Employer of Record in Philippines

An Employer of Record in the Philippines acts as the legal employer on behalf of a foreign company, managing contracts, payroll, and statutory compliance under Philippine law. EOR hiring can be completed in days, compared to the 10 to 16 weeks typically required to establish a local entity, making it a practical path for companies seeking to hire without a local presence.

Local hiring in the Philippines requires tri-agency registration with SSS, PhilHealth, and Pag-IBIG, and compliance with regional wage board orders that vary by province and city. The SSS total contribution rate reached 15% effective January 2025, split between employer and employee. Additional obligations include mandatory 13th month pay for all rank-and-file employees, payable on or before December 24 each year, a 30-day notice period for authorized-cause termination under the Labor Code, and a 110% wage premium for night shift work performed between 10 PM and 6 AM.

What Is an Employer of Record in Philippines?

An EOR is a locally registered entity that employs workers on behalf of a foreign company, assuming full legal employer obligations under Philippine law, including contracts, payroll, and statutory filings.

Global tech firms, BPO operators, and startups entering the Philippines without a local entity are the primary users of this model.

The workflow runs as follows: the client selects a candidate; the EOR issues a Labor Code-compliant employment contract; the EOR registers the employee with SSS, PhilHealth, and Pag-IBIG; runs bi-monthly payroll; administers 13th month pay; and manages day-to-day HR compliance while the client directs the work. To understand how does EOR work in practice, see our detailed explainer.

Your Hiring Options in Philippines: EOR vs. Entity vs. PEO vs. Contractor

Companies entering the Philippines have four practical paths: engaging an independent contractor, incorporating a direct local entity, working through a PEO, or using an EOR.

The contractor model suits short-term, project-based work where the worker operates with genuine independence and is not integrated into core business operations.

A direct entity makes sense for companies planning large, long-term headcount with the capacity to absorb 10 to 16 weeks of setup time. Foreign-owned Philippine subsidiaries also require a minimum paid-in capital of USD 200,000, which makes entity incorporation a significant financial commitment before a single employee is hired.

Path	Setup Time	Compliance Ownership	Cost Structure	Best For
Independent Contractor	Days	Contractor owns compliance	Project or hourly fees	Short-term, project-based work
Direct Entity	10 to 16 weeks	Full employer responsibility	High upfront costs plus USD 200,000 minimum paid-in capital	Large, long-term headcount
PEO	Weeks	Shared between PEO and client	Per-employee monthly fee	Companies with an existing Philippine entity
Gloroots EOR	Days	Gloroots manages compliance	Predictable, country-specific pricing	Fast, compliant entity-free employment

Philippine law applies DOLE's four-fold test to determine employment status. If a worker is controlled, paid, and integrated into operations, misclassifying them as a contractor carries significant legal and financial risk. Review Gloroots' EOR services to understand how compliant employment is structured.

How to Hire in Philippines Through an EOR: Step by Step

Hiring through an EOR in the Philippines follows a defined sequence from the initial hiring decision through to offboarding.

Step 1: Decide Between EOR, Entity, or Contractor

Assess headcount, timeline, and compliance risk before engaging any provider. Entity setup in the Philippines requires a minimum paid-in capital of around $200,000 and 10 to 16 weeks of setup time. Use the three-path comparison table above to make this decision first.

Step 2: Vet and Select an EOR Provider

Confirm the EOR holds its own Philippine entity directly rather than operating through a third-party partner. Verify DOLE and BIR registration, check the support model, and confirm pricing transparency before signing. See our best employer of record guide to benchmark providers against these criteria.

Step 3: Draft and Issue a Compliant Employment Contract

Issue a written contract covering role, compensation, probation period (up to six months), working hours, 13th month pay, statutory benefits, IP assignment, and termination grounds. Inform the employee of regularization standards at the time of engagement, as required under Article 296 of the Labor Code. Failure to do so results in the employee being deemed regular by operation of law.

Step 4: Enroll Employee in Statutory Programs

Register the employee with SSS, PhilHealth, Pag-IBIG, and the Employees' Compensation (EC) program before the first payroll run. EC coverage is administered through SSS. The EOR manages all agency filings and remits contributions on the employer's behalf.

