Employer of Record in Philippines

How an Employer of Record (EOR) works in the Philippines

An EOR provider is a third-party company in the Philippines that allows foreign employers to hire without establishing a local entity. The EOR provider, like Rivermate, becomes the legal employer in the Philippines and manages payroll, taxes, mandatory benefits and compliance in accordance with local labor laws.

Rivermate’s EOR services are built on three pillars:

• Local HR experts who understand the market and employment laws.
• A network of partners that allows us to provide competitive benefits.
• The Rivermate platform that simplifies every aspect of the employment relationship.

Using an EOR provider in the Philippines lets you focus on your business, knowing your employees are taken care of locally.

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Philippines labor market: At a glance

The hiring market
Greatest hiring activity:	Metro Manila, within the central business districts of Makati, Bonifacio Global City and Ortigas Center
Hiring timelines:	Junior or high-volume roles: 3-4 days Technical, senior or executive roles: 40-60 days
In-demand sectors:	Business Process Outsourcing (BPO), call centers, IT support centers, sales
Sectors with skills shortages:	Medicine, construction, engineering, advanced manufacturing
The salary market
Employer contributions:	Social Security System: 10% Philippine Health Insurance Corporation: 2.5% Home Development Mutual Fund: 2%
Minimum wage requirements:	Regional
Average gross annual salary for the Philippines:	₱156,000 - ₱280,000 (region, sector and role dependent)
Income tax brackets:	Progressive tax system: ₱250,000 or less: 0% (Tax-exempt)
	Then, between 15% and 35%

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The true cost of employment in the Philippines?

The Philippines is considered a low-employment-cost market, particularly for foreign companies looking to hire small teams for IT, BPO, customer service support and call centers. However, base salary alone does not represent the total employment cost in the Philippines. You also need to budget for statutory contributions, leave benefits, 13th-month pay, and vacation pay.

Wage structure

Salary levels vary considerably in the Philippines by region, city, industry and job. Candidates in areas like Metro Manila, Cebu City and Davao City are paid significantly more than in other cities in the Philippines. To illustrate, here is a comparison of the average gross annual salary ranges of higher-income cities versus lower-income cities.

Higher-income cities	Lower-income cities
Metro Manila: ₱455,000 – ₱650,000	Dumaguete City: ₱195,000 – ₱299,000
Cebu City: ₱312,000 – ₱585,000	Tacloban City: ₱182,000 – ₱273,000
Davao City: ₱286,000 – ₱520,000	Tuguegarao City: ₱182,000 – ₱260,000

These income ranges include the 13th-month pay, which is a mandatory bonus for eligible employees. Employers must pay it to employees on or before December 24th. The amount is at least one-twelfth of the employee’s basic salary earned during the calendar year.

Employer contributions

In the Philippines, employers make statutory contributions to three primary government agencies:

• Social Security System (SSS): 10%
• PhilHealth (Philippine Health Insurance Corporation): 2.5%, with a salary floor of ₱10,000 and a ceiling of ₱100,000.
• Pag-IBIG Fund (Home Development Mutual Fund): 2%, capped at ₱100.

As a broad budgeting rule, employers can expect to contribute between 12-15% above salary for social security. In the Philippines, contributions have ceiling caps, so once an employee earns above a certain salary, the contribution is frozen at the maximum ceiling.

Statutory benefits

The government requires all employers to provide several types of paid statutory employee benefits. These are the basics that you must offer to your employees.

• Service Incentive Leave
• Maternity Leave
• Paternity Leave
• Parental Leave for Solo Parents
• Special Leave for Women

The Philippines also has a number of statutory holidays. Employers must budget for additional payroll costs where employees work on regular holidays, special non-working days or rest days.

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Employment Cost Calculator

If you’d like a more accurate estimate of what it will cost to hire your employee in the Philippines, you can use our Employment Cost Calculator.

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The practical side of hiring in the Philippines

Market condition	What an employer needs to know
Talent availability	The talent pool is large but mainly concentrated in major hubs like Metro Manila, Cebu City and Davao City.
Top-paying sectors	Technology, finance, C-level executive management, consulting, data science
Key employer challenge	High employee turnover in IT, BPOs and call centers. Persistent power outages affecting business continuity Strict employment regulations and monitoring
Workplace culture	Hierarchical and focused on respectful interactions

Talent availability and skills shortages

The Business Process Outsourcing (BPO) sector in the Philippines is one of the largest in the world. This is because the Philippines is considered a low-cost employment market. These support centers are located primarily in Metro Manila and Cebu City and employ mainly Filipino nationals. For foreign employers, this provides not only a large talent pool but also a simpler hiring process. Locals can be onboarded and start working within 3-4 days.

Currently, the Philippines is investing heavily in infrastructure, connecting major hubs through transportation links and making it easier for Filipinos to work not only in major cities but also in outlying areas. These projects are creating a demand for skilled engineering, construction, logistics and trade workers. They also require project managers, finance professionals and administrative workers. In the short to medium term, this is expected to create some skills shortages in these areas, affecting how quickly talent is available.

