Guide to Hiring in Philippines

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Guide to Hiring in Philippines

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With its strategic location, skilled workforce, and robust economic growth, the Philippines stands out as one of the best places to expand your business to. In this guide, we’ll not only walk you through the fundamental labour laws that govern hiring practices but also highlight the unique advantages and opportunities this dynamic country offers.

If the Philippines is your next spot for business expansion, Links International has compiled for you key topics such as work permits, working hours, statutory paid annual leaves, discrimination laws and more. Take a read through our detailed guide and keep tabs on the latest labour law updates to get you started!

Please note that all the information listed below are to be used as a general guideline. For more detailed accounts of Philippine’s employment laws and regulations, please visit the official governmental websites.

Labour Law – Basics

What are the basic requirements for employers in the Philippines?

  • Wages may be fixed or by task or result. If wage is paid by result, employees should receive at least the prescribed minimum wage for 8 hours of work.
    • Employers are prohibited from deducting payment from an employee’s wage except for insurance premiums.
  • Employees have the rights to:
    • Safe Working Conditions
    • Right to Self-Organization and Collective Bargaining
    • Employees Compensation Benefits for work-related contingencies
  • Equal Work Opportunities for All – The State shall protect labor, promote full employment, provide equal work opportunity regardless of gender, race, or creed; and regulate employee-employer relations.
  • It is important to note that the minimum age of employment is 18 years for hazardous jobs, and 15 years for non-hazardous jobs. In special circumstances, a child below the age of 15 years may be allowed to take up employment by parents or guardians in a non-hazardous job environment.
  • Employees cannot be dismissed from work except for a just or authorized cause.
    • Just Cause:
      • Willful disobedience
      • Gross and habitual neglect of duty
      • Fraud or willful breach of trust
      • Commission of crime or offense against the employer
    • Authorized Cause:
      • Introduction of labor-saving devices
      • Redundancy
      • Retrenchment to prevent losses
      • Closure or cessation of business

What are the different work permits and visas in the Philippines?

Work VisaDescription
9(g) Pre-Arranged Employee Commercial VisaThe most common type of work visa availed by foreign nationals engaged in gainful employment in the Philippines.
9(g) Pre-Arranged Employee Non-Commercial VisaForeign nationals who are engaged in missionary, social, rehabilitation, and medical mission.
Special Non-Immigrant Visa or 47(A)(2)Allows the President to admit as non-immigrants, foreign nationals who are coming for a temporary period only, under conditions as he may prescribe.
Special Non-Immigrant Visa under E.O. 226, as amended by R.A. 8756 (ROHQ)To foreign personnel, their respective spouses, and unmarried children under twenty-one (21) years of age, of regional or area headquarters of multinational companies.
Work PermitsDescription
Special Work Permit (SWP)Work permit intended for short term assignments/employment of up to 6 months.
Provisional Work Permit (PWP)To foreign nationals who currently hold temporary visitors’ visas but wish to commence work in the Philippines while the approval of their employment visa application.
Alien Employment Permit (AEP)A foreign national who intends to work in the Philippines is required by the government to secure an Alien Employment Permit (AEP).

 

What to remember when hiring new employees?

The steps to hiring an employee in the Philippines include:

  1. Ensuring the employee is legally allowed to work in the Philippines
  2. Background Checks – A legal procedure in the Philippines with the consent of the employee, background checks are mandatory for certain jobs in the Philippines.
  3. Offer Letter – The offer letter should include the employee’s position, working hours, compensation, benefits, and the employing company’s termination policy in detail.
  4. Filing paperwork – The employer is required to file tax documents, non-disclosure agreements and register the employee under the Social Security System (SSS), PhilHealth, Corporate Pag-IBIG Fund (HDMF) and the Employees’ Compensation Commission. This step is mandatory.

 

Calculate how much it would cost to hire an employee in the Philippines through an Employer of Record!

 

What are the different discrimination laws in the Philippines?

Employers in the Philippines are not allowed to discriminate employees on account of:

  • Sex
  • Age
  • Marital status
  • Pregnancy status
  • Solo parent status
  • Disability
  • Mental health condition
  • Ethnicity
  • Actual or suspected HIV status
  • Suffering from tuberculosis
  • Actual hepatitis B
  • Having cancer or being a cancer survivor
  • Union membership.

