involved.
| Benefit type | Statutory minimum | Typical market practice | Multiplier-administered option |
|---|---|---|---|
| Minimum wage | Region-specific (e.g. ₱755/day NCR rate under Wage Order NCR-27) | Often above the regional minimum in Metro Manila’s competitive BPO/tech sectors | Compliant payroll calculation per current applicable regional rate |
| Leave (SIL) | 5 days paid Service Incentive Leave for rank-and-file employees with 1+ year of service | Common market practice offers 15 days vacation + 15 days sick leave | Compliant leave-policy administration |
| Sick leave | No separate statutory paid sick leave beyond SIL; SSS sickness cash allowance available if eligible | Many employers offer dedicated paid sick leave beyond the statutory SIL minimum | Compliant leave-policy and SSS-benefit coordination |
| Severance | None for just-cause dismissal; 0.5-1 month’s pay per year of service for authorized-cause termination | Matches statutory minimum in most cases | Compliant termination processing per cause classification |
| 13th-month pay | 1/12 of annual basic salary, due by December 24 | Some employers add a 14th-month pay or Christmas bonus as a competitive perk | Compliant 13th-month pay calculation and disbursement |
| Social security | SSS, PhilHealth, Pag-IBIG, and ECC contributions | Matches statutory minimum; supplementary private health/life insurance common at larger employers | Compliant SSS/PhilHealth/Pag-IBIG/ECC contribution processing per current rates |
Philippines Compensation Laws
Labor Code of the Philippines covers compensation and standard workplace practices like working hours, wage structures, overtime, and holiday pay. The Wage Rationalization Act sets minimum wages through regional boards. The country has no single national minimum wage.
Philippines has regional tripartite boards that set wages for non-agricultural work. As per Wage Order No. NCR-27, the daily minimum wage is ₱755/day for private sector workers across Metro Manila. While the Department of Labor and Employment (DOLE) has approved the wage increase to be rolled out in two tranches, the order has not yet been implemented.
Minimum wage in the private sector upon effectivity from July 2026: ₱718.00 – ₱755.00
Minimum wage in the private sector upon effectivity from January 2027: ₱743.00 – ₱780.00
The labor code and compensation rules also lay out standards on working hours, overtime pay, holidays, and social security contributions.
How to Design Your Employee Benefits Program
Here are five basic steps to design an employee benefits program that’s compliant and competitive:
Step 1: Identify Objectives and Budget
Plan a budget for your employee benefits and define goals to achieve from this policy. Consider your company size, employee locations, and standard market practices existing among competitors.
Step 2: Analyze Employee Needs
Make a note of employee needs. Research market trends, evaluate competitors and their policies. Consider the average age group of your employees, because different age groups benefit from different policies.
Step 3: Formulate the Benefits Plan
Draft a benefits plan from the findings of your research. Prioritize high-demand parks that match your budget. Keep the scope for cost-cutting by eliminating underutilized benefits if you’ve a temporary existing policy.
Step 4: Share Plan with Teams
Share your preliminary plan with employees and get their feedback. See if your employee benefits plan provides comfort and support for employees. Ensure all the demands and offerings are set within your allocated budget.
Step 5: Evaluate Periodically
Review and update the plan to adapt to changing business needs, demographics, market shifts, and regulatory updates across regions in the Philippines.
Guaranteed Benefits in the Philippines
Knowing and providing statutory employee benefits in the Philippines is the first step to ensure compliance among both employers and employees. These include:
Minimum wage
The Philippines doesn’t have a national wage, but regional boards decide national wages that employers must follow. Current proposed minimum wages in the Philippines are:
Metro Manila region: ₱755/day. Will rise to ₱780/day from January 20, 2027
Other regions: Generally between ₱450 to ₱650 per day on average, depending on the region.
Working hours and overtime pay
Under the Labor Code, standard working hours in the Philippines are 8 hours/day, following a 5- or 6-day workweek. Any work performed outside of 8 hours is paid at an additional 25% of the worker’s hourly rate. Night shift employees will receive an extra 10% from their basic pay if they work from around 10 PM to 6 AM. Work on designated rest days/holidays is paid at 30% of the hourly rate.
Leave policy
Filipino employees enjoy the following leave entitlements:
- Service Incentive Leave (SIL): 5 days per year after 1 year of service. These can be used for sickness or vacations. Unused SIL is converted to cash at the end of the year. There is no dedicated sick leave in the Philippines.
- Maternity leave: 105 days (120 for solo mothers) is valid for female employees who have paid at least three monthly Social Security System (SSS) contributions in the 12 months.
- Paternity leave: 7 days of paid leave. Mothers can also transfer 7 extra days to the father under the Expanded Maternity Leave Law.
- Solo Parent leave: 7 days of paid parental leave every year to eligible parents. Must’ve completed one year of service.
- Public holidays: Split into regular holidays (typically 10 every year and fully paid) and special non-working days (up to 10 days, unpaid) related to festivals.
- Leave for VAWC (Violence Against Women and Children) Victim-Survivors: 10 days of paid leave for women who have been victims of violence.
13th-month pay
Under Presidential Decree No. 851, the Philippines has a mandatory year-end benefit of 13th-month pay. Can be paid at one time before December 24 or split into two installments (mid-June and mid-December).
13th-month pay calculation: 1/12th of employee’s basic salary earned in a calendar year.
Social security system (SSS)
This is a state-run social insurance program to cover sickness, maternity, disability, unemployment, old age, and death. The current contribution rate is 15% of the Monthly Salary Credit (MSC) split between employer (10%) and employee (5%). The range is currently from ₱5,000 to a maximum ceiling of ₱35,000.
Health insurance (PhilHealth)
PhilHealth is the national health insurance of the Philippines, covering inpatient, outpatient and approved healthcare services. The premium contribution for 2026 is 5% of the monthly basic salary split equally between employee and employer at 2.5% each.
According to the contribution schedule, a ₱10,000 monthly income and a ₱100,000 ceiling are considered. So premiums range from ₱500 to ₱5,000.
Home Development Mutual Fund (PAG-IBIG)
Pag-IBIG is a mandatory savings and housing program that allows people to build savings and access housing. The contribution can be utilized for calamity or loans, subject to eligibility. The monthly contribution rate depends on the monthly income.
1% for employees earning ₱1,500 or less.
2% for employees earning above ₱1,500.
The contribution base is capped at the fund salary of ₱10,000, making the maximum mandatory contribution ₱200 each from the employer and employee.
Employees’ Compensation Program (ECP)
Part of the SSS, the Employees’ Compensation Program provides benefits for employees who suffer work-related sickness, injury, disability, or death with contributions solely from the employer. It covers medical reimbursement, rehabilitation, funeral and death benefits. This contribution is remitted through the SSS.
₱10 for a monthly salary of ₱14,500 and below.
₱30 for a monthly salary of ₱15,000 and above.
Supplemental Benefits for Employees in the Philippines
Several organizations offer additional perks beyond the statutory provisions. The main aim is to attract and retain top talent in the company. Some common supplementary benefits offered are:
Group Life Insurance
Additional coverage for employees in cases of accident, life-threatening diseases, and disabilities. Employees approach private insurance providers based on their specific needs and the nature of the business. Employers and employees pay a part of the employee’s monthly salary to this premium.
Health and Dental Coverage
This is an addition to statutory health insurance with broader coverage for other health and dental-related treatments. Depending on the provider, it ensures employees get the best treatment with partnered hospitals or clinics. Some insurance companies offer free consultations with accredited doctors, discounted hospital fees, and financial aid during medical emergencies. Employees can add dependents to this insurance, and contributions are made monthly.
If you need help in planning such benefits, Multiplier’s Localized Benefits can administer Voluntary Medical Insurance and other supplemental coverage for your Filipino team, including dependent enrollment. Talk to our team to scope a plan.
Christmas Bonus
Although the Philippines has a 13th-month pay, some companies also offer Christmas bonuses, usually paid before the Christmas holidays. To avoid confusion with the 13th-month bonus, this bonus is paid separately and on a different date.
Allowances
As an added incentive, many employers also offer allowances such as food, transportation, or telephone. The most popular allowance companies in the Philippines offer is a quarterly rice subsidy or actual rice.
Employee Benefits for Expatriates
Philippines is a popular destination for expat workers. Expats working in the Philippines with a valid work permit receive the same statutory benefits as local employees, such as 13th-month pay, social security, health insurance, paid leaves, and private insurance. Some additional perks like loyalty bonus, life insurance covering dependents, and retirement benefits can be provided.
How Are Employee Benefits Taxed in the Philippines?
The Philippine Bureau of Internal Revenue (BIR) governs taxation of employee benefits and additional allowances. Mandatory contributions to SSS, PhilHealth, and Pag-IBIG are deductible. Certain de minimis benefits, such as rice subsidies, uniform allowances, medical assistance, and employee achievement awards, are also tax-exempt when provided within the limits prescribed by the BIR. These may remain tax-exempt within the separate ₱90,000 annual ceiling for 13th-month pay and other benefits.
Effective January 6, 2026, Revenue Regulations No. 29-2025 increased several de minimis benefit ceilings:
Rice subsidy: ₱2,500
Annual uniform allowance: ₱8,000
Annual medical assistance: ₱12,000
Annual bonus/Christmas gift: ₱6,000
Amounts exceeding these de minimis limits may become taxable.
Restrictions for Benefits and Compensation
When deciding and designing a benefits plan, all requirements of the Philippine Labor Code must be followed.
To terminate any employee, an employer must have just cause such as serious misconduct, fraud, neglect of duty, or wilful breach of trust. A written notice has to be provided specifying the charges. After this, the employee gets a reasonable period to submit their written explanation or defense. Then, a second written notice has to be sent considering the employee’s explanation. The notice must clearly state why the employee’s defense wasn’t enough.
However, if an employee is removed for authorized cause (business closure or economic reasons), employers must give a written 30-day advance notice to both the employee and the DOLE, along with separation pay (severance).
For foreign organizations hiring contractors in the Philippines, having a registered entity within the country is the foremost requirement. But you can partner with the right EOR solution to represent you as a legal entity.
How Multiplier Can Help with Benefits Management in the Philippines
From hiring employees as your legal representative and tax filings, to offering benefits with local compliance, Multiplier’s Employer of Record manages it all for you. Multiplier administers contributions to the social security system, files taxes, and accounts for your team’s statutory leaves. It also helps you enroll them in Voluntary Medical Insurance, with 100% compliance.
Hire and manage benefits in the Philippines with Multiplier.
Multiplier’s EOR handles SSS, PhilHealth, and Pag-IBIG contributions, tax filings, and statutory benefits compliance in the Philippines — no local entity required.
Talk to our team or explore Philippines EOR.
FAQs
What are the mandatory employee benefits in the Philippines?
The Philippines' mandatory employee benefits include contributions to the Social Security System (SSS), PhilHealth, ECC coverage and the Pag-IBIG Fund, along with 13th-month pay, statutory holiday pay, and a minimum 5-day Service Incentive Leave.
What is the minimum wage in the Philippines in 2026?
The minimum wage in the Philippines for 2026 is ₱755/day after the first tranche raise. From January 20, 2027 the rate will go up to ₱780/day.
Is severance pay mandatory in the Philippines?
Depends on termination cause: not required for just-cause dismissal, but required at 0.5-1 month's pay per year of service for authorized-cause termination.
Is sick leave a separate statutory benefit in the Philippines?
No — beyond the 5-day Service Incentive Leave, there is no separate mandatory paid sick leave, though an SSS sickness cash allowance may apply for eligible employees.
What government contributions must Philippines employers make?
Employers in the Philippines must remit monthly statutory contributions to the Social Security System (SSS), which also includes Employee Compensation (EC), PhilHealth, and the Pag-IBIG Fund (HDMF).
How much annual leave are employees entitled to in the Philippines?
The statutory minimum is 5 days of Service Incentive Leave after one year of service; market practice commonly offers 15 days of vacation plus 15 days of sick leave.
What is 13th-month pay in the Philippines?
A mandatory benefit equal to 1/12 of an employee's basic annual salary, due on or before December 24, prorated for employees who worked less than a full year.
How much maternity and paternity leave is available in the Philippines?
Under the Expanded Maternity Leave Law, eligible mothers receive 105 days of paid leave for live births (60 for miscarriage), paid via SSS; fathers receive 7 days of employer-paid paternity leave for up to four births.
What is the difference between just-cause and authorized-cause termination in the Philippines?
Just-cause dismissal (e.g. serious misconduct) requires no severance but a strict two-notice procedure; authorized-cause termination (e.g. redundancy) requires 30 days' notice to the employee and DOLE, plus severance pay.
How can an Employer of Record help manage employee benefits in the Philippines?
Multiplier's EOR administers SSS, PhilHealth, and Pag-IBIG contributions, tax filings, leave processing, and 13th-month pay compliance — no Philippine entity required.
