The Philippines is the former colony of Spain and The United States. Today, it stands as the second-fastest growing economy of South-East Asia. It has received massive foreign investments has revised corporation codes. The diligent Filipino workforce makes it conducive for business expansions.
Currency: Philippine Peso (₱) 1 PHP = 0.0021 USD
Economic Capital: Manila
Spoken Language: English, Tagalog
GDP: 6.2% growth rate (2018)
Time Zone: UTC (+8:00)
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Minimum Wage: P290 ($5.70) to P537 ($10.61). Rates vary from region to region and are set by tripartite regional wage boards
Payroll Cycle: Monthly or bimonthly
Pay Date: 15th or 30th of the month
Working Hours: 40 hours per week or 8 hours per day
Night Shift Differential: 110% of regular wage if the working hours are from 10:00 PM to 6:00 AM
Overtime Compensation: 125% to 130% of regular pay. But compensated mainly by time off rather than payments.
Public Holidays: 12 public holidays
Special Holidays: 4 holidays in a year that follow “no work no pay” principle.
Annual Leaves: Usually, it's five days after a minimum of one year of service. In some cases, it's up to 15 days.
Sick Leaves: No statutory requirement by law. However, 15 days of paid leaves is a common practice among organizations.
Work-Related Injury Leaves: This leave can be up to 6 months. The exact duration depends on recommendations from the medical authority.
Special Leaves For Women: 2 months for women who have undergone surgeries caused by gynecological disorders.
Violence Leave Against Women And Their Children (VAWC): 10 days of paid leave to female employees who are victims of physical, sexual, psychological harm or suffering, or economic abuse. Employees need to provide certification from Punong Barangay or Clerk of Court.
Maternity Leaves: 105 days paid leave for female employees who have made at least three monthly Social Security System(SSS) contributions within 12 months before giving birth.
Paternity Leaves: 7 days of paid leave for married male employees.
Parental Leaves: 7 days of paid leave for employees with a Solo Parent Identification Card and have rendered one year of continuous service.
Compassionate Leaves: It is usually three days of paid leave in events like marriage (self), birthday (self), or death of immediate family members.
Death Grant: NA
Transfer Leaves: NA
Jury Service Leaves: NA
Personal Income Tax: Progressive tax rates after standard deduction compensation income are:
Income Tax Return(ITR): BIR Form 1701 for self-employed individuals and BIR Form 1701A for employees. It is mandatory to file ITR on or before April 15 of each year covering income for the preceding taxable year.
Value Added Tax (VAT): 0% for goods and services exported outside the Philippines and 12% of sales of goods and services in the Philippines.
Employee Statutory Benefits
National Health Insurance Program Healthcare: Compulsory for employees included in the SSS. Individuals contribute 2.75% of their primary income, shared equally by the employer and employee.
Home Development Mutual Fund Pag-IBIG: A national savings scheme for affordable shelter. A 2% contribution is made towards the same by both employees and employers. Pag-IBIG savings are generally used for housing loans, multi-purpose loans, calamity loans, etc.
Bonus Or 13th Month Pay: Bonus payments are made before December. The amount is equivalent to 1/12 of the basic salary received by an employee during the year. The amount gets prorated if an employee has worked for less than a year.
Employee Voluntary Benefits
Christmas Bonus: Offered in addition to the 13th-month pay to show appreciation to employees for their services during the year.
Allowances: Though allowances are rare in the Philippines, some organizations have started to provide the same. Allowances for housing, transportation, medicine, and childcare are the most common ones and can fall in the bracket of tax deductibles.
Retirement Age: Mandatory retirement age is 65 years, but one can retire as early as 60 years and start receiving social security benefits.
Social Security System (SSS): The insurance program set by the government for all the wage earners of private organizations. The same employee contribution rate is 3.63%, while for the employer, it is 7.37%.
National Pension: It’s a 2 tier system of protection:
- Mandatory defined benefit scheme provided by the Social Security System (SSS) provides a basic pension under the Defined Benefit (DB) Program.
- Voluntary contribution to Personal Equity and Retirement Account (PERA) is an additional retirement fund that employees establish on an individual level. Any investment made to a PERA account serves as a tax-saving instrument.
Retirement Pay: At the time of retirement, gratitude pay is given to employees who have served in the establishment for at least five years. The retirement pay is equivalent to at least one and a half months of salary for every year of service.
Probation Period: Maximum length of the probationary period is six months. During this period, employment contracts may terminate for a just cause without any notice period.
Termination Procedure: The procedure is different depending upon the initiator of termination.
- By Employer: If termination is due to a just cause, the employee should be handed a written notice informing him/her of the charges. The employer must afford the employee an opportunity to be heard where the employee can answer the accounts with the assistance of counsel.
- By Employee: If it’s a voluntary termination, it requires submission of a letter of resignation.
Notice Period: By law, one month notice period is mandatory. In some cases, it can be longer than 30 days if agreed by you while signing the employment contract.
Separation Payment: Applicable only if an employee loses their job because it is not their fault, such as health concerns, business closure, etc. The final amount for separation pay is One-month pay or half-a-month pay for every year of service, whichever is higher.
Office Setup in the Philippines
Types of Business: Limited liability companies, Sole proprietorship, Representative office, Branch office, Foreign partnerships, and Regional operating headquarters.
Coworking Cost: Manila, Quezon City, Makati, and Cebu City are some famous coworking grounds. For a hot desk, pricing typically starts from PHP 5000 per month or more, depending on how premium the coworking is.
Visa: Mainly, there are four types of visas available for foreign nationals coming to the Philippines for business or employment purposes:
Sources:Ecomparemo, Coworker, Deloitte, Bakermckenzie, ASEAN Briefing, KPMG, Bureau of Internal Revenue, Nomura Foundation