 

  • Philippines Anti-Sexual Harassment Act of 1995 (Republic Act No. 7877) makes it mandatory for employees to create workplace policies that prevent the act of sexual harassment in the workplace.
  • The Safe Spaces Act (Republic Act No. 11313) places the duty on employers or other persons of authority to prevent acts of gender-based sexual harassment in the workplace.
  • Late 2022, Philippines approved House Bill No.4479 which amends Article 135 of Presidential Decree No. 442 or the Labor Code of the Philippines, which lists the acts of discrimination prohibited. The bill seeks to strengthen the anti-discrimination provisions of the law by providing that it “shall be unlawful for any employer to discriminate against any woman employee with respect to terms and conditions of employment solely on account of her sex or characteristics of her sex, whether actual or presumed.”

 

What are the working hours in the Philippines?

The daily working hours of an employee must not exceed 8 hours per day, as stated in Article 83, Chapter I, Title I, Book Three of the Labor Code of the Philippines.

An employee who works more than 8 hours per day is entitled to overtime of:

  • 25% overtime pay of their hourly rate during regular working days.
  • 30% overtime pay of their hourly rate during rest days and special holidays.

It is important to note that employees who are supervisors or managers are not included in the overtime payment system as mentioned above.

 

What is the legal probation period in the Philippines?

The probationary period in Philippines should not exceed more than 6 months which consists of 180 days. However, there are some exceptions to the 180-day probation agreement, as follows:

  1. Apprenticeship agreement and
  2. Teaching personnel in the private sector.

As stated in Article 13, the first day on the job should be excluded from the probationary period.

 

What are the minimum wage requirements in the Philippines?

Daily Minimum Wage Rates – National Capital Region (NCR):

Sectors/IndustryNew Wage Increase as of 16 July 2023New Minimum Wage Rates as of 16 July 2023
Non-AgriculturePhp 40.00Php 610.00
Agriculture (Plantation and Non-Plantation)Php 40.00Php 573.00
Service/Retail Establishments employing 15 workers or lessPhp 40.00Php 573.00
Manufacturing regularly employing less than 10 workersPhp 40.00Php 573.00

*The above covers the Cities of Caloocan, Las Pinas, Makati, Malabon, Mandaluyong, Manila, Marikina, Muntinlupa, Paranaque, Pasay, Pasig, Quezon, San Juan, Taguig, and Valenzuela and Municipalities of Navotas and Pateros.

Minimum Wage Rates for Domestic Workers – National Capital Region (NCR):

Minimum wage rate = Php 6,000.00

*The above covers the Cities of Caloocan, Las Pinas, Makati, Malabon, Mandaluyong, Manila, Marikina, Muntinlupa, Paranaque, Pasay, Pasig, Quezon, San Juan, Taguig, and Valenzuela and Municipalities of Navotas and Pateros.

 

What to note for existing employees?

  • 13th-month Pay: As part of the employment law, private sector employees who have worked for at least one month within the calendar year is entitled to a yearly 13th-month compensation. Employers are required to pay it by December 24 each year.
    • Calculating the 13th-month pay:
      • Total basic salary per year (minus unpaid absences) / 12
    • The 13th-month pay is taxable if it exceeds ₱90,000.

 

  • Income Tax:
    • Individuals – Filipino resident citizens who are earning an income within or outside the Philippines. As stated on the Bureau of Internal Revenue of the Republic of the Philippines’ guidelines, these individuals include:
      • Employees deriving purely compensation income from two or more employers, concurrently or successively at any time during the taxable year.
      • Employees deriving purely compensation income regardless of the amount, whether from a single or several employers during the calendar year, the income tax of which has not been withheld correctly (i.e. tax due is not equal to the tax withheld) resulting to collectible or refundable return.
      • Self-employed individuals receiving income from the conduct of trade or business and/or practice of profession.
      • Individuals deriving mixed income, i.e., compensation income and income from the conduct of trade or business and/or practice of profession.
      • Individuals deriving other non-business, non-professional related income in addition to compensation income not otherwise subject to a final tax.
      • Individuals receiving purely compensation income from a single employer, although the income of which has been correctly withheld, but whose spouse is not entitled to substituted filing.

