The Philippines has become one of the most attractive hiring destinations for international businesses, thanks to its highly skilled, English-speaking workforce and strong cultural alignment with western markets. With competitive salary expectations, a growing talent pool, and excellent digital infrastructure, many U.S. companies are choosing to hire employees in the Philippines to support customer service, tech development, finance, and more.

For American companies looking to expand internationally, the Philippines offers a compelling mix of cost efficiency and qualified professionals. However, navigating the country’s labor laws, tax regulations, and employee classification rules can be complex. 

This guide breaks down everything you need to know about how to hire employees in the Philippines. We’ll walk you through the available hiring methods, key legal considerations, onboarding practices, and where to find top talent. You’ll also learn how Payoneer Workforce Management can simplify onboarding talent in the Philippines and help your business expand faster while staying compliant with local employment laws.

Hire employees in the Philippines: Options for U.S. companies

When considering how an American company hires employees in the Philippines, it’s important to evaluate the different hiring methods available. Each method comes with its own advantages and compliance responsibilities.

1) Set up a legal entity in the Philippines

Establishing a local legal entity allows your business to directly hire employees in the Philippines. This option offers complete control over hiring, contracts, and payroll processes. However, the process is time-consuming and costly.

Businesses must register with multiple Philippine government agencies, including the Bureau of Internal Revenue (BIR), the Social Security System (SSS), the Home Development Mutual Fund (Pag-IBIG), and PhilHealth. Ongoing compliance, tax filing, and legal management can be complex, especially for small or midsize companies.

For companies looking for speed and flexibility, this may not be the most practical approach.

2) Hire contractors in the Philippines

Another common route is hiring independent contractors. This method offers flexibility for project-based or short-term work. You can pay contractors without establishing a legal presence in the Philippines, making it faster and more cost-efficient.

However, misclassifying an employee as a contractor can lead to serious penalties. According to local labor regulations, workers who receive direction and control from the company, work regular hours, and depend on the company for income are considered employees, not contractors.

Consequences of employee misclassification can include:

• Government-imposed fines
• Payment of back taxes and benefits
• Legal disputes and reputational damage

3) Use a workforce management platform

Typically, using an EOR is a popular solution for companies that want to hire employees without setting up a legal entity. However, the EOR model may not be permitted in the Philippines. Businesses may use a workforce management platform instead.

It assists with administrative aspects such as employment contracts, payroll, taxes, benefits, and compliance support.

This model reduces overhead, speeds up hiring, and lowers risk for U.S. companies expanding into the Philippines.

Learn more about using a workforce management platform in the Philippines.

Where to find employees in the Philippines

Once you’ve chosen a hiring method, the next step is finding the right candidates. The Philippines offers a strong talent pool across various sectors, and there are several ways to source candidates locally.

Popular job boards in the Philippines

Job seekers in the Philippines widely use online job boards, which makes them a great option to advertise your open roles. Some of the most popular job boards in the Philippines include:

• JobStreet
• Kalibrr
• Indeed Philippines
• Bossjob
• LinkedIn
• WorkAbroad.ph

These platforms are ideal for reaching a broad range of professionals, from entry-level talent to seasoned experts.

Work with local recruitment agencies

If you’re looking to fill roles more quickly or need help filtering candidates, partnering with a local recruitment agency can be beneficial. These firms understand the local market, can assist with language or cultural barriers, and can help reduce time-to-hire.

However, recruitment agencies come at an additional cost and may charge placement fees or a percentage of the hired employee’s salary.

Recruit with the support of a workforce management platform

Workforce management platforms, like Payoneer Workforce Management, may offer localized talent acquisition support. With this approach, your business retains complete control over hiring decisions while the platform may assist with job postings, candidate screening, contract preparation, and onboarding. 

This helps streamline the process to hire employees in the Philippines quickly and compliantly, with guidance to understand local employment laws.

Onboarding employees in the Philippines

Onboarding employees from the Philippines should be structured, culturally sensitive, and compliant with local requirements. Here are some key steps to follow:

• Collect required documents: This could include government ID, address verification, tax ID (TIN), Social Security System (SSS) number, and academic/employment credentials.
• Prepare employment contracts: Written contracts are recommended for clarity and legal standing.
• Offer bilingual training: While English is widely spoken, bilingual documentation helps bridge any understanding gaps.
• Provide cultural orientation: Highlight company values, communication preferences, and time zone considerations.
• Set up systems: Payroll, leave tracking, and benefits administration must be operational from day one.

Payoneer Workforce Management can help streamline all your onboarding tasks, ensuring that employees are properly registered, contracts are compliant, and benefits are in place from the start.

Key employment laws and requirements in the Philippines

To hire employees in the Philippines, employers need to comply with local labor laws and requirements. From drafting contracts to managing statutory benefits and terminations, understanding local labor laws is essential. Here are some key employment requirements to help you navigate each stage of the employee lifecycle.

