Employer of Record in Philippines: A Complete Guide for 2026

Introduction

An employer of record in the Philippines is the legal alternative to direct hiring when you want Filipino talent without a local entity. 

Misclassifying a full-time employee as a contractor triggers BIR's (Bureau of Internal Revenue) 25% surcharge plus 12% interest per annum, SSS (Social Security System) fines from PHP (Philippine Peso) 5,000, with imprisonment under Republic Act 11199, and a PhilHealth penalty of PHP 50,000 per affected employee with possible jail time of six months to one year. 

This guide covers SSS, PhilHealth, and Pag-IBIG rates, TRAIN (Tax Reform for Acceleration and Inclusion Act) Law tax brackets, 13th-month pay, leave entitlements, visa categories, and EOR pricing in 2026.

The Philippines at a glance

Population size: 117.7 Million

Currency: Philippine Peso (PHP)

Capital city: Manila

Languages spoken: Filipino (Tagalog-based national language) & English

GDP: USD 461.62 billion 

How To hire employees in the Philippines

There are two main ways you can hire an employee in the Philippines.

1. Hiring directly by setting up a subsidiary.
2. Working through an “employer of record” (EOR) in the Philippines.

Standing up a Philippine subsidiary runs through the Securities and Exchange Commission registration, BIR Certificate of Registration (Form 2303), SSS / PhilHealth / Pag-IBIG employer enrolment, DOLE (Department of Labour & Employment) establishment reporting, the LGU (Local Government Unit) mayor's permit, the barangay clearance, and a fire-safety inspection

Layered on top: a Philippine-resident treasurer, the minimum paid-in capital that applies to your industry (and the higher PHP 5,000,000 minimum for a wholly foreign-owned domestic-market enterprise under the Foreign Investments Act), and ongoing annual GIS/AFS submissions with the SEC. 

Skuad acts as the legal employer in the Philippines, so your company can hire, onboard, and pay employees without SEC (Securities and Exchange Commission) incorporation, BIR (Bureau of Internal Revenue) registration, or in-house Philippines payroll infrastructure. 

Book a demo to see how Skuad gets your first Philippines hire onboarded without SEC incorporation

Onboarding and agreements

The first step in a successful onboarding process is to draft a proper employment agreement as per the onboarding policy in the Philippines. It should highlight all the essential elements of the working relationship, such as 

1. Working hours
2. Compensation package
3. Method of payment
4. Leave entitlements, and 
5. Termination conditions, among others.

Under employment law in the Philippines, a labor contract can be categorized into the following types:

• Definite contracts: Agreements in which the employee renders services for a definite period of time, and the employment relationship ceases to exist after such period expires.
• Seasonal contracts: Agreements wherein an individual performs work only for a certain period of time or season of the year. This contract type is commonly used in the food and beverage, hospitality, and retail industries.
• Casual contracts: These agreements are usually used for employees who perform work that is not primarily related to the employer's business or trade. The duration of this kind of employment relationship must be made known to the worker at the time they start rendering services.

Taxes

The table below contains a detailed overview of payroll taxes in the Philippines.

Employer tax in the Philippines

Employee tax in the Philippines

Compliance

Employment laws in the Philippines are governed by the Labor Code 1974 (Presidential Decree 442), which defines the rules and standards regarding employment policies, wage rates, working hours, employee benefits, etc.

For deeper coverage of statutory obligations, see Skuad's Philippines employment laws guide.

Independent contractor vs. full-time employee

There are two primary employee categories in the Philippines that are protected through employment contracts in the Labor Code: full-time employees and contractor employees.

Skuad supports both hiring models from a single platform:

EOR for full-time employees

• Acts as the legal employer in the Philippines, so you can hire without an SEC-registered entity of your own
• Helps you draft localised employment contracts in English and Filipino using Skuad's template library
• Supports payroll processing in Philippine Peso, with statutory deductions handled inside the platform's payroll cycle
• Helps administer statutory employee benefits and leave entitlements
• Provides support for termination and offboarding workflows

Contractor management 

• Helps you onboard self-employed Filipino contractors using locally-prepared agreement templates
• Automates invoice generation, approval workflows, and payouts in 70+ currencies
• Helps identify classification risk before it triggers retroactive employee status
• Provides IP, confidentiality, and non-compete clause templates for contractor agreements
• Centralises contractor records, agreements, and payment history alongside full-time employees in a single dashboard

Full-time or contractor, Skuad handles both in the Philippines. See pricing

Customer story: How VRP Consulting scaled across the Philippines and India with Skuad

VRP Consulting, an IT services and consulting firm, was managing 38 team members across the Philippines and India before partnering with Skuad, and running into incorrect salary calculations, payroll delays, and limited visibility into compliance.

