Employer of Record in Philippines: A Complete Guide for 2026

Introduction

An employer of record (EOR) in the Philippines is the legal alternative to direct hiring when a foreign company wants Filipino talent without registering a local entity. The EOR becomes the legal employer for tax and labor purposes. The hiring company continues to direct the employee's day-to-day work.

Getting this employment relationship wrong carries real financial and legal risk. Philippine law imposes penalties on companies that misclassify a full-time employee as an independent contractor, and the penalties come from three separate agencies. 

The Bureau of Internal Revenue (BIR) imposes a 25% surcharge plus 12% annual interest on unpaid tax. The Social Security System (SSS) fines start at PHP 5,000, with possible imprisonment under Republic Act No. 11199. PhilHealth adds a penalty of PHP 50,000 per affected employee, with jail time of six months to one year.

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

For example, a Philippines hire earning USD 30,000 a year in base salary accrues another USD 2,500 in mandatory 13th-month pay, bringing compensation to USD 32,500 before employer-side SSS, PhilHealth, Pag-IBIG, and other applicable statutory costs. Employers should factor these contributions into the total hiring budget alongside any EOR fee. 

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

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 to hire employees in the Philippines: 

• Set up a Philippine subsidiary and hire directly, or
• Hire through an employer of record service

Setting up a subsidiary starts with registering through the SEC's eSPARC portal. From there, you'll secure a BIR Certificate of Registration (Form 2303) from the Bureau of Internal Revenue.

You'll also need to enroll as an employer with SSS, PhilHealth, and Pag-IBIG. Report the new establishment to DOLE, and secure your mayor's permit, barangay clearance, and fire-safety inspection from the local government unit.

A subsidiary also needs a Philippine-resident treasurer. Minimum paid-in capital varies by industry. A wholly foreign-owned domestic-market enterprise needs USD 200,000 under the Foreign Investments Act.

Once registered, the subsidiary carries ongoing annual General Information Sheet (GIS) and Annual Financial Statement (AFS) submissions to the Securities and Exchange Commission (SEC).

An EOR skips this entire stack. Skuad acts as the legal employer in the Philippines, so a company can hire, onboard, and pay employees without SEC incorporation, BIR registration, or in-house Philippines payroll infrastructure.
Skip the SEC and BIR setup. Onboard your first Filipino hire with Skuad in under two weeks.

What are the onboarding and agreement requirements in the Philippines?

Onboarding an employee in the Philippines requires a written employment agreement that covers five core elements:

• Working hours
• The compensation package
• The payment method
• Leave entitlements
• Termination conditions

What taxes apply to employment in the Philippines?

Employment in the Philippines is taxed through two channels: employer social contributions and employee income tax. 

On the employer side, the main statutory cost is the Social Security System (SSS) contribution, calculated on a Monthly Salary Credit basis. 

On the employee side, income tax runs on a progressive scale, from 0% on taxable income up to PHP 250,000 to 35% on income over PHP 8,000,000, alongside a 12% value-added tax on goods and services under the National Internal Revenue Code (NIRC). PhilHealth funds state-subsidized health coverage and is non-taxable. 

The tables below break down each tax by rate, basis, and filing deadline.

What are the key compliance requirements in the Philippines?

Employment in the Philippines is governed by the Labor Code of the Philippines (Presidential Decree No. 442), enacted in 1974. The Labor Code sets the baseline rules for wage rates, working hours, employee benefits, and other employment standards that every employer in the country must follow.

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

What is the difference between independent contractors and full-time employees in the Philippines?

The Labor Code of the Philippines draws the line between full-time employees and independent contractors mainly through statutory benefits and legal protection: full-time employees receive both, and independent contractors receive neither. 

A full-time employee works over 30 hours a week in a role defined by their employer. An independent contractor works irregular hours on a project-scoped, short-term basis with no entitlement to statutory benefits and no protection against dismissal. 

The table below breaks down each distinction in detail:

What visa types are available in the Philippines?

The Philippines has three broad visa categories: immigrant, non-immigrant, and special visas. For foreign nationals coming to the country for employment, the most relevant route is typically the Pre-Arranged Employment Visa (9G), alongside the required Alien Employment Permit where applicable.

Other visa categories cover purposes such as permanent residence, short-term visits, study, treaty-based activities, and certain investment or employment arrangements.

For requirements, documentation, and the employment-visa process, see Skuad’s Philippines work permit guide

What are the work permit requirements in the Philippines?

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.

How fast can you onboard in the Philippines?

Local Philippines hires are typically onboarded within two weeks once documents and statutory registrations are in.

For foreign nationals, the 9G Pre-Arranged Employment Visa runs through the Bureau of Immigration after DOLE issues the Alien Employment Permit, adding roughly a month or two to the overall process.

Have a foreign hire moving to the Philippines? See how Skuad handles the 9G visa and AEP paperwork

How does payroll work in the Philippines?

Payroll in the Philippines requires employers to calculate compensation, withhold income tax, and process mandatory contributions to SSS, PhilHealth, and Pag-IBIG. Employers also administer statutory entitlements such as 13th-month pay.

If you're hiring directly, this workload typically calls for a capable accounting team and an HR representative who stays on top of changing employment laws and tax rules. Many international companies use an EOR instead, to manage payroll compliance without setting up local payroll operations.