Step 5: Run Compliant Bi-Monthly Payroll

Process payroll twice per month per Labor Code requirements. Apply regional wage orders, night shift differentials, and overtime premiums. Withhold income tax under TRAIN Law brackets and remit to BIR monthly.

Step 6: Manage Offboarding and Exit

Issue a 30-day notice for authorized-cause terminations. For authorized-cause separations, severance pay equals one month's pay per year of service, or fraction of at least six months, under the Labor Code.

Complete the clearance process and release final pay within 30 days of separation, including pro-rated 13th month pay and unused leave conversion. Issue a Certificate of Employment within three working days of request.

How to Choose the Right EOR in Philippines

Evaluate any provider against six criteria before signing a service agreement in the Philippines.

• Local legal knowledge and DOLE compliance track record

• Own entity versus partner network

• Support model and response time

• Pricing transparency, including statutory contribution pass-throughs, 13th month pay administration, and offboarding costs (market rates: USD 250 to 2,000 per employee per month)

• Security and data privacy compliance under the Philippine Data Privacy Act

• Integration capability with your existing HRIS and finance tools

Reviewing employer of record software options can help you assess platform fit alongside these compliance criteria.

Local Legal Knowledge and DOLE Compliance Track Record

Verify the provider has direct experience with the Philippine Labor Code, DOLE advisories, regional wage board orders, and the tri-agency contribution system, not just general Southeast Asia coverage.

Own Entity vs. Partner Network

Confirm whether the EOR holds its own SEC-registered, DOLE-enrolled Philippine entity or subcontracts to a local partner. Own-entity providers carry direct compliance liability and typically resolve issues faster.

Support Model and Response Time

Assess whether the provider offers a dedicated account manager, local Philippine HR support, and a defined SLA for payroll queries and compliance issues. This matters given the Philippines operates at UTC+8.

Pricing Transparency

EOR fees in the Philippines typically range from USD 250 to 2,000 per employee per month. Request an all-in quote that covers statutory contribution pass-throughs, 13th month pay administration, and offboarding costs before signing. See Gloroots pricing for country-specific details.

Security and Data Privacy Compliance

Verify the provider complies with the Philippine Data Privacy Act (Republic Act 10173). Confirm the provider holds ISO 27001 or SOC 2 certification for handling employee personal data.

Integration Capability

Confirm the EOR platform integrates with your existing HRIS, finance, and expense tools. Direct integration reduces manual data entry and reconciliation errors across payroll cycles.

Workforce and Talent Pool in Philippines

The Philippines has a workforce of approximately 49 million, with a median age of 25.7 years. GDP grew 5.6% in 2024, with the IMF projecting 5.1% growth in 2025. The services sector accounts for 61.5% of employment, and the country attracted $8.9 billion in FDI in 2024.

Over 500,000 graduates enter the market annually, with strong representation in STEM, business, and healthcare. Metro Manila (Makati, BGC, Quezon City), Cebu, and Davao anchor hiring across BPO, IT, finance, and healthcare sectors.

Filipino professionals score 570 on the EF English Proficiency Index 2024, ranking 22nd globally out of 116 countries and 2nd in Asia, placing them in the High Proficiency band. The Philippines operates at UTC+8, which overlaps with US West Coast mornings and Australian business hours, making real-time collaboration practical for both regions. Labor costs are competitive relative to markets like employer of record Singapore or employer of record Vietnam.

Work culture is hierarchical yet collaborative. Remote-first adoption has remained high since the pandemic, and Filipino professionals are widely regarded for strong communication skills and alignment with Western business norms.

Detail	Snapshot
Workforce size	~49 million (2025 est.)
Median age	25.7 years
English proficiency	EF EPI 2024: score 570, ranked 22nd globally, 2nd in Asia, High Proficiency band
Top talent hubs	Metro Manila, Cebu, Davao
Key industries	BPO, IT, finance, healthcare
GDP growth	5.6% (2024); IMF projects 5.1% in 2025
Services sector share	61.5% of employment
FDI inflows	$8.9 billion (2024)
Time zone	UTC+8; overlaps with US West Coast mornings and Australian business hours

Employment Law Essentials in Philippines

Philippine employment law is governed by the Labor Code, regional wage board orders, and DOLE advisories. Employers must apply the correct rules for each location where they hire.