Skuad now runs the full headcount through its Employer of Record and contractor management platforms, with onboarding, documentation, classification, and global payroll consolidated on one dashboard. 

VRP Consulting now runs accurate, on-time pay in local currencies and operational flexibility to scale the team up or down across both countries.

Read the full case study

Types of visas

The three categories of Visas in the Philippines are Immigrant, Non-Immigrant, and Special Visa, which are further classified into different types of visas as listed in the tables below:

Immigrant visas

Special visa

Work permits

For a work permit in the Philippines, you are required to apply for an Employee Visa 9G at the Bureau of Immigration Philippines. The documents required are as follows:

1. Copy of passport
2. Employment Contract
3. Alien Employment permit issued by the Department of Labor and Employment in the Philippines
4. Application Form
5. Additional information on the applicant's children (if needed)
6. Notarized certification of the number of foreign and Filipino Employees

For step-by-step guidance, see Skuad's Philippines work permit guide.

Payroll

To manage payroll and taxation in the Philippines, you will most likely need a talented accounting team and a diligent HR representative to track changing employment laws and tax considerations if you are hiring directly on your own. 

If you partner with an EOR service in the Philippines like Skuad, you'll get access to numerous capabilities such as:

See the full Skuad Philippines payroll service for detailed coverage.

For a foreign employer running its first Manila or Cebu payroll cycle, Skuad's Manage layer also pulls into your existing HRIS, accounting, and time-tracking systems through Skuad's Integrations library.

See how Skuad Manage supports the Philippines payroll workflows

Benefits and compensation

The Social Security System (SSS) provides income-replacement benefits to covered employees and their families. Mandatory SSS enrollment applies to employees earning PHP 1,000 or more per month. Under the SSS, covered employees are entitled to:

• Sickness benefit: a daily cash allowance paid for the number of days a member is unable to work due to sickness or injury
• Maternity benefit: a daily cash allowance granted to a female member who is unable to work due to childbirth or miscarriage/emergency termination of pregnancy
• Disability benefit: a cash benefit granted either as a monthly pension or a lump sum amount to a member who becomes permanently disabled 
• Retirement benefit: a cash benefit paid either in a monthly pension or as a lump sum to a retiree member who can no longer work due to old age
• Death benefit: a cash benefit paid either in a monthly pension or as a lump sum to the beneficiaries of a deceased member 
• Funeral benefit: a cash benefit given to whoever paid the burial expenses of the deceased member
• Unemployment benefit: a cash benefit granted to covered employees who are involuntarily separated from employment and have satisfied the eligibility requirements

See how Skuad's EOR platform administers Philippines statutory benefits and SSS reimbursements

Workers' rights

Remote & hybrid work

When hiring employees in the Philippines, it is necessary to determine your organization's readiness for remote work. Two main factors will help you determine how well your organization can maintain productivity outside a traditional office environment:

Invest in proper technology and infrastructure with a reliable internet connection, robust communication and collaboration tools/software, and suitable hardware (mobile devices and laptops)

Formulate flexible work policies targeting key areas, including performance evaluation, time management, and communication expectations

Salary

The salary of employees in the Philippines usually differs based on numerous factors, such as:

• The candidate's experience level: A professional with many years of experience and expertise in a particular field will demand a higher salary than a fresher.
• The industry: Salary averages vary by sector, finance, healthcare, IT-BPM, and customer experience, all of which sit at different bands.
• The nature of work: Individuals in highly specialised roles usually earn much more than those handling general or administrative tasks.

See Skuad's salary insights and employee cost calculator for Philippines-specific benchmarking and total-cost-of-employment modelling.

