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Employment laws in the Philippines: What employers must know in 2026

Learn about employment laws in the Philippines in 2026 that govern employee contracts, minimum wage, and payroll. Plus, we cover mandatory benefits and termination.

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Employment laws in the Philippines: What employers must know in 2026
Employment laws in the Philippines: What employers must know in 2026

Payoneer Team

Employment in the Philippines is governed mainly by the Labor Code (Presidential Decree 442), backed by statutes on wages, social security, health insurance, and 13th-month pay. Together, they set the floor for contracts, working hours, minimum wage, mandatory benefits, and how you can end employment.

Global businesses, like U.S. companies, are bound by local employment laws in the Philippines when they engage Filipino staff. This guide covers the key statutes, contracts, working hours, minimum wage, the four statutory contributions, termination rules, and what happens if you get them wrong. It also shows how a workforce management platform like Payoneer Workforce Management can carry these obligations for you. 

Book a demo today for support with hiring in the Philippines.

What are the key labor laws in the Philippines?

The Labor Code of the Philippines is the backbone, covering recruitment, hours, wages, leave, and termination. A handful of separate statutes set the contribution rates and benefits that sit on top of it. The main ones:

AreaGoverning law
Core labor standardsLabor Code of the Philippines (PD 442)
Minimum wageWage Rationalization Act (RA 6727)
Social securitySocial Security Act of 2018 (RA 11199)
Health insuranceUniversal Health Care Act (RA 11223)
13th-month payPresidential Decree 851
Maternity leaveExpanded Maternity Leave Law (RA 11210)

The Labor Code also defines legal recruitment, due process, and the penalties for non-compliance, including the employer’s role in securing work permits for foreign workers. 

For whom you can engage and how, read our hiring guide for the Philippines.

What must an employment contract include in the Philippines?

A Philippine employment contract can be written or verbal, but a written one is strongly advised, since it records the terms and helps show compliance. It should set out the following: 

  • Job description and top-line duties 
  • Hours and location of work
  • If the term is fixed or open
  • Compensation and benefits
  • Termination standards

Moreover, the probation is capped at 6 months.

What happens if you break employment law in the Philippines?

Breaches surface through DOLE inspections and employee complaints, and the penalties are specific. The common ones:

ViolationWhat can it trigger
Paying below the minimum wageDouble indemnity under RA 8188: the unpaid wages plus an equal amount in damages
Not remitting SSS, PhilHealth, or Pag-IBIGPenalty interest, and for deducted-but-unremitted SSS, a criminal offense under RA 11199
Illegal dismissalReinstatement with full back wages, or separation pay in lieu
Treating employees as contractorsReclassification, back benefits, and unpaid contributions

Your wider tax and compliance obligations depend on your activities and presence in the Philippines, so consult your own tax and legal advisors. 

Talk to our experts about engaging talent in the Philippines. Book a demo today!

What are the working hours and overtime rules in the Philippines?

The standard workday is 8 hours, and the workweek runs up to 48 hours over 6 days, with a daily meal break of at least 60 minutes. Work beyond 8 hours is overtime and must be paid at a premium. Premium rates are:

Work scenarioPay rate
Overtime on an ordinary day125% of the hourly rate
Work on a rest day or special non-working day130% of the daily rate
Work on a regular holiday200% of the daily rate
Night shift (10 p.m. to 6 a.m.)Plus 10% night differential

The Philippines observes 11 regular holidays and 8 special non-working days in 2026, which are separate from paid leave. 

Our leave policy guide for the Philippines breaks down holidays and every statutory leave.

What is the minimum wage in the Philippines?

The Philippines has no single national minimum wage. Under the Wage Rationalization Act, regional boards set daily rates by area, sector, and employer size: 

  • In Metro Manila (NCR): the rate is PHP 695 per day for non-agriculture work under Wage Order NCR-26, 
  • Other regions run roughly PHP 366 to 600. 

The National Wages and Productivity Commission publishes each region’s wage order. Paying below the applicable rate is a labor-standards violation, so confirm the current regional figure before setting pay. 

For the pay-cycle and remittance mechanics, see our payroll guide for the Philippines.

What mandatory benefits must employers provide in the Philippines?

