Simplify and expedite your business setup and expansion in the Philippines with the support of an Employer of Record (EOR) solution like Marzuna, eliminating the need to establish a foreign legal corporation. The Philippines boasts a highly educated and skilled workforce, particularly in industries such as information technology and customer-centric services, making it an attractive location for business growth. Filipino professionals are known for their kindness, adaptability, and strong work ethics, further enhancing the appeal of developing your company in this vibrant nation.
Navigating the intricacies of a foreign market, including understanding legal requirements, employment regulations, taxation systems, filing procedures, payroll management, and other specific details, can be a daunting task when expanding internationally. Yet, this knowledge is pivotal for achieving successful and efficient business operations with a sustainable cost structure.
Our global HR platform empowers you to grasp all the essential business intricacies in the Philippines from the comfort of your home country. With our automated and comprehensive platform, you can effortlessly manage payroll, taxes, recruitment, training, development, and compliance in the Philippines. To kickstart this journey, let’s begin by delving into some fundamental employment policies and essential information relevant to doing business in the Philippines.
As of January 2021, the employment rate in the Philippines stood at an impressive 91.3%. The cornerstone of employment laws in the country is the Labor Code of 1974, which lays down the foundation for regulations concerning employment practices, wage structures, working hours, employee benefits, and more.
The Philippines offers global companies an enticing gateway to access its vibrant market through the Philippines Employer of Record (EOR) solution. Our streamlined and automated platform significantly reduces the time and bureaucracy involved in hiring staff or handling administrative tasks, including the seamless issuance of employment contracts and efficient payroll management.
To ensure compliance with the country’s employment regulations, it is imperative to have a firm grasp of the laws governing the engagement and dismissal of independent contractors, working conditions, overtime compensation, and the prevailing labor code standards before entering into employment agreements.
We are here to facilitate your business activities in full accordance with Philippine law, supporting individuals and companies in achieving their objectives while upholding all pertinent employment regulations in the nation. By doing so, your company can experience accelerated growth and enhance its prospects for long-term success in the Philippines.
Let us discuss the employment laws in detail:
| Entitlements | Explanation |
|---|---|
| Statutory Working Hours | A typical work week shouldn’t go longer than 8 hours each day, 6 days per week. |
| Overtime eligibility | On a Sunday or a paid holiday, overtime is paid at a rate of 130% of the basic pay; on a public holiday, it is paid at a rate of 200%. Any employee who works in the nation during an emergency covered by Article 89 is entitled to overtime pay. |
| Weekly Rest Period | In a seven-day week, Sunday is regarded as a rest day. . |
| Paid Public Holidays | The following public holidays in Sweden are marked as paid holidays for employees:
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| Maternity & Paternity Leave | A male employee is entitled to seven days of leave up until the birth of the first four children, while female employees are entitled to up to 105 days of fully paid maternity leave for each pregnancy while employed. Within 60 days after the child’s birth, employees are permitted to take time off. After presenting supporting documentation to the Social Security Program for reimbursement, the employer must pay paternity leave. |
| Social Security System |
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| Annual Vacation Leave | After one year of employment, all employees are entitled to five days of paid leave, known as “service incentive leave,” which can be utilised for vacation or sickness based on the number of working days. When an employee reaches a certain degree of professionalism, their employers also provide them 15 days of paid leave each year. |
| Medical Leave | There isn’t a set rule regarding sick days for employees in the Philippines, however certain employment contracts or collective bargaining agreements may provide for sick leave benefits.
In the event of illness or injury, employees are entitled to receive from their employers 90% of their average daily income. Only those employees who paid a three-month Social Security System contribution fund for a year prior to their illness or accident are eligible for this payment.When all of the employer-paid sick leave has been used, the aforementioned provision takes effect. In this instance, the Social Security System is obligated to compensate the employer in full. |
| Employment Protection & Anti-Discrimination Rights |
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| Confidentiality of Personal Information | The Data Privacy Act 2012 in the Philippines safeguards both personal and corporate data. It offers thorough instructions for handling personal data. |
Within the Philippines, employment contracts as outlined in the Labor Code extend protection to two primary categories of employees: full-time employees and contractor employees.
