Guide to Hiring in the Philippines

Key takeaways

• The Philippines talent pool: The country’s English-speaking population and expertise in manufacturing, business process outsourcing (BPO), and IT make it one of the top destinations for global hiring.
• Local employment regulations: You will need to carefully follow regulations covering minimum wages, employment contracts, payroll taxes, statutory benefits, and termination procedures.
• No need for a local entity: G-P EOR lets you onboard, manage, and hire employees in the Philippines while simplifying payroll, benefits, and compliance.
• Worker classification is important: Hiring contractors in the Philippines gives you flexibility, but misclassifying workers can lead to penalties, unpaid benefits, and back taxes.

The Philippines has a highly educated, multilingual workforce. The country is a top player in IT and is predicted to become a global leader in semiconductor manufacturing by 2030. The country’s location provides a strategic gateway to other Asia-Pacific markets.

Before expanding into the Philippines, you’ll need to understand contracts, taxes, wages, benefits, and other employment laws. Our guide will tell you everything you need to know about hiring in the Philippines.

What to know before hiring in the Philippines

If you’re expanding your business into the Philippines for the first time, there are important legal requirements to be aware of. These norms and laws influence hiring practices in the Philippines as well as many aspects of the employer-employee relationship, including compensation and benefits.

G-P Gia™, our AI-powered global HR agent, can answer your toughest compliance questions across 50 countries — including the Philippines — and all 50 U.S. states. Reduce your reliance on outside counsel and cut HR administrative time and costs by up to 95% with Gia.

Here are five things to know about hiring in the Philippines.

1. Contracts and termination

In the Philippines, not all employment contracts must be in writing. However, it’s best practice to provide written contracts for fixed-term, project-based, and probationary employees. Contracts must include:

• The job title
• Duties
• Compensation and benefits
• Work hours
• Workplace
• Probation period (no longer than six months)

There’s no at-will employment in the Philippines. Terminations require due process and a just cause or an authorized cause. Just causes include serious misconduct, willful disobedience, gross neglect, fraud, and crime. Authorized causes include redundancy, retrenchment, closure, or incurable disease.

Employees terminated for authorized causes are entitled to separation pay. The amount depends on the exact cause and length of service.

G-P EOR has an Employment Contract Generator to help you draft compliant employment contracts that meet all legal needs and best practices in the Philippines.

2. Payroll and taxes

Employers withhold income tax from employee salaries based on tax rates set by the Bureau of Internal Revenue (BIR). As of 2026, the tax rates for individuals range from zero to 35%. Employers must withhold the following from employee salaries:

• Social Security System (SSS): Provides retirement, sickness, maternity, and other benefits. Both employer and employee contribute.
• PhilHealth: National health insurance program. Both employer and employee contribute.
• Pag-IBIG Fund: A government savings and housing fund. Both employer and employee contribute.

All rank-and-file employees who have worked for at least one month during the calendar year qualify for 13th-month pay. This must be paid no later than December 24. Some employers give an additional Christmas bonus or a 14th-month bonus. When considering these costs, remember that you can streamline the entire employee life cycle — including payroll — for your team members in the Philippines with G-P EOR. Pay your global teams in any of 150 currencies and easily add bonuses, commissions, and exceptions with just a few clicks.

3. Wages and working hours

The standard workweek in the Philippines is 40 to 48 hours. The standard workday is eight hours. Work that exceeds this limit is typically considered overtime, but this depends on statutory coverage and the circumstances of the work. Covered employees get an additional 25% of their regular hourly wage for each hour of overtime. This rate increases to 30% if they work overtime on a rest day or holiday. Employees who work on regular holidays are entitled to at least 200% of their daily wage.

The minimum wage in the Philippines varies by sector and region. As of 2025, the daily minimum wage in Metro Manila is the highest. Wages must be paid at least once every two weeks or twice a month. Intervals can’t be longer than 16 days.

4. Time off

Philippine law provides five days of paid service incentive leave (SIL) to eligible employees who have completed at least one year of service, subject to statutory exemptions. Employees can use this time for any reason, such as a vacation, sickness, or other personal reasons. Unused vacation days are usually paid out at the end of the year. Workers at companies with fewer than 10 employees, managerial employees, and other specific categories, such as domestic helpers, are exempt from this leave entitlement. However, employers can provide paid vacation leave as a fringe benefit.

Government employees are also exempt. Instead, they receive a more favorable leave entitlement under the Civil Service system. Government employees earn 1.25 days of vacation leave for each month worked.

The Philippines has two types of holidays: regular holidays and special nonworking days. There are 10 regular holidays, which are paid days off. These include New Year's Day, Good Friday, and Christmas Day. Special nonworking days are unpaid days off and change from year to year. In the past, these days have included Chinese New Year, All Saints' Day, and New Year's Eve.