Employment contracts

In the Philippines, employment contracts are not legally required to be in writing, and verbal agreements are considered valid under the law. However, it’s always a good idea to provide written contracts to avoid ambiguity and reduce the risk of disputes. A written agreement offers clarity and documentation of terms, protecting both the employer and the employee.

Written employment contracts in the Philippines should include:

•  Job title and responsibilities
• Compensation details, including salary, allowances, and payment frequency
• Standard working hours and leave entitlements
•  Probationary period (typically up to 6 months)
• Conditions and process for termination

Having these terms documented helps ensure transparency and serves as a point of reference if employment issues arise.

Employee benefits

Employers in the Philippines must provide several statutory benefits that support the health, financial stability, and well-being of their employees. These include:

• Vacation leave: After 1 year of service, employees are entitled to a minimum of 5 days of paid vacation (called service incentive leave or SIL) annually. However, many employers offer more generous paid time off as part of their company policies.
• Sick leave: While not mandated by law, most companies include paid sick leave in their employment contracts to promote workforce health and productivity.
• Maternity leave: Female employees are entitled to 105 days of paid maternity leave, which can be extended by an additional 30 days without pay. Solo parents may qualify for additional leave under specific circumstances.
•  Parental leave: Fathers are entitled to 7 days of paid paternity leave, and other forms of parental leave may apply depending on employee status.
• Public holidays: The Philippines observes 19 public holidays each year, varying by calendar and region.
•  13th-month pay: Employees must receive a 13th-month salary bonus by the end of the year. This is a mandatory benefit separate from performance or holiday bonuses.
•  Social security and government-mandated benefits: Employers must register employees and contribute to 3 government-mandated programs: SSS (Social Security System) for retirement and disability benefits, PhilHealth for public health insurance, and Pag-IBIG Fund, a government savings program that helps with housing and other long-term needs.

These benefits are essential for meeting compliance requirements and improving employee retention in the competitive Philippine labor market.

Working hours, overtime, and holidays

In the Philippines, the standard workday is 8 hours. Most employees work between 40 and 48 hours per week, depending on their employer’s policy or industry practices.

Any work performed beyond 8 hours in a day qualifies as overtime and must be compensated at 125% of the employee’s hourly rate on regular days, 200% for public holidays, and 130% for special holidays. This ensures employees are fairly paid for extended hours.

The country observes around 19 holidays each year. The exact number can vary depending on the official holiday calendar and regional observances.

While the legal minimum for paid leave is modest, many employers offer additional vacation and sick leave to stay competitive in attracting and retaining talent.

Tax obligations

When you hire employees in the Philippines, you’ll need to handle the following contributions and taxes:

• Income tax: Employers withhold income tax based on salary and submit it to the Bureau of Internal Revenue (BIR). Income tax rates range from 0% to 35%.
• SSS: Social security contributions are mandatory. Employers contribute 9.5% of an employee’s salary, and employees contribute 4.5%.
• PhilHealth: This government-run health insurance fund is also mandatory. Employer and employees split a contribution of 4%.
• Pag-IBIG: Employers contribute 2% of an employee’s salary to this government housing fund. Employees contribute 1% to 2% based on their earnings.

Termination and severance

Termination of employment in the Philippines must be based on just or authorized causes as outlined in the Labor Code. Employers are required to follow proper procedures, including issuing notices and allowing the employee to respond, to ensure due process is observed.

For employer-initiated terminations, written notice must be provided at least 30 days in advance. This gives employees sufficient time to prepare for the transition and allows employers to meet legal standards.

Severance pay is required in cases such as redundancy, retrenchment, or company closure. The amount typically equals 1 month’s pay for every year of service, though the final figure depends on the specific reason for termination.

Payoneer Workforce Management helps hire employees in the Philippines

How to hire employees in the Philippines depends on your business structure, growth strategy, and overall goals. While setting up a legal entity or hiring contractors may work for some companies, most growing businesses find that using a workforce management platform helps ease the process.

Payoneer Workforce Management offers a comprehensive solution for global employment. Whether you want to engage independent contractors or full-time employees, our unified platform helps you to:

• Onboard talent in 160+ countries without opening a local entity
• Run global payroll across multiple currencies
• Support with taxes, benefits, compliance, time tracking, and documentation

Book a demo with our team today to see how we can help.

FAQs

1) What is the cost of hiring an employee in the Philippines?

The cost depends on the role, region, experience, and skillset. However, leveraging a workforce management platform may be cost-effective option than setting up a legal entity or working with a recruitment agency. 

2) How do you hire and pay remote workers in the Philippines?

There are three main options to hire and pay workers in the Philippines:

1. Set up a local legal entity
2. Hire independent contractors
3. Use a workforce management platform

3) How can an American company hire employees in the Philippines?

Using a workforce management platform, like Payoneer Workforce Management, allows U.S. companies to hire employees in the Philippines. You retain control over daily operations while the platform helps manage employment contracts, benefits, and payroll, without the need to establish a local legal entity.