Working hours and overtime

Standard working hours are 8 hours per day, up to 48 hours per week. Overtime is paid at 125% of the regular hourly rate. Work performed between 10 PM and 6 AM carries a night shift differential of 110% of the regular hourly rate. Rest day and holiday work commands premiums ranging from 130% to 200%.

Employment contracts

The Labor Code requires written contracts specifying role, compensation, probation period (maximum 6 months), working hours, benefits, IP assignment, and termination grounds. Under Article 296, employers must inform probationary employees of the standards for regularization at the time of engagement. Failure to do so renders the employee regular from the start of employment. For authorized-cause terminations, the severance entitlement is one month's pay per year of service. Gloroots issues Labor Code-compliant contracts for every hire in the Philippines.

Minimum wage

Minimum wage is set by regional wage boards, not a single national rate. In the National Capital Region, the daily minimum wage is $11 (PHP 695) for non-agricultural workers and $11 (PHP 658) for agricultural workers, effective July 18, 2025, per the Regional Tripartite Wages and Productivity Board order. Employers hiring outside Metro Manila must verify the applicable board order for each region, as rates differ and are updated independently.

Employment Contracts

Under Article 296, employers must disclose regularization standards to probationary employees at engagement. Failure to do so means the employee is deemed regular from day one. Authorized-cause terminations carry a severance entitlement of one month's pay per year of service.

Working Hours and Overtime

Work performed between 10 PM and 6 AM is paid at 110% of the regular hourly rate as a night shift differential.

Minimum Wage

Minimum wage in the Philippines is set by regional wage boards, not a single national rate. In the National Capital Region, the daily minimum wage is $11 (PHP 695) for non-agricultural workers and $11 (PHP 658) for agricultural workers, effective July 18, 2025. Employers must verify the applicable regional wage board order for every location where they hire.

Leave and Statutory Benefits in Philippines

Philippine law sets minimum leave entitlements and statutory benefit obligations that apply to all rank-and-file employees. Employers must also administer mandatory contributions to SSS, PhilHealth, and Pag-IBIG alongside these leave provisions.

The table below summarises the core leave types, entitlements, pay rates, and key conditions under current Philippine law.

Leave type	Entitlement	Pay rate	Key conditions
Service incentive leave	5 days per year	100%	Minimum 1 year of service
Maternity leave	105 days (120 days for solo mothers)	100% (SSS-funded in part)	Female employees; SSS contributions required
Paternity leave	7 days	100%	Married male employees; limited to first four deliveries of lawful wife under RA 8187
Solo parent leave	7 additional days	100%	Solo Parents' Welfare Act; solo parent ID required
Public holidays	18 national holidays in 2025	100% (regular); 130% premium if worked (special non-working)	Regional variations apply

13th month pay is mandatory for all rank-and-file employees and must be paid on or before December 24 each year. Under the TRAIN Law (RA 10963), the first $1,437 (PHP 90,000) of combined 13th month pay and bonuses is tax-exempt. Many employers split payment into mid-year and December installments as a common practice, though the law requires only the December deadline.

Annual Leave

The Labor Code mandates a minimum of 5 days paid service incentive leave per year for employees with at least one year of service.

Sick Leave

The Labor Code does not mandate a separate sick leave entitlement. SSS provides sickness benefit payments for qualifying employees. Most employers voluntarily offer additional sick leave days as part of their compensation packages.

Maternity and Paternity Leave

Female employees are entitled to 105 days of paid maternity leave, extended to 120 days for solo mothers, funded in part through SSS reimbursement. Married male employees receive 7 days of paid paternity leave under Republic Act 8187, capped at four qualifying pregnancies per employee.

Public Holidays

The Philippines observes 18 national public holidays in 2025, covering regular holidays and special non-working days.

Payroll, Tax and Statutory Contributions in Philippines

Philippine employers run payroll twice per month, as required by the Labor Code, and are responsible for withholding income tax and remitting statutory contributions to three agencies.

A compliance gap that foreign employers frequently miss is the Employees' Compensation (EC) fund, an employer-only contribution of 1% of the monthly salary credit, capped at a $319 (PHP 20,000) salary credit, administered through SSS. Regional wage board orders also vary by location, so the applicable minimum wage must be verified for each region where employees are based.

