Global Hiring in the Philippines: A No-Nonsense Guide

The Philippines has become a go-to destination for global companies hiring remote talent—and for good reason. With a highly skilled, English-speaking workforce, competitive salaries, and a strong remote-first culture, it offers serious potential for businesses looking to expand efficiently. But hiring here isn’t just about sending out contracts and processing payroll. From mandatory benefits to government contributions and labor classifications, the legal landscape is layered and specific. If you’re planning to build a team in the Philippines, it’s essential to do it right. This guide covers everything you need to know. 

Why Companies Are Hiring in the Philippines

The Philippines has become one of the most attractive hiring destinations for global employers, especially in tech, customer service, finance, and creative industries. Here’s why:

1. Skilled, English-Speaking Talent Pool
   
   With over 700,000 annual college graduates and one of the highest English proficiency rates in Asia, the Philippines offers a workforce that’s both technically skilled and easy to communicate with. Many professionals have prior experience working with U.S., Australian, and UK companies often in roles that require a high degree of autonomy and real-time collaboration. The education system also places strong emphasis on English instruction, making onboarding smoother for global teams.
2. Cost-Effective Without Sacrificing Quality
   
   Labor costs in the Philippines are significantly lower than in North America or Western Europe. Businesses can build high-performing teams while keeping overhead lean, ideal for startups and scaling companies. Lower salaries don’t mean lower standards; many Filipino professionals are overqualified for the roles they’re hired into, bringing a higher level of performance than expected. Additionally, benefits and infrastructure costs remain manageable even as team size grows.
3. Established Remote Work Culture
   
   The country has a strong foundation in remote and distributed work, particularly due to its mature BPO industry. Many professionals are already equipped for remote collaboration and familiar with global workflows. Tools like Slack, Zoom, Jira, and Notion are part of the daily toolkit for most remote workers. The rise of freelancing and virtual assistant roles has only accelerated this cultural shift toward flexible work arrangements.
4. Cultural Compatibility
   
   Filipino professionals are known for adaptability, professionalism, and a strong understanding of Western workplace culture. This alignment reduces the friction often found in cross-border teams. There’s also a cultural emphasis on hospitality and client service, which translates well into customer-facing and collaborative roles. Soft skills like communication, empathy, and reliability are often standout traits in Filipino hires.
5. Government Incentives & Infrastructure
   
   The government has pushed initiatives to support foreign investment and digital workforce growth, with improvements in internet infrastructure and work-from-home policies across key cities. Programs like “Digital Jobs PH” aim to develop ICT-based employment in rural areas, expanding the available talent pool beyond urban hubs. Major ISPs have also begun upgrading fiber optic coverage, improving stability and reliability for remote teams.

Key Legal and Employment Considerations

Hiring in the Philippines comes with specific legal and compliance requirements that employers must meet to avoid penalties, disputes, or operational disruption. Here’s what you need to know before extending an offer:

1. Employment Classifications: Employee vs Contractor
   
   Misclassifying an employee as a contractor is a common mistake and one with serious consequences. Contractors operate independently and are not entitled to statutory benefits. If authorities determine a contractor is being treated like an employee (regular hours, control over work, etc.), the company may face back pay, penalties, and legal liability.
2. Employment Contracts Are Mandatory
   
   All employees—regardless of status—must have a written contract outlining job responsibilities, salary, working hours, benefits, and termination conditions. It should also specify compliance with the Labor Code of the Philippines. Contracts must be signed before the employee starts work to be considered valid.
3. Standard Working Hours and Overtime Rules
   
   The standard workweek is 40 hours (8 hours per day, 5 days a week). Anything beyond this is considered overtime and must be compensated at 125% of the regular rate, and higher on rest days or holidays. Employers must also track hours accurately and pay promptly to remain compliant. Failure to compensate overtime properly can result in labor complaints and monetary penalties.
4. Mandatory Government Contributions
   
   Employers are required to register and contribute to three main government agencies on behalf of each employee:

• SSS (Social Security System) for pension and benefits
• PhilHealth for healthcare
• Pag-IBIG Fund for housing and savings
  The employer must also remit these contributions on time each month.

