Employment in Philippines
Employment in Philippines

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.

General Information

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)

Entitlements

Minimum Wage: P290 ($5.70) to P537 ($10.61). Rates vary from region to region and are set by tripartite regional wage boards

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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 mostly compensated by time off rather than payments.

Leaves

Public Holidays: 12 public holidays

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Special Holidays: 4 holidays in a year that follow “no work no pay” principle.

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Annual Leaves: Usually it’s 5 days after a minimum 1 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 organisations. 

Work Related Injury Leaves: 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 gynaecological 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 3 monthly Social Security System(SSS) contributions within 12 month before giving birth.

Paternity Leaves: 7 days of paid leave for married male employees.

Parental Leaves: 7 days of paid leave for employees who have a Solo Parent Identification Card and have rendered 1 year of continuous service.

Compassionate Leaves: 3 days of paid leave in case of events like marriage (self), birthday (self), or death of immediate family members.

Death Grant: NA

Transfer Leaves: NA

Jury Service Leaves: NA

Taxes

Personal Income Tax: Progressive tax rates after standard deduction compensation income are:

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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 basic 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 and gratitude to employees for their services during the year.

Allowances: Though allowances are a rare practice in the Philippines, some organisations 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. 

Retirals

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 organisations. For the same employee contribution rate 3.63% while for the employer, it is 7.37%. 

National Pension: It’s a 2 tier system of protection:

1. Mandatory defined benefit scheme provided for by the Social Security System (SSS). It provides a basic pension under the Defined Benefit (DB) Program.

2. Voluntary contribution to Personal Equity and Retirement Account (PERA). It 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 month of salary for every year of service.

Termination

Probation Period: Maximum length of the probationary period is 6 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 charges with the assistance of a counsel.

• By Employee: If it’s a voluntary termination, it requires submission of a letter of resignation.

Notice Period: By law, 1 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 due to reason that 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 Philippines

Types of Business: Limited liability companies, Sole proprietorship, Representative office, Branch office, Foreign partnerships, and Regional operating headquarters.

Co-working Cost: Manila, Quezon City, Makati, and Cebu City are some popular coworking grounds. For a hot desk, pricing typically starts from PHP 5000 per month or more depending on how premium the co-working is. 

Visa: Mainly there are 4 types of visas available for foreign nationals coming to Philippines for business or employment purposes:

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