TRAIN Law income tax brackets

Annual taxable income (PHP)	Tax rate
Up to $3,992 (PHP 250,000)	0%
$3,992 (PHP 250,001) to $6,388 (PHP 400,000)	15% on excess over 250,000
$6,388 (PHP 400,001) to $12,775 (PHP 800,000)	20% on excess over 400,000
$12,775 (PHP 800,001) to $31,939 (PHP 2,000,000)	25% on excess over 800,000
$31,939 (PHP 2,000,001) to $127,754 (PHP 8,000,000)	30% on excess over 2,000,000
Over $127,754 (PHP 8,000,000)	35% on excess over 8,000,000

Employer and employee statutory contributions

Agency	Employee share	Employer share	Notes
SSS	~5%	~10% + 1% EC	Total SSS rate reached 15% effective January 2025; EC is employer-only, capped at $319 (PHP 20,000) salary credit
PhilHealth	2.5%	2.5%	Based on basic monthly salary
Pag-IBIG	2%	2% (max $3 (PHP 200/month))	Employer share capped at $3 (PHP 200) per month
13th month pay	N/A	8.33% of annual basic salary (accrued monthly)	Mandatory for all rank-and-file employees; payable on or before December 24

Worked cost example: customer support role

Cost component	Monthly amount (PHP)
Gross monthly salary	$559 (PHP 35,000)
SSS employer share (~10%)	$56 (PHP 3,500)
EC contribution (1%, capped)	$3 (PHP 200)
PhilHealth employer share (2.5%)	$14 (PHP 875)
Pag-IBIG employer share (max)	$3 (PHP 200)
13th month accrual (8.33%)	$47 (PHP 2,916)
EOR service fee	$199
Total estimated employer cost	~$682 (PHP 42,691) (excl. EOR fee)

Total statutory employer costs add approximately 20 to 25% on top of gross salary, before the EOR service fee. See pricing for country-specific EOR fee details.

Work Visas and Permits in Philippines

Foreign nationals working in the Philippines require one of three primary permits depending on assignment length and employment structure.

An EOR, as the legal employer of record, can support Alien Employment Permit and Special Work Permit applications on behalf of the foreign national. The 9(g) Pre-arranged Employment Visa requires a separate immigration filing with the Bureau of Immigration and is not processed through DOLE.

Visa Type	Purpose	Validity
9(g) Pre-arranged Employment Visa	For foreign nationals with pre-arranged employment; issued by the Bureau of Immigration	Up to 1 year, renewable
Alien Employment Permit (AEP)	Required for most foreign workers; issued by DOLE; processing takes approximately 3 to 4 weeks	1 to 5 years depending on contract
Special Work Permit (SWP)	For short-term assignments up to 6 months; issued by the Bureau of Immigration	Up to 6 months

Companies using an EOR should confirm which permit applies before the employee's start date, as processing timelines affect onboarding schedules.

Equity and ESOP Consulting in Philippines

Equity compensation is growing in use among Philippine tech and startup hires but is not yet standard across all sectors.

The Philippines has a tech-heavy BPO and IT talent market where equity compensation is increasingly used by startups and multinational tech firms to attract senior talent. Stock options are taxed as compensation income, either at grant or at exercise depending on the plan structure. Foreign equity plans offered to Philippine employees are also subject to Securities and Exchange Commission registration requirements, which companies must address before extending equity awards.

Misclassification Risk in Philippines

Misclassifying an employee as an independent contractor under Philippine law triggers DOLE enforcement action and back-pay liability for the engaging company.

Philippine law applies the four-fold test to determine employment status. If any of the following factors are present, the worker is likely an employee, not a contractor:

• Selection and engagement: the company selects the worker and controls the terms of engagement, including role scope and start date.

• Payment of wages: the company pays the worker directly on a regular schedule, rather than on a project or invoice basis.

• Power of dismissal: the company holds the authority to end the working relationship unilaterally, without a separate contractual process.

• Power to control conduct of work: the company directs how the work is performed, not just what output is delivered.

Companies that misclassify workers face a range of penalties under the Labor Code and related statutes:

• Back payment of all unpaid SSS, PhilHealth, Pag-IBIG, and Employees' Compensation contributions, covering the full period of misclassification.

• DOLE fines and a regularization order requiring the company to convert the worker to regular employment status immediately.