1. 13th Month Pay Is a Legal Requirement
   
   All rank-and-file employees who have worked at least one month during the calendar year are entitled to a 13th-month bonus, equivalent to one-twelfth of their annual basic salary. It must be paid no later than December 24 each year—this is non-negotiable and enforced by law. Missing or delaying this payment can lead to labor disputes and formal complaints with the Department of Labor and Employment (DOLE).

Payroll and Tax Requirements

Processing payroll in the Philippines isn’t just about transferring salaries—it’s a compliance-heavy task that requires employers to manage taxes, government contributions, and statutory entitlements with precision. Here’s what to keep in mind:

1. Income Tax and Withholding Obligations
   
   Employers are required to deduct income tax from employee salaries based on a progressive tax system ranging from 0% to 35%. The withholding amount depends on the employee’s compensation level and applicable exemptions. These taxes must be reported and remitted monthly to the Bureau of Internal Revenue (BIR) using the appropriate forms (e.g., BIR Form 1601-C). Failure to withhold or submit accurate returns on time can result in hefty penalties, surcharges, and interest.
2. Mandatory Government Contributions
   
   Every payroll cycle must include contributions to three government programs: SSS (social security), PhilHealth (health insurance), and Pag-IBIG (housing fund). Both the employer and employee contribute, with rates varying based on salary levels. Employers must calculate, deduct, and remit these contributions regularly—usually on a monthly basis. Missed payments or underreporting can affect an employee’s ability to access benefits like loans, hospitalization coverage, or retirement claims.
3. Payroll Must Be in Philippine Pesos (PHP)
   
   Salaries must be paid in the local currency (PHP) to comply with Philippine labor laws. This ensures employees aren’t disadvantaged by currency conversion losses or payment delays due to international banking processes. In some cases, foreign employers may seek exemptions to pay in another currency, but these require formal approvals and are rarely granted.
4. Timely Payment and Payroll Frequency
   
   Philippine law mandates that employees be paid at least twice a month (bi-monthly), and payment schedules should be clearly defined in the employment contract. Delays in payment, especially of final pay or statutory bonuses, can lead to complaints with the Department of Labor and Employment (DOLE), potential fines, and reputational damage.
5. Holiday, Sick Leave, and Maternity Leave Compliance
   
   Employees are entitled to benefits such as holiday pay (for regular and special non-working holidays), service incentive leave (minimum of 5 days after one year of service), and government-mandated maternity/paternity leave. Employers must ensure accurate leave tracking and provide full pay on eligible holidays—even if the employee doesn’t work on that day. Non-compliance may trigger DOLE audits or employee grievances.

Hiring Options for Global Employers

If you’re a global employer looking to hire in the Philippines, there are several ways to go about it. But each comes with different legal responsibilities, cost implications, and operational risks. Here’s a breakdown of the most common hiring models:

• Setting Up a Local Entity

This is the most direct—but also the most complex approach. It involves registering a business with the Securities and Exchange Commission (SEC), obtaining local tax identification numbers, setting up corporate bank accounts, and complying with local labor and tax laws. While it gives you full control over operations and branding, the setup process can take months and require significant legal and administrative overhead. It’s better suited for long-term expansion plans or companies hiring at scale.

• Engaging Independent Contractors

Hiring freelancers or contractors is faster and more flexible, especially for project-based work. However, this model carries a high risk of misclassification. If the contractor performs regular duties, works fixed hours, or is under the company’s direct supervision, they may legally qualify as an employee, triggering retroactive tax, benefit, and legal obligations. Most labor complaints in the Philippines stem from this exact scenario.

• Working with a Local Staffing Agency

Local firms can help you find and hire payroll talent. This reduces some of the operational burden, but compliance still falls on your shoulders. Agencies may not offer legal employer status, which means you’re still liable for ensuring correct contracts, contributions, and payments. It’s an option that works well when paired with solid legal advice and oversight.

