The Philippines has become one of the most popular destinations for global companies hiring remote talent. With a highly educated, English-speaking workforce and competitive costs, it’s an attractive market—but compliance requirements are strict. Here’s what employers need to know.
Country Overview
- Population: 112.9 million
- Capital: Manila
- Languages: Filipino (Tagalog) and English are official; 175+ languages spoken
- Economy: Lower-middle-income, shifting from agriculture to manufacturing and services
- Notable: World’s top supplier of nurses; strong BPO and tech talent pool
Employment Types
The Philippines recognizes four employment classifications:
| Type | Maximum Duration | Notes |
|---|---|---|
| Probationary | 180 days | Must convert to regular or terminate |
| Project-based | Project duration | Tied to specific deliverables |
| Casual | Up to 1 year | For irregular work not tied to business operations |
| Fixed-term | As specified | Must have legitimate business reason |
Important: Misclassifying employees to avoid benefits is illegal and can result in penalties.
Compensation Requirements
Minimum Wage
- Monthly: ~$119.70 USD
- Daily: ~$9.69 USD
Note: Minimum wage varies by region. Metro Manila rates are higher than provincial areas.
13th Month Pay (Mandatory)
All employees must receive a 13th month bonus, equivalent to one month’s basic salary, paid by December 24th each year. This is not optional—it’s required by law.
Sample Salaries (USD, Annual Median)
| Role | Salary |
|---|---|
| Software Engineer | $16,190 |
| Data Scientist | $47,414 |
| IT Manager | $21,488 |
| UX Designer | $23,994 |
Working Hours and Overtime
- Standard hours: 8 hours/day, maximum 48 hours/week
- Rest day: Mandatory 24-hour rest period per week
- Overtime pay:
- Regular days: +25% of hourly rate
- Rest days/holidays: +30% of hourly rate
Night shift differential (10pm–6am) requires an additional 10% premium.
Employer Contributions
| Contribution | Rate |
|---|---|
| Social Security System (SSS) | 7.07% |
| PhilHealth (Health Insurance) | 1.75% (employer share) |
| Pag-IBIG (Housing Fund) | 2% |
| Corporate Income Tax | 25-30% |
| Payroll Tax | 1.16-1.19% |
Total employer burden typically adds 10-12% on top of gross salary.
Leave Entitlements
Vacation Leave
- 13-18 days annually (company policy determines exact amount)
- Unused leave can be converted to cash
Sick Leave
- 12-15 days annually
- Also convertible to cash in many companies
Maternity Leave
- 105 days for live childbirth (paid through SSS)
- Additional 15 days for solo parents
Paternity Leave
- 7 days at full salary
Public Holidays
- 19 national holidays annually
- Working on holidays requires premium pay (typically double)
Termination Requirements
Notice Period
There’s no statutory minimum notice period, but 30 days is standard practice and often required by contract.
Severance Pay
Severance is required for authorized causes (not for just cause terminations):
- Redundancy/retrenchment: One month salary OR one month per year of service, whichever is higher
- Closure: Same as above
- Payment deadline: Within 30 days of termination
Just Causes (No Severance Required)
- Serious misconduct
- Willful disobedience
- Gross neglect of duty
- Fraud or breach of trust
- Commission of a crime
Authorized Causes (Severance Required)
- Redundancy
- Retrenchment to prevent losses
- Closure of business
- Disease preventing work
Compliance Tips
- Use proper contracts—verbal agreements aren’t sufficient
- Register with government agencies—SSS, PhilHealth, Pag-IBIG
- Pay 13th month—no exceptions, no delays
- Document everything—especially for terminations
- Consider an EOR—if you don’t have a local entity, an Employer of Record handles compliance
Why the Philippines?
- English proficiency: One of the highest in Asia
- Cultural alignment: Strong Western influence makes collaboration easier
- Time zone flexibility: Willing to work US hours
- Cost efficiency: High-quality talent at competitive rates
- Educated workforce: Strong university system, especially in tech and healthcare
Compliance requirements change. For specific situations, consult with a Philippines employment law specialist or work with an Employer of Record.