• Potential criminal liability under the Labor Code for willful or repeated violations of employment classification rules.

An EOR removes this risk by making the EOR the legal employer of record, with full compliance responsibility under Philippine law.

Hiring, Onboarding, Termination and Offboarding in Philippines

Onboarding

Structured onboarding in the Philippines runs across four phases, each with specific compliance and operational steps.

Before Day One

• Issue a written employment contract covering role, compensation, probation period, and termination grounds under the Labor Code.

• Register the employee with SSS, PhilHealth, and Pag-IBIG before the first payroll run.

• Confirm the applicable regional wage board order for the employee's work location.

• Set up payroll records and BIR tax registration for withholding tax remittance.

Day One

• Provide the employee with copies of the signed contract and statutory enrollment confirmations.

• Brief the employee on working hours, overtime rules, and leave entitlements under the Labor Code.

• Confirm night shift differential or hazard pay applicability if relevant to the role.

• Issue company equipment and system access in line with the client's onboarding checklist.

First Week

• Verify SSS, PhilHealth, and Pag-IBIG enrollment numbers are active and correctly recorded.

• Run the first payroll cycle and confirm net pay, tax withholding, and contribution deductions are accurate.

• Confirm the employee's probation period start date and performance review schedule.

Beyond

• Administer 13th month pay accrual monthly and remit the full amount on or before December 24.

• Track service incentive leave accrual and maintain leave records per DOLE requirements.

• Monitor regional wage board orders for any mid-year adjustments affecting the employee's minimum wage.

Termination

Philippine law distinguishes between just cause and authorized cause termination. Just cause covers employee misconduct or serious violations and requires a notice-to-explain process before dismissal. Authorized cause covers business reasons such as redundancy or retrenchment and requires a 30-day written notice to both the employee and DOLE. Severance pay for authorized-cause termination is one month's pay per year of service, or one month's pay for a fraction of a year of service of at least six months.

Offboarding

Offboarding follows a defined sequence to meet Labor Code and BIR requirements.

• Clearance process: collect company property, revoke system access, and obtain sign-off from relevant departments before releasing final pay.

• Final pay: release all outstanding wages, pro-rated 13th month pay, unused service incentive leave conversion, and any applicable severance within 30 days of the separation date.

• Certificate of Employment: issue within three working days of the employee's written request, confirming dates of employment and position held.

• BIR Form 2316: issue the annual tax certificate to the departing employee, covering all compensation and withholding tax for the period of employment in the calendar year.

Onboarding

• Before day one: Issue a Labor Code-compliant employment contract; register the employee with SSS, PhilHealth, Pag-IBIG, and EC; collect government ID numbers (SSS, TIN, PhilHealth, Pag-IBIG); confirm the regional wage board order applicable to the employee's location.

• Day one: Conduct orientation covering company policies, DOLE-mandated rights, and statutory benefits; issue company equipment if applicable; confirm payroll details and bank account.

• First week: Complete BIR TIN registration if not yet held; enroll in HMO if provided; confirm probationary performance standards in writing per Article 296 of the Labor Code.

• Beyond: Track probationary period milestones; issue a regularization notice before the six-month mark; begin leave accrual tracking.

Termination

Just-cause terminations carry no severance obligation. Authorized-cause terminations require one month's pay per year of service and 30 days advance notice to DOLE.

Offboarding

• Settlement: Compute final pay including pro-rated 13th-month pay, unused service incentive leave (SIL) conversion to cash, and severance pay where applicable under the Labor Code.

• Documents: Issue a Certificate of Employment within three working days of request, provide BIR Form 2316 for the tax year, and complete the internal clearance certificate process.

• Exit: De-register the employee from company payroll, notify SSS, PhilHealth, and Pag-IBIG of the separation, and confirm return of all company property before releasing final pay.

What's New: Recent Regulatory Changes in Philippines

The SSS total contribution rate increased to 15% effective January 2025 under the contribution schedule set by RA 11199 (Social Security Act of 2018), with the employer share at approximately 10% and the employee share at approximately 5%.

• The SSS rate increase raises direct employer payroll costs; budget projections for Philippine headcount must reflect the updated employer share of approximately 10%.

