How to Hire Employees in the Philippines

Q: What are the standard working hours in the Philippines?

The standard working hours in the Philippines are 8 hours a day, totaling 40 hours a week.

Q: What is the minimum wage in the Philippines?

The minimum wage varies by region and industry, ranging from PHP 315 to PHP 570 per day.

Q: What are the types of employment contracts in the Philippines?

Employment contracts in the Philippines are generally fixed-term, project-based, casual, seasonal, or regular contracts.

Q: What are the leave entitlements for employees in the Philippines?

Employees in the Philippines are entitled to five days of service incentive leave per year, with companies often providing up to 15 days of paid leave.

With a workforce of nearly 49 million*, high English proficiency, and low labor costs, the Philippines has become a global hiring hotspot — especially for companies expanding across ASEAN.

Monthly salaries here average just $360, compared to $6,704 in the US* — a gap that allows many businesses to scale teams affordably here. However, the labor market in the Philippines is tightening, and it may now take longer to fill roles, especially in IT and healthcare.

Hiring in the Philippines: Key trends

Demand for talent is high: Overall hiring activity grew 11% year‑on‑year as of March 2025* (despite an 8% month‑on‑month slowdown)

The cost of talent is increasing: New‑hire salaries are projected to rise by about 5.5% in 2025*
ITBPM industry remains a key employment generator: This sector generated 120,000 direct jobs in 2024*
Talent is increasingly available outside Manila: The IT-BPM sector has moved beyond Manila to centers like Bacolod, Cebu, Clark, Davao, and Iloilo*
Yet talent shortages are emerging across critical sectors: The healthcare sector faces an estimated 60% nursing shortfall* by 2030.
Foreign hiring is becoming tougher: DOLE’s new rules are making it increasingly complex to employ foreign nationals in the Philippines

Demand for talent in the Philippines is rising. While hiring foreign nationals here is becoming more complex, local hiring isn’t straightforward either. Employers must navigate a dense regulatory landscape — from entity setup to SSS, PhilHealth, and Pag-IBIG registrations, plus full compliance with the Labor Code.

This guide outlines how to hire employees compliantly in the Philippines — and explores how options like an Employer of Record (EOR) can help you hire faster, reduce risks, and scale efficiently.

Why businesses hire employees in the Philippines

Here’s why the Philippines deserves a top spot on your global hiring shortlist.

Cost-efficient workforce: Offers competitive wage levels that drive strong ROI on headcount investments.
High English proficiency: Ranks 22nd in English proficiency.
Innovation-driven momentum: The Philippines is among the top 10 fastest climbers in WIPO’s Global Innovation Index (2024).
Filipino employees are eager to upskill: 42.3% of workers* are motivated to learn AI and digital skills.
Rural talent activation: Through the Digital Cities 2025 program, the government is expanding digital literacy and skills training to more rural provinces

Moreover, the Philippines’ strategic location in ASEAN and time-zone overlap with Asia-Pacific and Middle East markets enable near-shore support for around-the-clock operations, boosting supply-chain resilience, collaboration, and market reach.

These advantages make the Philippines a compelling hub for scalable, compliant, and cost-effective talent acquisition.

Before hiring: Compliance and cost considerations in the Philippines

Employers hiring in the Philippines must comply with labor laws, contract rules, and statutory contributions. They must issue written employment contracts and strictly follow wages, working hours, benefits, and termination regulations.

What is the cost of hiring employees in the Philippines?

Average salaries in the Philippines are competitive. Consider these benchmarks

Job Title	Average Salary Range (PHP)	Average Salary Range (USD)
Accounting Manager	83,333 – 166,666	1,735 – 3,470
Web/Mobile App Developer	108,333 – 250,000	2,275 – 5,250
Data Scientist	125,000 – 208,333	2,625 – 4,375
Test Analyst	83,333 – 158,333	1,750 – 3,325
Project Manager	166,667 – 333,333	3,500 – 7,000
Sales Manager	108,333 – 425,000	2,275 – 8,925

Note: The above table contains approximate averages* updated in April 2025.

However, hiring an employee typically costs 1.25 to 1.4 times their base salary, factoring in the cost of recruitment, payroll taxes, and mandatory benefits.

What are some mandatory benefits or allowances employers should consider while hiring in the Philippines?

In addition to base salary, employers must budget for these mandatory costs for their Filipino workers

Statutory contributions: Employers must contribute to the Social Security System (SSS), PhilHealth, and Pag-IBIG on behalf of each employee.

