How to hire employees in the Philippines in 2026: Process, costs & more

You can hire employees in the Philippines in three ways: set up your own local entity, engage independent contractors, or use Payoneer Workforce Management that employs the worker under the BPO framework on your behalf. 

Each route differs in cost, speed, and the extent to which compliance responsibility sits with you. This guide covers all three: where to find talent, how onboarding works, and the labor laws, taxes, and statutory benefits employers need to get right.

Many U.S. companies hire in the Philippines for its large, English-speaking talent pool and competitive costs, filling customer service, tech, and finance roles. Payoneer Workforce Management can handle compliant contracts, peso payroll, and SSS, PhilHealth, and Pag-IBIG contributions so that you can engage talent without a local entity. 

Book a demo for support with hiring in the Philippines.

How do you hire employees in the Philippines?

A local entity gives you the most control, but is the slowest and costliest to set up. Contractors are fast and low-cost but carry misclassification risk. A workforce management platform lets you employ talent without your own entity. The table below compares all three.

1) Set up a legal entity in the Philippines

Setting up a local entity lets you hire directly and gives you full control over hiring, contracts, and payroll, but it is the slowest and most expensive route. 

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. The process, though, 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, and incorporate with the Securities and Exchange Commission (SEC). Ongoing compliance, tax filing, and legal management can be involved, 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

Engaging independent contractors is faster and lower-cost and needs no local entity, but misclassifying an employee as a contractor carries real penalties.

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.

Treating an employee as a contractor, though, can lead to serious penalties. Under 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

Payoneer Workforce Management also offers a contractor management system for onboarding, contracts, and payments, starting at $19 per contractor per month. To avoid contracting workers directly, an Agent of Record (AOR) service can engage and pay them through its own entity, starting at $99 per contractor per month.

3) Use a workforce management platform

A workforce management platform lets you engage employees in the Philippines without your own entity. It supports local employment through a compliant framework and makes the worker available to your business, handling contracts, payroll, and statutory benefits. For instance, Payoneer Workforce Management can support you through its BPO framework.

An Employer of Record (EOR) is a popular route elsewhere for companies that want to engage employees without a legal entity, but the standalone EOR model is not permitted in the Philippines. Businesses can 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 onboarding, and helps simplify the process for U.S. companies expanding into the Philippines.

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

What happens if you hire in the Philippines without staying compliant?

Hiring without a local entity or a compliant partner exposes you to three main risks: misclassifying employees as contractors, failing to remit statutory contributions, and dismissing workers without the due process required by the Labor Code. Each can bring back pay, penalties, and government action. 

The way to reduce them is to hire compliantly, through your own entity or a workforce management platform.

Where can you find employees in the Philippines?

You can source talent in the Philippines through local job boards, recruitment agencies, or a workforce management platform. Job boards give you the widest reach, agencies speed up screening for a fee, and a platform pairs sourcing support with compliant onboarding once you have chosen a candidate.

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.

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

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 employment contracts and onboarding.

This helps engage talent in the Philippines quickly, with guidance to understand local employment laws.

How do you onboard employees in the Philippines?

Onboarding in the Philippines means collecting the right documents, issuing a compliant contract, registering the hire with the social agencies, and setting up payroll and benefits before day one. A structured, culturally aware process helps a new employee settle in quickly.

Onboarding employees in 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 or 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 with onboarding, from registering employees to setting up compliant contracts and benefits from the start.

What are the key employment laws in the Philippines?

Employers in the Philippines must follow the Labor Code, administered by the Department of Labor and Employment (DOLE), on contracts, working hours, statutory benefits, and termination, and remit contributions to the SSS, PhilHealth, and Pag-IBIG. The essentials below cover each stage of the employment relationship.

From drafting contracts to managing statutory benefits and terminations, understanding local labor laws is essential. Here are some key employment requirements to help you manage each stage of the employee lifecycle. For a deeper look, see our employment laws guide for the Philippines.

What should an employment contract include?

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

In the Philippines, employment contracts are not legally required to be in writing, and verbal agreements are valid under the law. A written contract, though, helps avoid ambiguity and reduce the risk of disputes by documenting the terms and protecting both sides.

What employee benefits are mandatory?

Employers in the Philippines must provide several statutory benefits that support the health, financial stability, and well-being of their employees. For the full breakdown, see our leave policy guide for the Philippines. These include:

• Vacation leave: After 1 year of service, employees are entitled to a minimum of 5 days of paid vacation (service incentive leave, or SIL) annually. Many employers offer more generous paid time off as part of their company policies.
• Sick leave: While not mandated by law, most companies include 11 days of 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, extendable by an additional 30 days without pay, with 15 extra days for solo parents.
• 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: For 2026, the Philippines observes 19 public holidays, made up of 10 regular holidays, 8 special non-working days, and 1 special working day, which can vary by official calendar and region.
• 13th-month pay: Employees must receive a 13th-month salary equal to one month’s pay on or before December 25. This is a mandatory benefit separate from performance or holiday bonuses.
• Social security and government-mandated benefits: Employers must register employees and contribute to three government-mandated programs: SSS for retirement and disability benefits, PhilHealth for public health insurance, and the Pag-IBIG Fund, a government savings program for housing and other long-term needs.

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

What are the working hours and overtime rules?

The standard workday in the Philippines is 8 hours, and most employees work between 40 and 48 hours per week, depending on employer policy or industry practice.

Any work performed beyond 8 hours in a day qualifies as overtime and is paid at 125% of the hourly rate on regular days, 200% for work on a regular holiday, and 130% for work on a special non-working day. This makes sure employees are fairly paid for extended hours.

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.

What taxes and contributions must employers handle?

When you engage employees in the Philippines, you’ll need to handle the following contributions and taxes. Our payroll guide for the Philippines covers the mechanics in more detail.

• Income tax: Employers withhold income tax based on salary and remit it to the Bureau of Internal Revenue (BIR). Income tax rates are graduated from 0% to 35%.
• SSS: Social security contributions are mandatory. Employers contribute 10% and employees 5%, for a total of 15% of the monthly salary credit (capped at PHP 35,000).
• PhilHealth: This government health insurance fund is also mandatory. Employer and employee split a 5% premium (2.5% each), on monthly pay from PHP 10,000 up to a PHP 100,000 ceiling.
• Pag-IBIG: Employers contribute 2% and employees 1% to 2%, based on a maximum fund salary of PHP 10,000, so each side’s contribution is capped at PHP 200.

How does employee termination and severance work in the Philippines?

Termination in the Philippines must rest on a just or authorized cause under the Labor Code, and employers must follow due process, including issuing notices and allowing the employee to respond.

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

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

How can Payoneer Workforce Management help you hire 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 complete 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

Workforce management platform services start at $199 per employee per month, with final pricing depending on headcount and contract structure. 

Hire in the Philippines with Payoneer Workforce Management. Book a demo for compliant contracts, payroll, and benefits.

Frequently asked questions (FAQs)

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.