Mothers get 105 days of paid maternity leave with the option to extend for 30 days without pay. Solo parents receive an extra 15 days of paid leave. Employees who suffer a miscarriage or emergency termination of pregnancy are entitled to 60 days of paid maternity leave.

Fathers get seven days of paid paternity leave for their first four children, provided the mother is their legitimate spouse and they live together. Fathers must present marriage documents and birth certificates.

5. Antidiscrimination laws and restrictions

The 1987 Philippine Constitution, unamended as of October 2026, guarantees equality before the law. It instructs the State to protect labor rights and promote equal employment opportunities for all, regardless of sex, age, or other status. Depending on the law in question and the violation involved, penalties for discrimination may include fines, imprisonment, administrative sanctions, or civil damages such as reinstatement, back wages, and moral damages.

Hiring models for global companies in the Philippines

You have several options when hiring employees in the Philippines. The right hiring model will depend on your budget, long-term plans, and business goals. Each approach meets different needs.

• Direct employer registration: The direct employer model gives you complete control over hiring and workforce management. To hire employees in the Philippines directly, though, you’ll need the right legal registration structure. This includes registering your company with the relevant government agencies and managing contributions to the Social Security System (SSS), Pag-IBIG Fund, and PhilHealth.
• Employer of record: An employer of record (EOR) lets you hire employees in the Philippines without establishing a local entity in the country. An EOR essentially becomes the legal employer and handles employment contracts, taxes, payroll, and other employment compliance requirements. With G-P EOR, you can onboard, manage, and hire in the Philippines seamlessly and quickly. We support hiring in 180+ countries, allowing you to expand your international workforce without the expense of establishing local entities.
• Subsidiary or branch: If you set up a subsidiary or branch in the Philippines, you will have a formal business presence in the country. A subsidiary is a separate legal entity, while a branch is an extension of your company. Both options require that you register your business with the government. You need to be aware of tax obligations and ongoing employment compliance requirements as well. Depending on your business activities, you may also need permits and licenses. This model makes sense if you’re planning on long-term operations in the Philippines.
• Independent contractor and misclassification risk: Hiring contractors in the Philippines gives you access to specialized talent without having to set up a traditional employee relationship. Contractors manage their own schedules and workflows. However, Philippine law distinguishes independent contractors from employees based on the working relationship. Misclassifying an employee as an independent contractor in the Philippines can result in penalties such as retroactively paying for previously unpaid wages, taxes, and statutory benefits. G-P Contractor™ simplifies contractor onboarding, contract management, and payments. Its automated classification checks help you identify potential risks before hiring contractors.

Top hiring hubs in the Philippines

Some cities in the Philippines are known for particular industries. Knowing what each city has to offer allows you to focus your hiring efforts in the right place and fill roles faster.

These are the top talent hubs in the Philippines:

• Metro Manila is the main economic and employment center. It includes cities like Makati, Taguig (Bonifacio Global City), Quezon City, and Pasig. These locations are home to several multinational companies and business process outsourcing (BPO) services.
• Cebu City is known as the Queen City of the South. Cebu is a central hub for BPO, IT, and manufacturing employment. It has a lower cost of living than Manila.
• Davao City is the largest city in Mindanao. Davao is a growing center for BPO, agriculture, and trade.
• Clark Freeport Zone is a developing area for logistics, manufacturing, and BPO operations.
• Iloilo City is emerging as a regional center for BPO, healthcare, and education.

Key industries in the Philippines

Understanding the Philippines’ main industries allows you to benchmark salaries and benefits. You can use this insight to make smart choices about where to invest and grow your workforce.

The main industries in the Philippines include:

• BPO and IT: The Philippines is a global leader in BPO services. This includes call centers, IT support, and other services nationwide. The sector is driven by the country’s proficiency in English. Specialist talent includes customer service and technical support, finance and accounting professionals, and legal process outsourcing roles such as paralegals and legal researchers.
• Manufacturing: This sector employs about 7% of the Philippines’ labor force. Key manufacturing industries include electronics and semiconductors, textiles, automotive parts, food and beverage processing, and chemicals. Specialist talent includes various engineering roles.
• Construction: This is a major growth area. The sector is a big beneficiary of the government's Build Better More program. This initiative has funded PHP 9.14T for hundreds of projects and construction work on roads, railways, airports, and seaports. Specialist talent includes project managers, various engineering roles, and skilled trades.
• Financial services: Banking, insurance, and fintech are well-developed in the country. There are over 300 fintech companies in the Philippines. Digital payments and mobile wallets are the leading subsectors. Specialist talent includes software developers and engineers, data scientists and analysts, and cybersecurity professionals.
• Mining and energy: The Philippines has rich mineral resources. Mining includes gold, copper, and nickel. The country is also investing in renewable energy like solar, wind, and hydropower. Specialist talent includes engineers, surveyors, and geologists.

