Payroll & Employment Guide Philippines

The law recognises five types of employment contracts: regular, probationary, project-based, fixed-period, and seasonal. Employers must ensure each contract, oral or written, meets the labour code’s essential requirements and minimum standards. If the employee is a Philippine national, employers must provide a bilingual contract including Filipino to ensure clear communication.

Notice periods: 30 days written notice

Termination of employment: Employers may terminate contracts for just causes (employee fault), authorised causes (business/legal reasons), or accept voluntary resignations made for personal reasons.

Employee benefits in the Philippines are governed by comprehensive labour laws designed to protect workers and promote their welfare. These benefits include mandatory statutory provisions as well as additional perks and supplemental benefits.

• Mandatory benefits: Social security contributions, PhilHealth, Pag-IBIG Fund, 13th salary,
• Common perks: Additional paid leave, private health insurance, group life insurance, professional development
• Leave policies: Service Incentive Leave (SIL), maternity leave, paternity leave, parental leave

In the Philippines, employers withhold and remit taxes on behalf of employees, who remain legally liable but are usually hands-off if fully employed.

A resident alien is a person who is stateless or a citizen of another country, living in the Philippines without a set plan for how long they will stay, but who is not just a temporary visitor.

Personal income tax: Here are the tax rates for compensation income (Resident and non-resident aliens engaged in business):

• PHP 0 – 250,000 → 0%
• PHP 250,001 – 400,000 → 15%
• PHP 400,001 – 800,000 → 22,500 + 20% of excess over 400,000
• PHP 800,001 – 2,000,000 → 102,500 + 25% of excess over 800,000
• PHP 2,000,001 – 8,000,000 → 402,500 + 30% of excess over 2,000,000
• Over PHP 8,000,000 → 2,202,500 + 35% of excess over 8,000,000

Withholding and contributions: In the Philippines, the standard withholding rates are:

• Dividends: For resident individuals 10%; for non-resident individuals 20%
• Interest: 20%
• Capital gains: Listed shares are taxed at 0.6% of the gross sale price; unlisted shares at 15% of net gain; real estate at 6%

Tax allowances and non-taxable benefits:

• Government credits
• Medical allowance (Up to PHP 333)
• Rice subsidy (Up to PHP 2,500)
• Uniform allowance (up to PHP 8,000)
• Medical assistance (up to PHP 12,000)
• Laundry allowance (up to PHP 400)
• Achievement awards (Up to PHP 12,000)
• Holiday gifts (Up to PHP 6,000)
• Meal subsidy (Up to 30% for the basic Minimum wage per region, with PHP 208.50 per day based on the NCR wage rate)
• CBA benefits
• 13th-month pay
• Maternity benefit claim

Deductions and tax reliefs: Minimis benefits are small-value benefits granted by employers to promote employee health, well-being, satisfaction, or efficiency. These benefits are not subject to income tax, withholding tax, or fringe benefit tax, so employees receive the full amount.

Managing payroll in the Philippines involves complying with clear deadlines for salary payments, tax remittances, and mandatory contributions. Staying on top of these schedules helps ensure smooth operations and compliance with local laws.

Salary payment deadline: Wages must be paid at least twice a month, with intervals not exceeding 16 calendar days between payments

Taxes and contributions payments deadline: Income tax withheld must be remitted on or before the 10th day of the following month; social security and other contributions by the 10th or 15th of the following month

Payroll declarations deadline: on or before the 10th day of the month following the payroll period

Payroll currency: PHP

The Department of Labour and Employment (DOLE) enforces the labour code and promotes its principles across workplaces. It regulates employment laws, protects workers from unfair practices, and oversees areas like training, work conditions, health and safety, social benefits, and termination.

Total employment cost: Total employer obligations reach approximately 13% of gross wages.

Minimum wage: Varies by region, ranging from PHP 341 to PHP 610 per day or about PHP 7,161 to PHP 12,810 per month

Probation period: Up to six months

Foreign citizens must obtain the proper work permits and visas to work in the Philippines. The process, type of permit, and costs vary based on the applicant’s nationality, job role, and duration of stay.

Types of permits: 9G visa

Process length: three to four months

Process cost: 3500 USD

Using EOR services in the Philippines enables you to employ individuals legally without establishing a local entity. The EOR handles all legal responsibilities as the official employer, including:

• Legal employment and contracts
• Payroll processing
• Tax withholding
• Benefits administration
• Onboarding/offboarding employees

Using PEO services in the Philippines provides HR and administrative support while you remain the legal employer. PEO services suit employers with local entities who need help managing workforce operations, including:

• HR support and workforce administration
• Payroll and benefits management
• Compliance and local labour law guidance
• Employment contracts assistance

Native Teams offers a payroll calculator tailored to the Philippines’ labour laws, helping you quickly estimate net and gross salaries, employer and employee contributions, and other mandatory deductions.

Here is a list of public holidays in Philippines: