You can hire employees in Philippines without the need for an entity.
Typically, to hire employees in Philippines, your business must have an entity, which involves establishing a local office, registering an address as a subsidiary, and opening an account with a local bank. Managing regional benefits, payroll, tax, and HR laws throughout this process can take several months.
Philippines has separate regulations for contractors compared to full-time employees, making it crucial to avoid misclassification to avoid potential penalties. ATA streamlines the process of hiring employees in Philippines, ensuring speed, simplicity, and compliance. Additionally, our platform automates tasks such as tax document collection, payroll, benefits, and more.
Our quickstart guide to hiring in Philippines
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- Minimum Wage Requirements
- Minimum Wages in the Philippines increased to 570 PHP/day in 2022 from 537 PHP/day in 2021.
- Individual Income Tax
- The range of individual income tax varies from 0% to 35% and is calculated using progressive rates.
|Type of leave||Time period|
|Annual leave/Earned Leave||5 days|
|Maternity Leave||15 weeks|
Terminating an employee in the Philippines is a challenging process that requires adherence to The Labor Code of the Philippines. An employee can only be dismissed if they exhibit behavioral issues such as serious misconduct, willful disobedience, gross and habitual neglect of duty, fraud, breach of trust, or the commission of a crime or offense against the employer, their family, or representative. Alternatively, the company may dismiss employees for reasons such as the installation of labor-saving devices, redundancy, retrenchment to prevent losses, closure and cessation of business, or due to disease/illness.
The notice period before termination is up to 3 months.
In compliance with The Labor Code of the Philippines, employees who have been terminated are eligible for a severance pay package. The computation of the severance pay is dependent on the grounds for termination, except in cases of behavioral issues. The computation generally includes a payment of one month’s salary or at least half a month’s salary for each year of service, whichever is higher (with a fraction of six months considered as a whole year). This computation also takes into account any available allowances related to the position held. Additionally, separation pay is exempt from taxation.
The mandatory benefits that an employer must provide to their employees are known as statutory benefits. These benefits are outlined in the labor laws of the Philippines and include: Social Security System (SSS) Home Development Mutual Fund (HDMF) & Coverage. Employees who have been working for at least 1 month are entitled to a salary increase of 13th-month pay, no matter what kind or way in which they were paid.
The Filipino labor laws mandate a service incentive leave as an employee’s statutory benefit. According to Article 95, those who have rendered at least 1 year of services are entitled 5 days paid time off work for the purpose of doing volunteer activities or taking care personally other than what is prescribed by their job description.
After the client signs the SOW, the onboarding process typically requires two-three business days.
- Employee contract
- Typically, employment in the Philippines doesn’t demand a formal or documented agreement. However, a mutual agreement can be settled upon by both parties, except for contractors and subcontractors which necessitate written contracts. Written contracts are commonly drafted in English, but if the employee is a Filipino citizen, an agreement in Filipino must be given by the employer to explain the terms and conditions. All contracts, whether written or consensual, are required to comply with The Labor Code of the Philippines.
- Probation period
- After an employee starts working, the probationary employment period in the Philippines should not exceed six months, according to Article 281 of the Labor Code. If the employment continues beyond the six-month probationary period, it is regarded as regular employment.
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