Employer of Record in the Philippines: Complete Guide 2026
Philippines Employer of Record: learn the compliant way to hire, understand costs, payroll rules, and how to employ talent without opening a local entity.
An Employer of Record in the Philippines helps you engage and pay local employees without setting up a local entity. For foreign companies hiring Filipino employees, it is a quick and compliant path to getting started.
The Philippines has strict rules regarding labor-only contracting under the DOLE department, but Payoneer Workforce Management’s employment model and framework keep you compliant with the local laws.
Through Payoneer Workforce Management, you can engage local employees and manage payroll, statutory benefits, and employment contracts with compliance support, reducing the administrative load on your HR and finance teams.
Book a team to learn about how we can help, or keep reading to learn more about onboarding and paying employees in the Philippines.
How can you hire employees in the Philippines?
You have three options to hire employees in the Philippines: set up your own local entity, engage independent contractors, or use the Payoneer Workforce Management platform.
The table compares them at a glance.
| Route | Setup effort | Compliance burden | Best when |
|---|---|---|---|
| Set up a local entity | High: register with the SEC, secure a local government permit, open a local bank account, and enroll with tax and benefit agencies | The employer owns all of it | You plan a long-term, large-scale presence |
| Engage independent contractors | Low: Contractors manage their own taxes, use their own equipment, etc. | Employers carry misclassification risk if the relationship looks like employment | Work is genuinely project-based and short-term |
| Payoneer Workforce Management platform | Low: Onboarding typically runs in days | The platform onboards through its local employment framework and supports compliance, manages payroll, benefits, taxes, and more. | You want employees in the Philippines without an entity |
Setting up an entity means registering with the Securities and Exchange Commission (SEC), obtaining a business permit from the local government unit, and registering with the Bureau of Internal Revenue (BIR) and the social agencies.
Contractors are quicker, but treating someone as a contractor when the working relationship resembles employment can trigger penalties. You can read our guide on worker classification and misclassification penalties.
Payoneer Workforce Management helps with the process of hiring employees. For a deeper walkthrough, read our guide to hiring in the Philippines.
How does Payoneer Workforce Management work in the Philippines?
Payoneer Workforce Management operates under the BPO framework in the Philippines; it legally employs local talent and makes those employees available to support your business. It handles contracts, payroll, and statutory benefits like SSS, PhilHealth, Pag-IBIG, and 13th-month pay.
What happens if you hire in the Philippines without a workforce management platform?
If you engage Filipino talent without a compliant structure, the exposure is real. Three risks stand out, each with a financial or operational consequence, and a clear way a workforce management platform addresses it.
- Misclassification. Treating an employee as a contractor to avoid local registration can lead to back pay, unpaid contributions, and penalties. A workforce management platform employs the worker legally, so the relationship is structured correctly from day one.
- Termination and security-of-tenure disputes. The Philippines strongly protects employees from dismissal without just or authorized cause. Ending a contract the wrong way can lead to illegal dismissal claims, back wages, and reinstatement orders. A workforce management platform structures the employment and handles exits in line with the Labor Code.
- Non-compliance with payroll and benefits. Missed SSS, PhilHealth, or Pag-IBIG remittances and incorrect 13th-month pay can draw DOLE complaints and surcharges. A workforce management platform administers these statutory obligations on your behalf and keeps pace with rate changes.
The difference comes down to who carries the employment.
For instance, here’s a table that compares hiring in the Philippines on your own against hiring through Payoneer Workforce Management.
Philippines Employer of Record Vs Entity
| Factor | Setting up an entity | With Payoneer Workforce Management |
| Legal employer | You, which requires a local entity | The platform employs the local employee |
| Setup | Register and maintain a Philippine entity | Onboard in days, no entity needed |
| Statutory compliance | You manage SSS, PhilHealth, Pag-IBIG, 13th-month, and wage orders | The platform administers these obligations |
| Misclassification risk | Higher if you engage contractors directly | Lower, the worker is properly employed |
| Employee exits | You handle security-of-tenure rules | The platform manages compliant termination |
How does a workforce management platform compare to a PEO in the Philippines?
The key difference is that a PEO (Professional Employer Organization) requires you to have your own registered entity in the Philippines, while Payoneer Workforce Management does not. Both handle HR and payroll, but only Payoneer Workforce Management legally employs local talent, so you can engage Filipino talent without incorporating locally.
The table below breaks down the differences.
| Consideration | Payoneer Workforce Management | PEO |
|---|---|---|
| Legal employer of the worker | Yes, through a compliant framework (BPO) | No, you remain the employer |
| Your own local entity is required | No | Yes |
| HR and payroll support | Yes | Yes |
| Engage talent without incorporating | Yes | No |
| Compliance with local labor laws | Supported through local expertise | You own it |
For contractor-heavy teams, an Agent of Record (AOR) or a contractor management system may fit better.