• Using an Employer of Record (EOR)

An EOR acts as the legal employer on your behalf, managing everything from contracts and payroll to government contributions and compliance. You manage the employee’s tasks, while the EOR ensures everything is legally compliant in the Philippines. This is the most efficient option for companies without a local entity, offering fast onboarding, full compliance, and reduced risk. It’s ideal for startups, pilot teams, and businesses looking to scale quickly without infrastructure.

Each method has its use case, but only one puts compliance, speed, and scalability into a single, manageable package. That’s where EOR becomes the clear choice for many global employers.

Why EOR Is the Preferred Route for Global Hiring

Hiring in the Philippines can be rewarding but only if it’s done compliantly and efficiently. That’s why more global companies are choosing to work with an Employer of Record (EOR). It’s the most practical option for teams that want to move fast without tripping over legal and operational hurdles.

• No Local Entity Required

Setting up a legal entity in the Philippines can take months and involve lawyers, paperwork, and local registrations. With an EOR, you can bypass all of that. The EOR becomes the legal employer on your behalf, allowing you to hire in days—not months.

• Fully Compliant Employment Contracts

The EOR drafts contracts that follow the Philippine Labor Code and reflect current regulations. This protects your company from fines, lawsuits, and disputes while ensuring your employee knows exactly where they stand.

• Government Contributions and Taxes Handled

The EOR manages SSS, PhilHealth, and Pag-IBIG contributions, income tax withholdings, and reporting—all with 100% local compliance. No need to track changing rates or navigate filing deadlines. Everything is calculated, paid, and submitted on time.

• Statutory Benefits and Leaves Included

From 13th month pay and holiday entitlements to sick leave, maternity leave, and bonuses, the EOR builds it all into the compensation package. Your employee gets what they’re legally owed, and you avoid costly oversights.

• Fast Onboarding and Scalability

Whether you’re hiring one person or an entire remote team, an EOR can onboard employees quickly and scale with you as your needs grow. This flexibility allows you to test new markets, launch regional teams, or fill critical roles without the commitment of permanent infrastructure.

How Remire Helps You Hire in the Philippines

Hiring in the Philippines isn’t just about contracts and payroll, it’s about understanding the nuances of local labor laws, creating a great experience for your remote hires, and protecting your company from legal risks. At Remire, we combine deep local expertise with scalable global infrastructure to help you hire smarter and stay fully compliant without opening a local entity.

• We Handle Everything Legal—So You Don’t Have To

From drafting compliant employment contracts to managing tax filings, SSS, PhilHealth, Pag-IBIG contributions, and onboarding documents, Remire takes care of it all. You don’t have to worry about shifting labor policies or missing a filing deadline. We stay ahead of regulatory updates and ensure every aspect of employment aligns with Philippine law.

• Payroll That’s Accurate, Local, and On Time

We process payroll in Philippine Pesos, apply the correct tax withholdings, and ensure government contributions are calculated and submitted without error. Employees get their payslips, contributions are tracked, and everything is done according to local labor and tax schedules. Your team is paid correctly and trusts you because of it.

1. 1. Benefits That Build Retention
      We help you offer more than just a paycheck. Remire ensures your employees receive legally required benefits like 13th month pay, holiday pay, and service incentive leave. But we also help you go further, supporting supplemental benefits like health insurance and allowances based on your budget and what top talent expects.

• Fast, Compliant Onboarding

We onboard your new hires in days, not weeks. Employees get locally compliant contracts, access to support, and a smooth transition into their role without delays or uncertainty. Whether it’s a developer in Cebu or a marketing specialist in Manila, we ensure a consistent onboarding experience every time.

• Ongoing Support with a Human Touch

You’ll have a dedicated account manager who understands your business goals and is available to guide you through every step—from hiring to contract renewals or exits. We also support your employees directly, handling HR questions, benefits clarification, and payroll concerns, so they feel secure and taken care of.

