Employment contracts Philippines

What should an employment contract in the Philippines include?

These are the general elements of every compliant employment contract in the Philippines:

• Personal details of both parties – names, addresses, and relevant contact details.
• A comprehensive job description involving the duties, responsibilities, and rights of both parties.
• The employee’s salary or wage and all the benefits entitlements.
• The hours and days of the week when the employee should work.
• Confidentiality clauses to safeguard employer’s interest and sensitive information.
• Policies and procedures for employment termination.

It’s worth noting that both parties should read, understand, and agree to each of the terms presented in the employment contract before providing their signatures.

What types of employment contracts exist in the Philippines?

In the Philippines, there are a few types of major employment contracts, as follows:

1. Employee contracts

Employee contracts can be divided into 2 types:

• Permanent employment contracts: Permanent employment contracts, or commonly referred to as regular employment contracts, are the most commonly used type due to them providing stability and security for both parties. Permanent contracts aren’t limited to a certain end date and can be terminated by both parties following the notice period specified within the contract.
• Fixed-term employment contracts: In contrast to permanent employment contracts, fixed-term contracts do have a specific end date and are commonly used to regulate temporary job arrangements between employers and employees. Fixed-term employment contracts are considered ineffective upon the specified end date without the need for notice.

2. Casual employment contracts

Under casual employment contracts, the employment relationship is established for the purpose of intermittent work or short periods of workforce demand. Such contracts should specify the main terms of the employment and may feature limited benefits compared to regular employment contracts.

3. Project-based employment contracts

Project-based contracts are used to hire employees for the needs of the completion of a specific project or a task. Project-based contracts must specify the scope of the project, the duties and responsibilities of the employee, and end dates or project completion terms. Similar to casual employment contracts, project-based employees may also receive limited benefits.

How to hire employees in the Philippines?

There are several necessary legal requirements prior to hiring employees in the Philippines. Initially, every business should establish a legal entity, obtain a tax identification number, and set up a local bank account. 

Additionally, employers in the Philippines are obligated to adhere to local labor laws concerning minimum wages, work hours, and employee benefits. 

To streamline the process of hiring international employees, businesses can partner with a global recruitment company like Native Teams. With our Employer of Record solutions, you can focus on your core business activities while our teams of law and tax professionals manage your payroll, taxes, and HR administration in full compliance.