SSS. Up to PHP1,630 per month per worker, covering pensions, disability, and illness.
PhilHealth (PHIC) is 3% of the employee’s monthly salary (this increases by 0.5% every year)
Pag-Ibig (HMDF).
1% of the salary for monthly salaries less than PHP 1,500.
2% of the salary for monthly salaries over PHP 1,500

13th-month pay: All employees are entitled to a 13th-month bonus equal to one month’s salary, paid by 24th December each year.
Service Incentive Leave (SIL): After one year of service, employees are eligible for at least five paid leave days annually (including sick leave). You must pay out unused leave days at year-end.
Paternal leave:

Maternity leave includes 105 days of paid leave for childbirth and 60 days of paid leave for a miscarriage or emergency termination. Solo parents are entitled to an additional 15 days of leave after childbirth, totaling 120 days.
Paternity Leave includes 7 days of paid leave for married male employees for the first four deliveries of their legitimate spouse.

Termination costs and process: Severance pay is typically one month’s salary, but it may increase if you don’t follow the due process. (At-will employment is not recognized. To terminate employees, employers must demonstrate valid cause and follow due process, including documented hearings and formal notices.)
Wage and overtime compliance: The legal workweek is 40 hours. If employees work overtime, they must be paid 125% of their regular hourly wage for each extra hour. Overtime pay is higher during holidays.

Missing any of these steps can result in fines or legal disputes. When calculating the cost of hiring, companies must calculate the administrative cost of compliance, including payroll processing fees, HR administration time, legal and accounting services, compliance reporting, and employee onboarding expenses.

Given these complexities and costs, businesses must decide early: Will you build in-house HR and legal capacity, or partner with an Employer of Record (EOR)?

What is an EOR, and how does it simplify hiring in the Philippines?

An Employer of Record (EOR) is a third-party organization that legally employs talent on your behalf. You manage talent acquisition and day-to-day work while the EOR handles everything else — contracts, payroll, taxes, benefits, and compliance.

Whether you choose to hire directly or work with an EOR, the hiring process in the Philippines follows a clear set of steps. In the next section, we explore each step and highlight how an Employer of Record (EOR) can simplify it.

Hiring in the Philippines: A step-by-step playbook

Hiring employees in the Philippines requires more than just finding the right candidate. From business registration to payroll setup and labor law compliance, you must pay attention to compliance and best practices at every step.

Step 1: Establish your Philippines entity and secure registrations

In-house hiring begins by choosing your legal structure — either incorporating with the SEC or registering as a sole proprietor with the DTI—and then obtaining a BIR Tax Identification Number (TIN).

Once your entity is recognized, you must enroll as an employer with the Social Security System (SSS), PhilHealth, and Pag-IBIG, and secure all necessary local government permits.

How an EOR helps

With an EOR, you bypass the need to set up a local entity. The EOR serves as your legal employer in the Philippines, handling all local requirements — including SSS, PhilHealth, Pag-IBIG contributions, payroll, taxes, and employment contracts — while you manage the employee’s daily responsibilities.

This approach helps global businesses eliminate the cost, time, and burden of entity set up and administrative responsibilities when hiring in the Philippines.

Step 2: Set up payroll and statutory contributions

Managing payroll in-house means:

registering for BIR withholding (Forms 1601-C and 1601-Q)
establishing accounts with SSS, PhilHealth, and Pag-IBIG, and
configuring your payroll system to calculate and withhold income tax per BIR tables.

You must remit social contributions between the 10th and 15th of each month and accrue 13th-month pay and mandatory leaves.

How an EOR helps

An EOR handles every step calculating payroll, withholding taxes and contributions, filing returns, remitting payments, and automating 13th-month pay, so you stay compliant and never miss a deadline.

Step 3: Understand labor code and local regulations

The Philippines Labor Code mandates minimum wage, overtime rates, night-shift differentials, rest days, service incentive leave, and probationary rules, and post DOLE – required safety and labor notices.

You must also monitor Regional Tripartite Wages Board orders, PEZA/BOI incentive guidelines, and periodic circulars from DOLE, BIR, SSS, PhilHealth, and Pag – IBIG.

How an EOR helps

When you partner with an EOR, local HR and legal experts update your contracts, policies, and procedures automatically to reflect new wage orders, safety standards, and zone – specific incentives, removing the burden of ongoing compliance monitoring.

Step 4: Define roles, source talent, and assess candidates

In-house talent acquisition starts by classifying roles — full-time (30+ hours with full benefits), part-time, or contractor — and drafting job descriptions that comply with classification rules and the Labor Code.