• Scalable for Growth, Ready for Change

Whether you’re hiring your first team member in the Philippines or building a regional operation, Remire adapts to your needs. Our EOR model gives you the freedom to scale fast, hire flexibly, and test markets without long-term commitments or legal bottlenecks.

With Remire, you don’t just get compliant hiring, you get a partner invested in your success. We make it possible to build great teams in the Philippines without slowing down or making costly mistakes.

Common Mistakes to Avoid When Hiring in the Philippines

Hiring in the Philippines opens up a world of talent and opportunity, but it also comes with a unique legal and cultural context. Missteps—especially from companies unfamiliar with local practices—can quickly snowball into costly compliance issues or unhappy teams. Below are the most common hiring mistakes international employers make (and how to avoid them):

• Skipping the 13th Month Pay

Many foreign employers assume this is a performance-based bonus. It’s not. it’s a mandatory benefit under Philippine labor law, and all rank-and-file employees are entitled to it. It’s equivalent to one-twelfth of an employee’s annual basic salary and must be paid no later than December 24 each year. Failing to issue this payment on time can lead to formal labor complaints, financial penalties, and serious reputation damage, especially during the holidays when employees rely on this extra income.

• Misclassifying Full-Time Workers as Contractors

It may seem faster to hire a Filipino worker as a freelancer or contractor to avoid setting up local payroll and benefits. But if they work fixed hours, report directly to your managers, and rely on your systems, they meet the legal standard of an employee. In the Philippines, misclassification is taken seriously and can result in back pay of government contributions, statutory benefits, and even regularization of the employee. Beyond the financial risks, it also undermines employee trust and can lead to public disputes if mishandled.

• Using Generic or U.S.-Based Employment Contracts

Using your U.S. offer letter as a contract in the Philippines might seem convenient, but it won’t hold up in labor disputes. Local labor law requires that contracts include specific terms like benefits, working conditions, hours, and cause-based termination clauses. Contracts also need to comply with the Labor Code of the Philippines, and in many cases, must be available in both English and Filipino. Without these details, your contract may be considered invalid, leaving your company vulnerable during audits or legal action.

• Missing Government Contributions

You’re legally required to register and remit contributions for each employee to the SSS, PhilHealth, and Pag-IBIG Fund. These aren’t optional. They provide your employees with healthcare, social security, and housing benefits. Missed contributions not only put your team at risk but can also trigger fines, audits, and backdated liabilities. Additionally, delays in reporting can restrict your employee’s access to benefits, leading to dissatisfaction and potential turnover.

• Delaying Payroll or Paying in the Wrong Currency

Employees in the Philippines expect to be paid twice a month, on time, and in Philippine Pesos. Paying late—or worse, in USD or another foreign currency can violate labor law unless approved by the Department of Labor and Employment (DOLE). Even minor payment delays can erode employee morale, especially during high-cost seasons like Christmas or the start of a school year. Consistency in payroll builds trust—disruptions quickly undermine it.

• Overlooking Regional Employment Nuances

Salaries, benefits expectations, and even internet connectivity differ widely between Metro Manila, Cebu, Davao, and provincial regions. For instance, hiring in Metro Manila may require a more competitive package, while workers in rural areas may prioritize job stability and flexibility over perks. Failing to adapt to these differences can lead to mismatches in expectations, failed hires, or unnecessarily high costs. A region-sensitive approach allows you to attract better-fit candidates and retain them longer.

Hiring in the Philippines, the Right Way

Success in the Philippines isn’t just about finding the right people, it’s about hiring them the right way. Compliance with labor laws, offering fair benefits, and respecting local norms are non-negotiable if you want to build a team that performs and stays. When done right, the Philippines offers access to world-class talent, lower costs, and long-term operational efficiency. The difference between hiring and hiring well often comes down to the support you have. And that’s where a partner like Remire steps in to make things easy, legal, and scalable from day one.