Public holidays 2026

Public holidays in 2026 - Philippines

Cultural Considerations

For an employer of record, the Philippines can provide a few distinct challenges when taking on a new hire. The following points outline a few core cultural differences that an employer should be aware of when taking on a new hire:

• Family, respect, and teamwork are some of the key elements of cultural values in the Philippines. As a result, new employees from the Philippines may have higher expectations of their co-workers’ etiquette and commitment than other places.
• Building strong relationships is crucial to the culture of the Philippines. This can sometimes lead to differences in how much of their personal lives new hires may want to share with co-workers. 
• Filipino cultural values are also characterized by a strong hierarchical system and respect for authority. Senior professionals are often regarded with high respect and deference. Additionally, informing and consulting high-ranking individuals before making significant decisions or changes is generally considered polite.

EOR platforms typically feature their payroll and onboarding features as the primary offering, but they also provide valuable HR tools that make managing employees a more simple task. Read more here.

Professional Employer Organization (PEO)

A Professional Employment Organization (PEO) is an outsourced HR department where organizations merge with small and medium-sized businesses to handle your company compliances, payroll management, tax filing, recruitment, and other services.

So when you engage the services of a PEO, that organization handles your business operation smoothly without setting up a separate business entity. A PEO offers customized services according to the client requirements (e.g. employee benefits, payroll processing, administration of workers compensation, business compliances, recruitment).

With the Philippines’ EOR solution, you don’t need to associate with any small or medium-sized organization because you can become a legal employer directly. Skuad’s EOR solution allows you to easily handle: 

• Employee benefits and compensation
• Tax filing
• Payroll
• Compliance
• Attendance management

Depending on the nature, size, and operations of your business, you may still want to hire directly by becoming a legal employer or partner with a Professional Employment Organization (PEO). Both options are available.

Book a demo with Skuad to help you decide..

Conclusion

As this page suggesst, hiring directly can be overwhelming as an employer of record. The Philippines, like most other countries, has a wealth of applicable laws and regulations, which will require constant monitoring and input from your legal and accounting teams. 

That’s why EOR platforms like Skuad offer the most attractive option for business owners seeking to source talent from the Philippines. Contact us to see how we can simplify your operations and help you grow your business to the next level.

FAQs

What is an employer of record in the Philippines?

An Employer of Record (EOR), like Skuad in the Philippines, is a service provider that legally employs individuals on behalf of another company. The EOR solutions in the Philippines handle all HR responsibilities, including payroll, taxes, benefits administration, and compliance with local labor laws like labor code break time Philippines. This allows the client company to focus on core business activities without establishing a local entity.

Is employer of record legal in the Philippines?

Using an Employer of Record is legal in the Philippines. This service allows companies, especially foreign ones, to legally hire local employees without the need to establish a physical presence in the country, which is particularly useful for businesses looking to expand into the market.

How long do employers keep employee records after termination in the Philippines?

In the Philippines, employers are required to keep employee records for at least three years after termination. This period is mandated to ensure compliance with the Philippines labor laws and for audit purposes. Records include personal information, employment details, payroll, and contributions to government institutions.

What is the difference between employer of record and payroll?

An Employer of Record payroll Philippines provides comprehensive employment services, including hiring, payroll, compliance, and HR management. In contrast, payroll services only calculate, distribute, and report employee salaries. While an EOR acts as the legal employer, a payroll service does not take on employer responsibilities.

How to set up an EOR in the Philippines?

Setting up an EOR in the Philippines typically involves selecting a reputable service provider, like Skuad, who understands local employment laws and can efficiently manage HR tasks. The process includes negotiating terms, defining service scope, and ensuring the EOR’s capabilities align with your business needs. Companies should ensure the chosen EOR can handle the specific requirements of employing staff in the Philippines, including legal compliance and payroll processing.

What is the difference between EOR and PEO?

One of the main differences between EOR services in the Philippines and PEOs is that when you partner up with a PEO, you are essentially entering into a co-employment relationship. This means that you will still be legally responsible for your employees, and the PEO is simply there to support your HR functions, such as managing payroll and employee benefits. On the other hand, an EOR in the Philippines becomes the legal employer on your behalf, handling everything from drafting contracts to ensuring compliance with local labor laws.

What are the benefits of EOR?

Some of the many benefits of using an employer of record in the Philippines include reduced costs, simplified payroll, improved compliance, and access to expertise. For example, an EOR is how an American company hires employees in the Philippines without setting up a local entity.