Cost of hiring an employee in the Philippines

Whether you’re hiring one employee or an entire team in the Philippines, expenses are inevitable. Budget for the following:

• Entity setup (unless you partner with an employer of record)
• Job advertisements
• Labor costs for applicant review
• Payroll
• Taxes
• Salaries
• Benefits
• Bonuses
• Allowances
• Insurance
• Travel
• Translator (if applicable)

According to G-P Verified sources from Gia, the employer burden rate in the Philippines, which includes costs triggered on top of salaries, is approximately 14.5%.

What does a company need to do to hire employees in the Philippines?

Make sure you cover these essentials before expanding your team in the Philippines:

• File your official company name with the Securities and Exchange Commission (SEC).
• Notarize your treasurer’s affidavit and articles of incorporation.
• Get your taxpayer identification number (TIN).
• Open a bank account.
• Deposit the minimum required capital.
• Receive your business permit from the Business Permit and Licensing Office (BPLO).
• Get a Barangay Clearance that certifies your company’s compliance with local community regulations.
• Get your community tax certificate (CTC) so that you can pay your yearly community taxes.

Setting up a Philippines subsidiary can take weeks or months. Use G-P EOR to hire full-time employees in the Philippines without setting up your own entity. Build your team in the Philippines at a lower cost and with peace of mind that you’re doing so compliantly.

Steps to hiring in the Philippines

The hiring process in the Philippines is similar to the one you’re likely familiar with in your own country. The hiring process follows five basic steps: advertising the job, evaluating applications, interviewing candidates, sending job offers, and onboarding new employees.

1. Advertise job vacancies

Create a detailed job description and define the role based on responsibilities and qualifications. Make sure your job ads comply with antidiscrimination laws. It’s against the law to specify age preferences, limits, or specifications in job advertisements, or to require applicants to disclose their age or birth date.

Include the following information in your job ad:

• Name of the hiring company
• Contact details (name, phone, email)
• Job title and description of duties
• Required skills and experience
• Work hours and location
• Application opening and closing dates

JobStreet, LinkedIn, and Indeed are popular job sites in the Philippines.

2. Evaluate applications

Collect applications and review resumes. Screen candidates based on their qualifications, experience, and fit for the role. If you do an initial screening, avoid asking candidates about their age, marital status, or health.

3. Interview candidates

Interview candidates who made it onto your shortlist. You can do these interviews in person or virtually. Use structured, nondiscriminatory interview questions. Gia can help you create questions that follow antidiscrimination laws in the Philippines, so you can find the best fit for the role while complying with local regulations.

4. Make job offers

Coordinate with your chosen candidate about the position with your team. Prepare a compliant employment contract. Include the job title, duties, salary, benefits, working hours, leave entitlements, and termination conditions.

5. Onboard new employees

Now you can onboard new employees. Collect the successful candidate’s pre-employment documents. These include government-issued IDs, medical certificates, NBI or police clearance, and a transcript of education records. You must also register the new employee with the Social Security System (SSS), PhilHealth, and Pag-IBIG Fund.

If you’re working with an EOR like G-P, you won’t have to worry about the administrative burden of onboarding. We’ll streamline the process, so you can focus on training your new hires and integrating them into your company culture.

Hiring contractors in the Philippines

Working with independent contractors in the Philippines can be a cost-effective way to test the market and build a presence without the commitment of full-time employees. Contractors based in the Philippines understand local consumer behavior, rules, and business practices. They’ll be ready to start working quickly with their own equipment and established work processes.

Hiring contractors allows you to easily adjust your workforce based on your business needs without the complexities and costs of employment.

Before you enter into an agreement with an independent contractor in the Philippines, consider the following.

1. Employees vs. independent contractors

It’s important to understand the difference between employees and independent contractors. In the Philippines, employers hire employees to do work and, in return, pay them a regular salary and benefits. Independent contractors provide services. Unlike employees, contractors set their schedules, use their own equipment, and work on specific projects rather than having an ongoing role.

2. Penalties for misclassification

Classifying someone as a contractor when they’re not can lead to severe penalties. If misclassification occurs, you may need to:

• Retroactively pay all back wages, unpaid salaries, and statutory benefits such as 13th-month pay.
• Retroactively register the misclassified worker with the Social Security System (SSS), PhilHealth, and Pag-IBIG Fund, and pay all unpaid employer and employee contributions, including penalties and interest.
• Face penalties and expenses for improper tax withholding and misclassification from the Bureau of Internal Revenue (BIR).

3. How to pay contractors in the Philippines

G-P Contractor™ takes away the messy, time-consuming process of hiring and paying international contractors. You can create and issue contracts and pay contractors with just a few clicks, all while ensuring a compliant process.

Hire employees and contractors in the Philippines with G-P

Our Global Employment Platform and its AI-powered products, EOR, Contractor, and Gia, support companies as they build and manage global teams.

G-P is the recognized leader in global employment with more than a decade of experience; the largest team of HR, legal, and compliance experts; and a global proprietary knowledge base.

Make your expansion to the Philippines easier with G-P. Contact us or book a demo today.

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