• The TRAIN Law $1,437 (PHP 90,000) ceiling on tax-exempt 13th-month pay remains in effect, keeping that benefit free of withholding tax for most rank-and-file employees.

• The NCR daily minimum wage increased to $11 (PHP 695) for non-agricultural workers, effective July 18, 2025, per RTWPB-NCR Wage Order.

• PhilHealth contributions are set at 5% of basic monthly salary for 2024 to 2025, split equally between employer (2.5%) and employee (2.5%).

• DOLE Labor Advisory No. 06, Series of 2020, requires employers to release final pay within 30 days of separation and remains actively enforced.

Employers must update payroll systems to reflect the SSS rate change and the NCR minimum wage increase before each effective date to avoid under-remittance penalties.

Quarterly review note: Verify SSS, PhilHealth, Pag-IBIG, and RTWPB-NCR rates each quarter. Contribution schedules and wage orders are subject to change without extended notice.

Costs and Financial Planning for Hiring in Philippines

Total employment cost in the Philippines extends well beyond gross salary. Statutory contributions, mandatory benefits, and administration fees all add to the base figure.

Three costs catch foreign employers off guard: the 13th-month pay accrual (8.33% of annual basic salary), the Employees' Compensation (EC) contribution that is often omitted from initial payroll setup, and regional wage board compliance costs for companies hiring across multiple locations.

Statutory employer contributions break down as follows: SSS approximately 10% plus 1% EC, PhilHealth 2.5%, Pag-IBIG 2% (capped at $3 (PHP 200) per month), and 13th-month pay at 8.33%. Total employer cost typically runs 20 to 25% above gross salary. For a worked example, a $559 (PHP 35,000) gross per month customer support role carries statutory costs of approximately $113–$142 ($112 (PHP 7,000) to $140 (PHP 8,750)), a 13th-month accrual of approximately $47 (PHP 2,917), and an EOR fee of approximately $179 (PHP 11,200) (estimated at USD 200). Total monthly cost reaches approximately $923–$972 ($910 (PHP 57,000) to $958 (PHP 60,000)). For a full breakdown of how these figures compare across markets, see employer of record cost.

Cost element	Direct entity	Gloroots EOR
Entity setup cost	USD 20,000 to USD 50,000	None required
Minimum equity requirement	Applies under SEC rules	Not applicable
Payroll administration	Internal hire or third-party vendor	Included in EOR fee
Statutory compliance	Employer responsibility	Gloroots manages all filings
Offboarding management	Internal HR and legal cost	Included in EOR fee
Time to hire	10 to 16 weeks (entity setup)	Days

A direct entity becomes cost-competitive at approximately 20 or more employees. Below that threshold, the EOR model typically costs less when entity setup, equity requirements, and ongoing compliance overhead are factored in.

Common Challenges and How Gloroots Solves Them in Philippines

Philippine hiring presents specific compliance challenges that catch foreign employers off guard, particularly around regional wage variation, probationary disclosure rules, and immigration support for foreign hires.

The table below covers seven distinct risk areas and how Gloroots addresses each. For companies at an early stage of international hiring, EOR for startups outlines how the model applies to smaller, fast-moving teams.

Challenge	Gloroots solution
Regional wage board variance across 17 regions	Gloroots applies the correct regional wage order for each employee location, preventing underpayment and DOLE exposure.
Article 296 probationary standards disclosure risk	Gloroots includes written performance standards in every probationary contract, satisfying the Labor Code disclosure requirement.
EC contribution omission in payroll setup	Gloroots registers and remits the 1% EC contribution from the first payroll run, closing a gap that many self-managed setups miss.
Night shift differential calculation errors	Gloroots applies the mandatory 10% night shift differential for hours worked between 10 PM and 6 AM on every payroll cycle.
13th-month pay tax exemption tracking	Gloroots tracks the $1,437 (PHP 90,000) tax-exempt ceiling and applies correct withholding treatment to 13th-month pay each December.
Authorized-cause severance calculation	Gloroots calculates separation pay at one month per year of service (or one-half month, depending on cause) and issues the required 30-day DOLE notice.
AEP and SWP immigration support for foreign hires	Gloroots supports Alien Employment Permit (AEP) and Special Work Permit (SWP) applications for foreign nationals employed through the EOR.

Why Gloroots Is a Strong EOR Partner in Philippines

Gloroots suits companies hiring small teams in the Philippines that need compliant employment without establishing and administering their own local entity. Its EOR model allows companies to employ workers in the Philippines while Gloroots manages the local employment and payroll administration.

Gloroots manages key Philippine employment and payroll requirements, including statutory contributions for SSS, PhilHealth, and Pag-IBIG, as well as Employees' Compensation (EC) obligations. It also administers applicable regional wage requirements based on the employee's work location.

Mandatory benefits such as 13th-month pay and applicable night-shift differential are incorporated into payroll administration. Separation pay is also calculated where required based on the applicable termination rules and reason for separation. This reduces the need for clients to manage Philippine payroll requirements independently or build dedicated local payroll expertise.

BPO, IT, and customer support teams hiring across Metro Manila, Cebu, Davao, and other Philippine locations can be a strong fit for this model. Gloroots supports companies at different stages through its EOR for mid-market companies and EOR for enterprises offerings.

Before signing with an EOR provider, companies should confirm who will serve as the legal employer, how statutory registrations and payroll obligations are managed, and whether the provider operates directly or through a local partner. These factors can affect the structure of the employment relationship, compliance processes, and level of accountability.

Conclusion

The Philippines' 15% SSS contribution rate and regional wage board system make payroll compliance more complex than a single national rate suggests. Each region operates under its own wage order.

Before committing to a provider, compare own-entity status, regional wage coverage, and all-in pricing. Request a Philippines-specific cost breakdown that includes EC contributions and 13th-month pay accrual. For companies expanding across Asia, see employer of record India and employer of record Australia for comparable compliance considerations in those markets.

Frequently Asked Questions About Employer of Record in Philippines

What does an Employer of Record in the Philippines actually do?

An EOR acts as the legal employer on your behalf. It holds a locally registered entity, issues Labor Code-compliant contracts, enrolls employees with SSS, PhilHealth, and Pag-IBIG, runs bi-monthly payroll, and manages DOLE compliance. Your company directs the work while the EOR carries full statutory employer responsibility.

Is using an EOR legal in the Philippines?

Yes. The EOR model is a recognized employment structure under Philippine law. The EOR holds an SEC-registered entity, complies with the Labor Code, and meets all DOLE registration requirements. The client company directs work without holding a local entity of its own.

How long does it take to hire someone in the Philippines through an EOR?

Hiring through an EOR typically takes days. Setting up a direct Philippine entity requires 10 to 16 weeks, a minimum paid-in equity of USD 200,000, and at least four incorporators, two of whom must be Philippine residents. An EOR removes all of those requirements.

How much does an EOR in the Philippines cost?

EOR fees in the Philippines range from USD 250 to USD 2,000 per employee per month, depending on the provider and service scope. Total employer cost runs approximately 20 to 25 percent above gross salary once statutory contributions to SSS, PhilHealth, and Pag-IBIG are included. See EOR for small business for guidance on cost planning at smaller headcounts.

What is the difference between an EOR and setting up a Philippine entity?

A direct Philippine entity requires USD 200,000 in minimum paid-in equity, four incorporators with at least two Philippine residents, and 10 to 16 weeks of setup time. An EOR requires none of that. The EOR's existing registered entity covers all statutory obligations from day one.

Do EOR employees in the Philippines receive the same benefits as direct hires?

Yes. Employees hired through an EOR receive all mandatory benefits under Philippine law: SSS, PhilHealth, Pag-IBIG, and Employees' Compensation contributions, 13th-month pay, five days of service incentive leave, and statutory maternity and paternity leave entitlements.

Can an EOR sponsor work visas for foreign nationals in the Philippines?

An EOR, as the legal employer, can support Alien Employment Permit applications filed with DOLE and Special Work Permit applications with the Bureau of Immigration. The 9(g) pre-arranged employment visa requires a separate immigration process, but the EOR's legal employer status supports the underlying application.

What is the 13th-month pay rule in the Philippines?

13th-month pay is mandatory for all rank-and-file employees. It equals one-twelfth of the employee's total basic salary earned during the calendar year and must be paid on or before December 24. Under the TRAIN Law, the first $1,437 (PHP 90,000) of combined 13th-month pay and other bonuses is exempt from income tax.