 

  • Non-Individuals – As stated on the Bureau of Internal Revenue of the Republic of the Philippines’ guidelines, these non- individuals include:
    • Corporations including partnerships, no matter how created or organized.
    • Domestic corporations receiving income from sources within and outside the Philippines.
    • Foreign corporations receiving income from sources within the Philippines.
    • Estates and trusts engaged in trade or business.

 

Termination of Employment – Seperation Pay & Long Service Payment

Employers in the Philippines can terminate employees on the following conditions:

  • Willful disobedience
  • Gross negligence towards duty
  • Serious misconduct
  • Breach of trust and fraud
  • Commission of any crime against the employer or his/her representative.

There is no seperation pay that is required to be paid for the above conditions.

  • Replacement of labor-saving devices
  • Redundant placement
  • Closure of business
  • Disease or illness
  • Retrenchment to prevent losses.

Seperation pay is required to be paid for the above conditions. Severance payment is usually one month’s wages per year of service.
When termination is done under a ‘just cause’, the employer is required to provide the employee with 30 days of notice which can be in the form of:

  • A notice of intent to dismiss the employee which must specify the dismissal grounds.
  • A conference or hearing allowing the employee to respond to the charges.
  • A notice of dismissal that the company has established grounds to justify termination.

The employer must provide the employee with:

  • A written copy of the notice. This must also be provided to the Regional Office of the Department of Labor and Employment (DOLE) that governs the company’s region.
  • Severance pay which depends on the reason for termination. If the employee is not at fault upon termination, the employer must provide one month’s pay or one month’s pay per year of service, whichever stands at a higher point.

 

What is the retirement age in the Philippines?

The mandatory retirement age for civil servants in the Philippines is 65 years. However, early retirement at the age of 60 years is an option.

Employment dispute channels

Employees can act through The National Labor Relations Commission (NLRC).

Is employment insurance compulsory in the Philippines?

All employed persons under the age of 60 who earn more than ₱1,000 are required to contribute to:

  • Social Security System (SSS) – Made to protect private employees, seafarers, and Overseas Filipino Workers (OFWs) from financial burdens, Philippines’ Social Security System (SSS) requires a monthly contribution of:
    • 5% for employers with a cap of ₱1,900
    • 5% for employees with a cap of ₱900

As members of the SSS, employees can benefit from:

  • Maternity Benefits
  • Sickness Benefits
  • Retirement Benefits
  • Salary Loan Benefits
  • Disability Benefits
  • Death Benefits
  • Funeral Benefits

 

  • Philippine Health Insurance Corporation (PhilHealth) – Philippine’s state health insurance fund requires employers to contribute 4% of employee’s base monthly wage, with an income ceiling of ₱80,000.

Types of PhilHealth Members:

  • Formal economy members – All employed individuals working with the government or private sectors in the country.
  • Informal economy members – Unemployed, self-employed, informal workers, naturalized Filipinos and foreigners living in the country who are voluntary or individually paying their premiums to PhilHealth.
  • Overseas Filipino Workers (OFWs)
  • Senior Citizens – Automatic members of PhilHealth for Filipinos aged 60 years old or above.
  • Lifetime members – Aged 60 years old or above and have paid a minimum of 120 monthly premiums to PhilHealth.
  • Sponsored members – Members whose contributions are made by a sponsor.
  • Indigent members – Members without a source of income.
  • Qualified dependents – Members whose contributions are covered by a principal member (spouse, children or parents).

 

  • Home Development Mutual Fund (HDMF) – Also known as the Pag-IBIG Fund, the HDMF helps employees finance a new home. Monthly contributions are mandatory for all Social Security System covered employees. The maximum monthly compensation allowed to compute each employee’s Pag-ibig contribution is currently set at ₱5,000.
    • Employers contribute 2% to all employee salaries.
    • Employees contribute 1% on salaries of ₱1,500 or below and 2% on salaries over ₱1,500.

HDMF gives employees the chance to take loans for housing and emergency purposes. The membership allows members to loan residential properties that do not exceed 1,000 sqm.Other benefits under HDMF include:

  • Home financing
  • Savings
  • Calamity loan
  • Multi-purpose loan (MPL)
    • Employees’ Compensation Program (EC) – A government program made to provide a compensation package relating to work-related sicknesses, injury or death to both public and private employees.
      • Employer contribution is ₱10 for employees earning over ₱14,749.
      • Employer contribution is ₱30 for employees earning over ₱14,749.