Full-time employment comes with a range of benefits and safeguards, including statutory sick pay, paternity leaves, minimum notice periods, legal protection against unjust termination, and access to pension and health insurance benefits. The classification of full-time employees is determined by the nature of their work, as they are typically engaged to perform activities that are essential or desirable in the regular course of business operations.
According to the Labor Code, regular employees are those who have rendered service for a minimum of one year, whether continuously or with intermittent periods, in relation to their role within the business. This tenure bestows job security upon them, ensuring that their employment cannot be terminated without justifiable cause and due process.
In contrast, contractor employees have a fixed term that is specifically linked to a particular project. Once the project concludes, so does their engagement. Contractor employees typically do not enjoy the same benefits and protections afforded to full-time employees.
Within the Philippines, full-time employment is generally favored by individuals due to the substantial job security it offers. The array of attractive benefits and a heightened level of employment stability associated with full-time positions serves as the primary driver for this preference.
Elevating your company’s success hinges on building an exceptional team, as the strength of your team plays a pivotal role in achieving your organizational objectives. During the interview process, it is crucial to evaluate candidates’ skills and qualifications in alignment with the job description before making a hiring decision. It’s worth noting that all employment-related matters in the Philippines are governed by the regulations set forth by the Department of Labor and Employment (DOLE).
In the Philippines, the process of recruiting for government positions entails rigorous civil services tests that span from two to six months. Conversely, the private sector relies on various job platforms, including well-known ones like Google for Jobs, Pinoy Jobs, jobfinderph.com, Jora, and more, to fill job openings. Once a candidate is selected, they are required to enter into a formal employment contract with the company to ensure compliance with the relevant regulations.
While you may be situated in your home country, you might be pondering how to effectively manage compliance matters from afar.
In the Philippines, a probationary term of up to six months is required of all new hires. The period may be extended if there is an apprenticeship agreement in place between the employer and the worker. Regardless of whether a new contract is signed for the same position, the employee must be recognized as a regular employee once this term has been successfully fulfilled, according Philippine employment law.
| Topics | Explanations |
|---|---|
| Notice for Termination of Employment | An employee may end their employment relationship with their employer by giving written notice to the employer at least one month in advance, or they may do so immediately for the reasons listed below:
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| Grounds for Termination by Employer | According to Article 282 of Book VI, Title I of the post-employment laws of Labor Relations, the employer may terminate the employee’s employment. The following are the grounds for termination:
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It is easier to expand a business in the Philippines with Marzuna, The Employer of Record (The Philippines EOR) solution, while maintaining accuracy and compliance without having to establish new legal organizations. Choosing to use EOR can improve the efficiency of your business’s payroll, corporate compliance, attendance, tax filings, and other employment-related tasks.
Marzuna’s global HR platform will help you manage your business more simply by eliminating complexity through its unified and automated platform, which is designed to handle monthly payroll, onboarding employees, drafting employment contracts, managing compliances, and all day-to-day HR functions for your employees in the Philippines. Speak with an expert as soon as possible.
| Taxes that apply to invoices | Employer Liability 12.25% + Provident fund. |
|---|---|
| Minimum duration of service | There is no set timeframe for the service. There is a six-month probationary period that may be terminated on certain grounds, as described in the probation and termination section, by either the employee or the employer. |
| Currency Accepted | Philippine Peso. |
| Required Details and Documents | Personal data, ID evidence, home proof, a resume, bank information, and employment information are all required for Filipino citizens. For expatriates: contact information, employment contract, resume, copy of ID and passport, job description, educational background, and technical qualifications. |
Immigrant, Non-Immigrant, and Special Visa are the three types of visas available in the Philippines, and they are further divided into several sorts of visas as shown in the table below.