How to onboard employees in the Philippines?
To onboard an employee in the Philippines, you secure work authorization for foreign hires, enroll the worker in payroll, and register them with the Social Security System (SSS), PhilHealth, and the Pag-IBIG Fund. You also set up statutory benefits like the 13th-month pay and Service Incentive Leave. Payoneer Workforce Management can run these steps for you.
Here’s your onboarding checklist for the Philippines:
- Work authorization: Foreign nationals need both a work permit and a visa. In most cases, that means an Alien Employment Permit (AEP) from the Department of Labor and Employment and a 9(g) work visa from the Bureau of Immigration. The exact type depends on the role, and the employer manages the application.
- Employment contract: Put the terms in writing before the start date, covering the role, salary in pesos, working hours, the probationary period (up to six months), and benefits. A clear contract sets expectations and supports compliance with the Labor Code.
- Payroll enrollment: Collect the employee’s legal address and bank details to add them to your payroll platform. All workers in the Philippines must be paid in Philippine pesos (PHP), and wages are paid at least twice a month under the Labor Code.
- Government and tax registration: Register the new hire with the SSS, PhilHealth, and the Pag-IBIG Fund, and with the Bureau of Internal Revenue (BIR) for tax. You’ll need their Tax Identification Number (TIN), SSS number, PhilHealth number, and Pag-IBIG membership ID.
- Benefits enrollment: Some benefits run through the SSS, such as sickness and maternity pay, while the employer sets up others directly. These include the mandatory 13th-month pay and Service Incentive Leave (SIL) of five paid days a year after one year of service.
- Orientation and equipment: Run a first-week induction on company policies and the role, set up devices and system access, and introduce the new hire to the team
What does it cost to hire in the Philippines?
Hiring in the Philippines costs more than the gross salary. On top of pay, employers fund mandatory contributions to the Social Security System (SSS), PhilHealth, and the Pag-IBIG Fund, plus the 13th-month pay. If you hire through a workforce management platform, you pay a per-employee service fee in place of the cost of running your own entity.
Payoneer Workforce Management services in the Philippines start at $199 per employee per month, depending on the hiring volume. Companies should weigh this against the cost of setting up and maintaining a local entity, based on their expected headcount and timeframe.
Worked example: monthly cost of a PHP 50,000 hire in Metro Manila
Say you engage a developer in Metro Manila on a gross salary of PHP 50,000 a month. Employer contributions are capped at each fund’s ceiling, so the figures below reflect 2025 to 2026 rates and are illustrative.
| Line item (monthly) | Amount (PHP) | Paid by |
|---|---|---|
| Gross salary | 50,000 | Base |
| SSS (employer share, MSC capped at 35,000) | approx. 3,530 | Employer |
| PhilHealth (employer 2.5%) | 1,250 | Employer |
| Pag-IBIG (employer 2%, MFS capped at 10,000) | 200 | Employer |
| 13th-month pay (accrued, 1/12 of salary) | approx. 4,167 | Employer |
| Approximate fully loaded employer cost | approx. 60,146.67 | Employer |
| SSS (employee 5%) | 1,750 | Employee (deducted) |
| PhilHealth (employee 2.5%) | 1,250 | Employee (deducted) |
| Pag-IBIG (employee 2%) | 200 | Employee (deducted) |
| Withholding tax (graduated 0% to 35%) | Varies by bracket | Employee (deducted) |
Explore the Employee Cost Calculator for more details.
How does payroll work in the Philippines?
Payroll runs in Philippine pesos (PHP), typically on a semi-monthly cycle, with three mandatory contributions and a graduated income tax. Employees also receive 13th-month pay equal to one month’s salary, due on or before December 24 each year.
The current employer and employee contribution rates are below.
| Contribution | Total rate | Employer | Employee | Cap/basis |
|---|---|---|---|---|
| SSS | 15% | 10% | 5% | Monthly Salary Credit (MSC) up to PHP 35,000 |
| PhilHealth | 5% | 2.5% | 2.5% | Salary PHP 10,000 to 100,000 |
| Pag-IBIG | up to 4% | 2% | 1% or 2% | MFS up to PHP 10,000 (max PHP 200 each) |
By partnering with Payoneer Workforce Management, you can pay Filipino employees in a timely manner. But it’s still good to understand your responsibilities as an employer. For the full mechanics, see our payroll guide for the Philippines.
What are the key employment laws in the Philippines?