You then source on platforms like JobStreet or LinkedIn Philippines, engage local recruitment agencies, and conduct structured interviews, skills assessments, and background verification, ensuring you avoid discriminatory questions.

How an EOR helps

Finding the right candidate requires time and effort. An EOR frees up your HR teams to focus on candidate fit, while the EOR handles classification, contract generation, background screening, and onboarding logistics.

Step 5: Draft compliant contracts and prevent misclassification

In the Philippines, a written agreement or contract is essential to formalize employment. Your HR teams must prepare offer letters or employment contracts that clearly specify salary, benefits, duties, working hours, probation terms, termination clauses, and Filipino statutory rights such as 13th-month pay and leave entitlements. They must be careful not to misclassify employee as contractors or vice versa, as this can trigger back-tax liabilities, fines, and benefit payouts.

How an EOR helps

An EOR leverages local legal teams to generate contracts that adhere to Philippine regulations and best practices including ideal leave count, insurance plans, allowances, probation period, non-compete, and other policies. It reduces your risk of misclassification or non-compliance and helps you onboard employees quickly and effortlessly.

See how an EOR like Multiplier helps you generate compliant employment contracts within minutes

Step 6: Onboard efficiently and compliantly

Apart from the signed contract, you must collect BIR Form 1902, IDs, and bank details during onboarding. You must also distribute employee handbooks, labor law posters, and policy documents; configure payroll profiles and benefits enrollment; set up IT accounts; and conduct orientation covering safety, conduct, and role expectations.

How an EOR helps

Partnering with an EOR automates all these steps: new hires complete statutory forms and compliance tasks via the EOR’s portal, payroll and benefits are set up from day one, and remote employees get their IT assets in time — it’s everything they need to onboard smoothly and begin their new role confidently.

In the Philippines, compliance isn’t a one‑time checkbox — it’s a continuous process spanning SSS/PhilHealth remittances, AEP filings, wage‑order updates, and tax returns. From tax filings to labor‑code updates and classification audits, you have ongoing obligations and missing any deadline can trigger significant penalties and operational disruption.

Recap: The compliance checklist for Philippine hiring

Create compliant job descriptions that ensure correct classification under the Labor Code
Register your business with relevant agencies—SEC or DTI, BIR, SSS, PhilHealth, Pag-IBIG—and secure necessary LGU permits.
Set up payroll to comply with tax withholding, statutory contributions (SSS, PhilHealth, Pag-IBIG), and ensure timely accrual and payment of the mandatory 13th-month bonus.
Statutory filings: Regularly submit required forms and remittances:

Monthly withholding tax (Form 1601-C)
Quarterly withholding tax (Form 1601-EQ)
Monthly/quarterly contributions to SSS, PhilHealth, and Pag-IBIG

Consider registering with PEZA or BOI for tax and investment incentives, ensuring continuous compliance with reporting and operational requirements.
Distribute mandatory labor law posters, maintain clear policies on safety standards, and secure documented employee acknowledgments.

For businesses with established Philippine operations and large HR teams, in-house hiring can be effective.

But for companies hiring in the Philippines for the first time, partnering with an EOR like Multiplier can help ensure compliance, efficiency, and scale. Let’s quickly recap how the in-house process looks versus an EOR

Hiring in the Philippines: In-house hiring vs EOR

Entering the Philippines requires careful compliance with local labor laws, statutory contributions, and visa regulations. An EOR like Multiplier simplifies it all. You get end-to-end automation of SSS, PhilHealth, and Pag-IBIG contributions, along with seamless processing of AEP and work visas — all proactively updated as regulations evolve, ensuring your team remains fully compliant.

With Multiplier, it takes just a few clicks ot

Generate compliant Philippine employment agreements in minutes
Automate payroll processing
Manage work permits for employing foreign nationals in the Philippines

HR teams love how its easy-to-use, unified dashboard can help them manage and view expenses, contributions, benefits, and HR workflows with 100% compliance to Philippine labor laws.

Why HR teams choose Multiplier for Philippine expansion (and beyond)

Hundreds of customers trust Multiplier with their global expansion plans. We’ve helped businesses of every size set up and scale their workforce in the Philippines effortlessly and confidently.

DB Results scaled operations by hiring 100 employees in the Philippines within 10 months.
Technology Aloha was able to enhance their service levels affordably with their Philippines teams while saving 800% in payroll costs.

Whether you’re hiring in Metro Manila, Cebu, or Clark, Multiplier helps you scale your team quickly and compliantly. Book a demo today to see how we can become your trusted partner for your global expansion plans in the Philippines.