Employers must enroll employees in three statutory funds and pay the 13th-month salary. The funds are the Social Security System (SSS), the Philippine Health Insurance Corporation (PhilHealth), and the Home Development Mutual Fund (Pag-IBIG). The current rates per Monthly Salary Credit (MSC):

FundEmployerEmployeeWhat it funds
SSS10% of MSC5% of MSCPension, sickness, maternity (MSC capped at PHP 35,000)
PhilHealth2.5%2.5%Health insurance (salary PHP 10,000 to 100,000)
Pag-IBIG2% (max PHP 200)2% (max PHP 200)Housing fund

13th-month pay is separate and mandatory under Presidential Decree 851: one-twelfth of the basic salary earned in the year, paid on or before December 24, and pro-rated for partial years. The first PHP 90,000 of 13th-month pay and other benefits is tax-exempt. Statutory leave, including 105 days of maternity leave, sits on top of these contributions.

What are the rules on termination and severance in the Philippines?

Employees have security of tenure and can be dismissed only for a just cause (employee fault, such as serious misconduct or fraud) or an authorized cause (business reasons, such as redundancy or closure), with due process. 

Just-cause dismissals carry no separation pay; authorized-cause dismissals require 30 days’ notice to the employee and to DOLE, plus separation pay:

GroundNoticeSeparation pay
Just cause (misconduct, fraud, neglect)Two-notice due processNone
Redundancy or labor-saving devices30 days to the employee and DOLE1 month per year of service (minimum 1 month)
Retrenchment, closure due to losses, or disease30 days to the employee and DOLEHalf a month per year of service (minimum 1 month)

A dismissed employee who believes the dismissal was unfair can file a case, so the cause and the process both need to hold up.

How can I keep up with Philippine employment law?

Philippine labor rules change often, from wage orders to contribution rates, and keeping payroll and contracts in step takes time. As a workforce management platform, Payoneer Workforce Management can help to compliantly onboard a Filipino team without a local entity while it keeps contracts, the statutory remittances, 13th-month pay, and termination handling in line with current law.

Payoneer Workforce Management starts at $199 per employee per month and depends on your headcount and contract type. 

Book a demo for support with hiring in the Philippines, or compare a nearby market in our employment laws guide for Malaysia.

Frequently asked questions (FAQs)

Wages must be paid at least twice a month, typically on the 15th and the last working day, under the Labor Code. Employers cannot pay less frequently than semi-monthly. Pay must be in Philippine pesos, and employees are entitled to a payslip showing earnings and deductions.

Employees are entitled to the regional minimum wage, an 8-hour day with overtime premiums, rest days and holiday pay, statutory leave (maternity, paternity, solo-parent, and special leaves), SSS, PhilHealth, and Pag-IBIG coverage, 13th-month pay, security of tenure, and protection from unfair dismissal.

There is no national figure; rates are set regionally under the Wage Rationalization Act. Metro Manila (NCR) is PHP 695 per day for non-agriculture work under Wage Order NCR-26, the highest in the country, while other regions run roughly PHP 410 to 600. You apply the rate where the employee works.

Employers contribute to three funds: SSS at 10% of the Monthly Salary Credit (employee 5%), PhilHealth at 2.5% (employee 2.5%), and Pag-IBIG at 2% (employee 2%, capped at PHP 200 each). They also pay a 13th-month salary by December 24. Rates are set by RA 11199, RA 11223, and PD 851.

No. Paid sick leave is not required by law and is offered at the employer’s discretion, though 12 to 15 days a year is common. For longer illness, the SSS pays a sickness benefit to qualifying members, which the employer advances and then reclaims. Maternity and other statutory leaves are separate and mandatory.

No. Employees have security of tenure and can be dismissed only for a just cause (employee fault) or an authorized cause (business reasons), with due process. Authorized-cause dismissals need 30 days’ notice to the employee and DOLE, plus separation pay. Dismissing without valid cause exposes you to an illegal-dismissal case.

Payoneer Workforce Management can engage a Filipino team through a compliant framework (BPO) and keep contracts, SSS, PhilHealth, Pag-IBIG, 13th-month pay, working-hour rules, and termination in line with Philippine law, without you setting up a local entity. That lets you grow a compliant team while you direct the day-to-day work.

Hire & pay globally with Payoneer Workforce Management

  • Expand internationally in 160+ countries
  • Run global payroll securely in a few clicks
  • Stay compliant with local employment laws
  • Let Payoneer Workforce Management manage benefits, work permits, timesheets, and more so you don’t have to
Employment laws in the Philippines: What employers must know in 2026
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