Employment in the Philippines is primarily governed by the Labor Code of the Philippines, enforced by the Department of Labor and Employment (DOLE). Before hiring, employers should know the core rules: standard working hours and overtime, a weekly rest day, a probation period capped at six months, and anti-discrimination protections. The sections below cover each.
The Labor Code dictates that:
- Standard working hours range from 40 to 48 hours per week, typically spread across 5 days. Employees working more than 8 hours a day are entitled to overtime pay.
- Employees are entitled to 1 rest day of 24 consecutive hours for every 6 days worked.
- A probationary period cannot exceed 6 months.
All employers must follow employment laws, such as the Age Discrimination in Employment Act and the Magna Carta for Women, which outline anti-discrimination legislation and fair employment practices.
Our employment laws guide for the Philippines covers contracts, working time, and statutory rights in more detail.
What is the minimum wage in the Philippines?
The legal minimum wage in the Philippines varies by location and industry. It is determined based on the location of the employer, not the employee.
| Area/basis | Daily minimum wage | Notes |
|---|---|---|
| NCR (Metro Manila), non-agriculture | PHP 316 to PHP 695 | Wage Order NCR-26, effective 18 July 2025 |
| NCR, agriculture, and small retail/service | PHP 410 – PHP 515 | Same wage order, smaller establishments |
| Lowest regional floors | around PHP 366 to 411 | Varies by region; check the latest wage order |
These rates are subject to change based on wage orders issued by the Department of Labor and Employment (DOLE). Employers should refer to the latest DOLE circulars for region-specific updates.
These rates change through regional wage orders across 13 or more regions. It is recommended to check the latest order for the relevant region before setting pay.
For a breakdown of pay and contributions, see our payroll guide for the Philippines.
Rates change through periodic wage orders, so confirm the figure for the employer’s region against the current National Wages and Productivity Commission (NWPC) order before you set pay.
What should an employment contract in the Philippines include?
A comprehensive employment contract in the Philippines typically includes:
- The contract type (fixed- or open-term)
- Start date
- The employee’s typical compensation, benefits, and eligibility for bonuses
- Work hours and location, and allocated paid time off
- Length of probation
- Termination requirements (e.g., notice period and severance pay)
Employment contracts may not be a legal requirement for all roles in the Philippines. However, creating written employment contracts can mitigate misunderstandings and reduce risk within working relationships.
What leaves are employees entitled to in the Philippines?
Statutory leave in the Philippines is leaner than in many markets, anchored by Service Incentive Leave (SIL) in addition to paid public holidays and parental entitlements.
The table summarizes the main types.
| Leave type | Entitlement |
|---|---|
| Service Incentive Leave (SIL) | 5 days per year after one year of service; unused days are convertible to cash |
| Public holidays (2026) | 11 regular holidays plus 8 special non-working days (Proclamation No. 1006) |
| Maternity leave | 105 days paid, with an option to extend 30 days unpaid; 15 extra days for solo parents |
| Paternity leave | 7 days for married employees |
| Solo parent leave | 7 working days after six months of service |
| Special leave for women | Up to 2 months for qualifying gynecological surgery |
Sick leave is not a separate statutory entitlement (employees typically draw on SIL), and bereavement leave is discretionary, though many employers grant about seven days.
See the full breakdown in our leave policy guide for the Philippines.
How does termination work in the Philippines?
Under the Labor Code of the Philippines, an employer can terminate an employee’s contract in the event of serious misconduct, habitual neglect of duties, and criminal offense(s). The ground determines notice and separation pay:
| Scenario | Notice | Separation pay |
|---|---|---|
| Just cause (employee fault) | No notice if due process is observed | Generally none |
| Redundancy (authorized cause) | 30-day written notice to the employee and DOLE | At least one month’s pay, or one month per year of service, whichever is higher |
| Closure not due to serious losses | 30-day written notice | At least half a month’s pay per year of service |
| Closure due to serious losses | 30-day written notice | None |
Do foreign nationals need a work permit in the Philippines?
All foreign nationals require a work permit and a visa to work in the Philippines.
Work permit requirements in the Philippines can differ based on the employee’s country and the type of role they will be performing.
Both employers and candidates should refer to official government sources to verify the specific rules, documentation, and procedures involved.
Are background checks standard when hiring in the Philippines?
A background check is standard practice for employers engaging talent in the Philippines. It may not be a legal requirement, but it’s considered an essential part of due diligence.
Employers generally must obtain the candidate’s consent and clearly outline what will be reviewed. It is best to consult local laws and guidelines before initiating any background checks in the Philippines.
How do you register a company in the Philippines?
Registering a company in the Philippines can be complicated, but it may be the right choice if your company wants to establish a long-term presence there.
Full details are available through the Philippines’ SEC and BIR websites. However, for many U.S.-based companies, using a workforce management platform in the Philippines is often a faster and simpler solution.
How is a PEO different from an EOR in the Philippines?
Typically, a PEO (Professional Employer Organization) and an EOR (Employer of Record) both support you with HR and payroll tasks when building an international team. However, there are some important differences to consider.
However, in the Philippines, while companies may search for Employer of Record (EOR) services, this model is not permitted. Workforce management platforms may assist with HR and payroll.
While PEOs are a helpful way to outsource HR functions, they don’t serve as the legal employer for your Filipino team. This means you still need to register as a legal entity in the Philippines if you want to engage employees there.
On the other hand, partnering with a workforce management platform in the Philippines offers a simple way to engage Filipino employees.
The workforce management platform may offer a compliant way to engage with talent in the Philippines as per local employment laws.
Why choose Payoneer Workforce Management for hiring in the Philippines?
When onboarding and paying employees in the Philippines without setting up a local entity, Payoneer Workforce Management’s compliant employment model assists with payroll, HR, benefits, and more.
You can expand international teams while worrying less about complex local labor laws and complicated global payroll.
Book a demo today to see how Payoneer Workforce Management can help with hiring employees in the Philippines.
Frequently asked questions (FAQs)
An Employer of Record (EOR) is a third-party company that acts as the legal employer, so you hire employees without setting up a local entity. In the Philippines, the standalone EOR model is slightly complicated as DOLE prohibits labor-only contracting, so companies can engage talent through Payoneer Workforce Management instead, which employs workers under a BPO framework and supports employment contracts, payroll, and statutory benefits.
The EOR model as used in markets like the United States turns a bit complicated in the Philippines. Payoneer Workforce Management offers a compliant way to employ talent through its BPO framework. The outcome for you is similar (accessing talent without your own entity), but the legal structure is different.
Cost depends on the provider, the salary, and mandatory employer contributions to SSS, PhilHealth, and Pag-IBIG. Payoneer Workforce Management services in the Philippines start at $199 per employee per month. That is generally lower than registering and running a local entity. Use the Employee Cost Calculator to estimate the fully loaded cost for a specific salary.
Employers must remit SSS (15% of the monthly salary credit, split 10% employer and 5% employee), PhilHealth (5%, split evenly), and Pag-IBIG (up to 2% each side). Employees also receive 13th-month pay equal to one month’s salary, due on or before December 24. Service Incentive Leave of five days per year applies after one year of service.
A BPO (business process outsourcing) provider in the Philippines runs an outsourced function, such as business support, accounting, or a relevant service or role, acting as an extended arm for business operations by employing and managing local talent. An Employer of Record acts as the legal employer of local talent so you can hire without a local entity, which can be complicated as DOLE prohibits labor-only contracting.
Through Payoneer workforce management, onboarding typically takes 3-5 business days once the worker’s details, contract terms, and statutory registrations are in place. Setting up your own local entity takes considerably longer because it involves SEC registration, a local permit, and enrollment with tax and benefit agencies before you can pay anyone.
Yes, but with care. Contractors offer flexibility and lower setup effort. The risk is misclassification: if the working relationship looks like employment (set hours, ongoing direction, exclusivity), authorities may reclassify the contractor as an employee, exposing you to back pay and penalties. A contractor management system or workforce management platform helps you engage either group compliantly.
Payoneer Workforce Management operates under the BPO framework, legally employing talent through a compliant local structure, so you can access talent without your own entity. It supports localized contracts, payroll in Philippine pesos, statutory benefit administration, and contractor engagement, as part of a platform spanning 160+ countries and territories and 70+ currencies.
About the author
Linh Pham
Lead, Global HR Operations
Linh Pham is the Lead for Global HR Operations at Payoneer Workforce Management (Formerly Skuad), based in Ho Chi Minh City, Vietnam. With over 10 years of HR experience in the Asia-Pacific region, she specialises in international talent acquisition, employee relations, and employment compliance. Linh leads the HR Operations team across 50+ countries, ensuring efficient onboarding, payroll management, and adherence to local laws for distributed teams.
About the author
Linh Pham
Lead, Global HR Operations
Linh Pham serves as the Lead for Global HR Operations at Payoneer Workforce Management (formerly Skuad) and is based in Ho Chi Minh City, Vietnam. She brings over a decade of HR experience across the Asia-Pacific region, with expertise in international talent acquisition, employee relations, and employment compliance. Linh oversees HR operations in more than 50 countries, supporting efficient onboarding, payroll processes, and alignment with local regulatory requirements for distributed teams.
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