| Visa category | Explanation |
|---|---|
| A Child born abroad of an immigrant mother | a kid born when the mother is on a short stay outside the Philippines. |
| 13 C | This visa is for a kid who was born after the accompanying parent’s immigrant visa was issued. |
| 13 A | It comes in two varieties:
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| Permanent Resident Visa (PRV) | This type of visa is granted to four types of categories:
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| 13 G | This is for the candidate who:
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| Returning Visa (13 E) | Anyone who has previously been awarded permanent residency in the Philippines and is returning to a relinquished abode there following a brief trip abroad is eligible to make this transaction. |
| Quota Visa (13) | This applies to citizens of the nations with whom the Philippines maintains diplomatic ties and which, in accordance with the concept of reciprocity, provide Filipinos the same immigration rights. For any given calendar year, there may not be more than fifty (50) people of any one nationality or who are stateless. |
| Visa category | Explanation |
|---|---|
| Temporary Resident Visa (TRV) | This type of visa is granted to 4 types of categories:
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| Temporary Visitor Visa (9A) | These types of temporary visitor visas are available:
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| Treaty Trader or Treaty Investor (9D) | This category of visas comprises the following:
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| Accredited Official of Foreign Government (9E) | Any accredited representative of a foreign government acknowledged by the Philippine government, together with his family, close friends, and staff members. |
| Student Visa (9F) | This includes 2 categories:
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| Pre- Arranged Employment Visa (9G) | This kind of visa consists of:
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| Visa category | Explanation |
|---|---|
| Visa Upon Arrival (SEVUA) |
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| Special Visa for Employment Generation | A qualified non-immigrant foreigner may apply for this visa provided they really employ at least ten (10) Filipinos in a legitimate and long-lasting business, trade, or industry. |
| Special Employment Visa for Offshore Banking Unit | This includes: converting an offshore financial unit’s PD 1034 non-immigrant visa; extending a non-immigrant visa for an offshore banking unit; |
| Special Visa under E.O. 226 as amended by R.A. 8756 | This includes:
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You may get assistance from our regional partners in the Philippines with handling work permits for your company. As an EOR in the Philippines, we handle all employment-related obligations and duties in a straightforward and legal manner. The client firm may manage the day-to-day operations and employment activities of its personnel on our HR platform. You must submit an Employee Visa 9G application to the Bureau of Immigration in the Philippines in order to obtain a work visa there. The following documents are necessary:
Payroll and tax management in the Philippines requires familiarity with local employment regulations and the Philippine tax system, which may vary based on the nature of your firm. The taxation framework includes several tax legislation, such as business tax, withholding tax, employee pay, social security, and others.
The Marzuna EOR solution will ensure that you abide with payroll regulations in the Philippines. Additional elements of the social security system include the Philippines Health Insurance Corporation (PhilHealth) and a house building fund. Let’s examine the tax rates in more detail.
Employer Taxation
| Tax | Explanation |
|---|---|
| Tax Year | 31st December (Calendar year) |
| Penalties | P1,000 for basic tax, not more than P5,000. P3,000 for basic tax is more than P5,000 but less than P10,000. |
| Payroll Tax | No specific payroll taxes. |
| Social Security Contributions | Employers make social security contributions at a rate ranging from 73.70 to 1,178.70 pesos per employee. |
| Public Pension | The Government Service Insurance System and Social Security System are in charge of overseeing pensions in the Philippines. |
Employee Taxation
| Tax | Explanation | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Income Tax Rates |
25% of their gross income is applied to non-resident immigrants who are not involved in trade or commerce in the Philippines. |
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| Sales Tax | 12% on all goods and services. | ||||||||||||
| Filing & Payment | The deadline for submitting the yearly income tax return is April 15 of the year after the calendar year. | ||||||||||||
| Health Insurance | The Philippines Health Insurance Corporation (PhilHealth), which provides publicly financed healthcare, offers non-taxable healthcare benefits. |
Our commitment is to ensure that your business remains in full compliance across the nation. In the Philippines, you have the option to establish various types of business entities, such as a company, branch office, regional headquarters, or foreign partnership, depending on the nature and scope of your operations. Let’s delve into the specific requirements to get you started.
To create a Filipino subsidiary, you must prepare and submit specific documentation to the Securities and Exchange Commission (SEC) and obtain the necessary licenses. This entails providing:
Typically, the process of incorporating a subsidiary in the Philippines takes approximately 30 days. Once this is completed, you can conduct your business activities without hindrance. As your trusted global provider of Employer of Record (EOR) solutions, we take the weight off your shoulders by handling documentation requirements, corporate compliance, employee development, and hiring in the Philippines. Our objective is to streamline your business operations, enabling you to focus on key areas of growth and expansion.