Labour Law - Leave

In the Philippines, employees who have worked for a company for a full year are entitled to 5 days of paid leave per calendar year which is known as the Special Incentive Leave or Service Incentive Leave.

Additional Holidays include:

  • 10 days regular national holidays – more details in the ‘Public Holidays’ section below.
  • 7 special nonworking holidays (with additional special holidays declared through Presidential Proclamations).

Check out the latest Labour Law updates in the Philippines!

As Philippines does not have statutory sick leave, employees can use ‘Service Incentive Leaves’ as sick leaves which is 5 days per year. Employees who have made at least 3 monthly contributions to the Social Security System in a span of the last 12 months can claim a sickness benefit which consists of 90% of their monthly salary. This allowance will be able to be used once all the other sick leave has been exhausted.

  • Employed mothers are entitled to 105 days of maternity leave for normal delivery and 120 days for caesarean delivery. Mothers are also entitled to an additional 30 days of leave without pay, subject to certain conditions.
  • Mothers are required to inform their employers about the pregnancy and the expected date of delivery at least 30 days before going on maternity leave. This must be supported with a medical certificate.
  • The employer is prohibited from terminating the employment or demoting them because of maternity leave.
  • Employers are required to provide a supportive work environment for a healthy pregnancy and postpartum recovery.
  • In the case of miscarriage and/or early termination of pregnancy, employees are allowed 60 days of paid maternity leave.
  • Solo parents are entitled to 120 days of paid maternity leave and the option to extend for an additional unpaid 30 days.
  • Paternity leave is to be granted to every male employee for a maximum of 7 working days when his spouse has delivered a child or suffered a miscarriage. The paternity leave should be filed with the medical or birth certificate along with a copy of the marriage contract.
  • Parental leave for Solo Parents is to be granted to solo parents as defined under R.A. 8972 for a maximum of 7 working days. The Parental Leave for Solo Parents should be filed at least 5 working days prior to the absence with attached photocopy of Solo Parent ID.
  • Special leave for women can be used after a surgery due to gynecological disorders for a maximum of 2 months. This can be filed with a medical certificate and Department clearance within a reasonable period of time from the expected date of surgery.
  • Leave for Victim of Violence Against Women and Children (VAWC Leave) is to be granted to female employees who have suffered violence are entitled to up to 10 days of paid leave to attend to medical and legal concerns. The use of the 10-day leave shall be at the option of the female employee. If the leave benefit is not availed of, it shall not be convertible into money and shall not be cumulative. The victim-employee is to present to her employer a certification from the barangay chairman (punong barangay), barangay councilor (barangay kagawad) or prosecutor or the Clerk of Court, as the case may be, that an action relative to the matter is pending.
  • Special Leave for Women (RA9710) is to be granted to all female employees who underwent surgery caused by gynecological disorders and who rendered at least six months of continuous aggregate employment service for the last twelve months prior to surgery are entitled to 2 months of paid special leave.

All employers are entitled to provide their employees with a rest period of not less than 24 consecutive hours after every 6 consecutive normal working days.

What are the upcoming public holidays in the Philippines?

Philippines Public Holidays 2024

Employees are entitled to public holidays as follows:

Regular Holidays:

HolidayDate
New Year’s Day1 January
Maundy Thursday28 March
Good Friday29 March
Araw ng Kagitingan9 April
Labor Day1 May
Independence Day12 June
National Heroes Day (Last Monday of August)26 August
Bonifacio Day30 November
Christmas Day25 December
Rizal Day30 December

 

Special (Non-Working) Holidays:

HolidayDate
Chinese New Year10 February
Black Saturday30 March
Ninoy Aquino Day21 August
All Saints’ Day1 November
All Souls’ Day2 November
Feast of the Immaculate Conception of Mary8 December
Christmas Eve24 December
Last Day of the Year31 December

 

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Please note that all the information listed below are to be used as a general guideline. For more detailed accounts of Philippine’s employment laws and regulations, please visit the official governmental websites.

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