Language and business practices

The Philippines is one of the top three English-speaking countries in Southeast Asia. This is another reason why Western countries choose to set up call centers and BPOs here. Business in the Philippines is predominantly conducted in English and is the primary language for commerce, law and education. The workplace has also been heavily influenced by Western business practices, and this makes it easy for people from all over the world to come and work in the Philippines, such as the US, Canada, Australia, Europe and South Africa.

Challenges an employer must know about

Despite positive economic and technological advancements, the Philippines has a challenge that employers should know about. Remote workers will be affected by power outages from time to time and may need backup generators for their computers and internet. Employers could be required to offer additional allowances to cover these expenses.

The employment environment is heavily regulated in the Philippines, and authorities closely monitor all employers to ensure compliance with Philippine labor law. A recent case highlighted this matter when schools came under investigation for not having the correct employment contracts and work visas.

Workplace culture

An important aspect of hiring in the Philippines that is often overlooked is that the workplace culture is hierarchical and focused on respectful interactions. This can affect how employees give feedback, raise challenges, handle conflict and interact with superiors.

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What employers must know about immigration in the Philippines

The Philippines has a unique requirement for foreigners applying for a work visa. They enter the country on a standard temporary visitor or tourist visa, then apply to convert it into the 9(g) Pre-arranged Employment visa.

This happens after the employer obtains an Alien Employment Permit from the Department of Labor and Employment. This permit will only be released once the employee enters the country. If the employee needs to start working before the 9(g) application is approved, the employer can apply for a Provisional Work Permit (PWP). The visa conversion process takes between 6 and 10 weeks.

Employers should bear in mind that while an employee can be present in the Philippines while awaiting their 9(g) approval, it does not automatically give them the right to begin working without a PWP or AEP. This was reiterated in June 2026 by DOLE Secretary Francis N. Tolentino. He summarized the intent of the legislation as follows:

“When you have the ACR, you’re allowed to reside in the Philippines. When you have the AEP, you’re allowed to work. That’s the difference”

The immigration process in the Philippines is straightforward on paper, but in practice it can be complicated. This is because several applications, government approvals and documents need to line up. For instance, the AEP is not just an administrative document. Employers must participate in a Labor Market Test to determine whether there is no Filipino citizen who is competent, able and willing to perform the position.
If you’re hiring for the first time in the Philippines, this is where partnering with an established EOR service provider can benefit your business. Their local experts understand the nuances and timing of the immigration process and can help you manage this from day one.

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Compliance issues that employers need to know about in the Philippines

Probation periods

Employers may use a probation period in the Philippines. This gives you the opportunity to assess the employee's skills, performance and suitability for the role before they become a regular employee. However, a six-month probationary period does not automatically mean dismissal at the end of the period. An employer must still follow termination procedures under local labor laws. These laws protect probationary employees from unfair dismissal.

Worker misclassification

In the Philippines, independent contractors are clearly distinguished from permanent employees: they are classified as self-employed individuals and pay their own taxes.

Challenges arise when workers are incorrectly classified as contractors even though they work exclusively for one client and take all instructions from that client. Authorities regard this as an employment relationship and can impose fines and require back payment of taxes and social security contributions.

Fixed-term contracts

Fixed-term contracts are commonplace in the Philippines. Employees sign contracts for six months to a year, and at the end of the period, they sign a new fixed-term contract. These contracts allow employers to hire an employee for a specific period or date. However, authorities have scrutinized them in an attempt to curb unfair end-of-contract schemes.

While the Labor Code does not state a maximum duration, Supreme Court jurisprudence has conditionally validated fixed-term agreements lasting up to five years, provided they were voluntarily agreed upon.

Workers in the Philippines have the right to file a complaint with the DOLE if they feel that an employer is using a fixed-term contract to delay making them a permanent employee. As part of the DOLE investigation, employers will be asked to explain why they are not recognizing the worker as a permanent employee.

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How you can benefit from using EOR services in the Philippines

Hiring an employee in a foreign country can be daunting. You need to understand compliance risks and apply them correctly. This is where partnering with Rivermate can benefit your business. Consider these key benefits for yourself:

• You won’t have to establish a local entity. This will save you time, money and resources.
• We will be the legal employer in the Philippines. We will handle payroll, taxes, mandatory benefits, terminations, visas and other aspects of the employment relationship.
• We will ensure ongoing compliance and monitor changes to employment regulations.
• You will manage day-to-day business activities with the employee and manage their performance.

Rivermate lets you put your focus where it belongs. On your business and on the people you hired.

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Ready to hire in the Philippines?

If you’ve found the right candidate in the Philippines and you’re ready to hire them. Talk to a Philippines hiring expert.

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Sources:
DOLE reminds schools employing foreign nationals to secure proper work permits