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

Payroll costs in the Philippines can extend beyond base salary once statutory contributions, taxes, and employee entitlements are factored into the total cost of hiring.

Skuad’s Employee Cost Calculator helps teams assess employment costs before making a hire by bringing salary and applicable employment expenses into the planning process.

• Helps estimate the overall cost of employing a worker
• Supports budgeting before extending an employment offer
• Helps teams compare hiring costs across supported markets
• Provides greater visibility into costs beyond an employee’s base salary

Estimate your employee hiring costs with Skuad’s Employee Cost Calculator.

What benefits and compensation must employers provide in the Philippines?

Employers in the Philippines must enroll employees earning PHP 1,000 or more per month in the Social Security System (SSS), which provides seven mandatory income-replacement benefits to covered members and their families:

Payroll costs in the Philippines extend beyond base salary to statutory contributions, leave entitlements, and mandatory compensation such as 13th-month pay. Skuad helps employers account for these employment costs while supporting payroll processing, statutory contribution workflows, and benefits administration across supported markets. 

What are workers' rights in the Philippines?

How should companies approach remote and hybrid work in the Philippines?

Companies hiring in the Philippines should assess remote-work readiness across two factors before setting a policy: technology infrastructure and workplace policy design.

The first factor is technology and infrastructure. This means a reliable internet connection, communication and collaboration tools, and the right hardware, laptops and mobile devices, for the team. 

The second factor is policy design. This means setting flexible work policies that address performance evaluation, time management, and communication expectations. Companies that get both factors right can maintain productivity without a traditional office setup.

How are salaries structured in the Philippines?

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.

What are the public holidays in the Philippines for 2026?

Public holidays in 2026 - Philippines

What are the termination and offboarding rules in the Philippines?

For an employer of record, the Philippines has a few critical rules to be aware of when letting an employee go:

How does incorporating a company in the Philippines work?

Incorporating a domestic stock corporation in the Philippines runs through the SEC's eSPARC portal. You'll need Articles of Incorporation, By-laws, a Treasurer's Affidavit, and, for corporations with more than 40% foreign equity, an F-100 form.

You'll also need at least two incorporators and a Philippine-resident treasurer. A One Person Corporation only needs one incorporator, but that's a separate structure with its own rules.

For companies testing the Philippine market or hiring a small team before committing to ongoing entity maintenance, an EOR removes that entire registration and compliance stack.

Skuad acts as the legal employer in the Philippines, so your company can hire, onboard, and pay employees without SEC incorporation, BIR registration, or in-house Philippine payroll infrastructure.

Here is what Skuad helps with:

• Employment contract generation across 160+ countries, aligned with local labor laws and statutory requirements
• Statutory contribution workflows across supported markets, covering applicable social insurance and pension obligations
• Payroll processing in 70+ currencies with tax withholding and statutory deductions
• Termination and offboarding support aligned with local labor requirements across supported markets

Not ready to spend 20 to 45 days on SEC incorporation? Hire in the Philippines through Skuad instead

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 has operational flexibility to scale the team up or down across both countries.

Read the full case study

What is a Professional Employer Organization (PEO) in the Philippines?

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

With Skuad's Philippines PEO solution, you can handle employee benefits and compensation, tax filing, payroll, compliance, and attendance management.

How do EOR, local entity, and independent contractor hiring compare in the Philippines?

The right hiring model depends on whether you need a long-term employee, already have a Philippine entity, or are engaging someone for genuinely independent project-based work.

Employer of Record Philippines: Hire without SEC setup

Hiring in the Philippines means managing a stack of overlapping statutory obligations, Labor Code compliance, BIR income tax withholding, SSS, PhilHealth, and Pag-IBIG monthly filings, the full leave benefit stack across five separate laws, 13th-month pay by December 24, and work visa sponsorship for foreign hires. 

Each one has its own schedule, its own authority, and its own penalty for a missed filing.

Skuad supports hiring, payroll processing, statutory contribution workflows, benefits administration, and offboarding for Philippines employees without requiring your company to establish its own local entity.

Companies entering Southeast Asia through the Philippines can use Skuad to build local teams without adding SEC incorporation and in-house payroll infrastructure upfront.

If you are comparing the cost of an EOR with setting up your own entity, review Skuad’s EOR pricing before deciding which model fits your hiring plans.

Start hiring in the Philippines without setting up your own entity. Book a demo 

FAQs

1. What is an employer of record in the Philippines?

An employer of record in the Philippines is a locally registered company that becomes the legal employer of your Filipino hires on paper, handling SSS, PhilHealth, Pag-IBIG, BIR withholding, 13th-month pay, and Labor Code (P.D. 442) obligations while you direct the work. 

2. How much does an employer of record in the Philippines cost per employee?

EOR pricing in the Philippines typically ranges from USD 190 to USD 700 per employee per month. For a USD 30,000 annual hire, employers should also budget for 13th-month pay and statutory contributions on top of salary and the EOR platform fee.

3. How can a foreign company hire in the Philippines without setting up a local entity?

Through an employer of record. The EOR signs the contract under Labor Code P.D. 442, becomes the legal employer of your Philippine hires on paper, runs payroll in Philippine pesos, registers each employee with SSS, PhilHealth, and Pag-IBIG, and files the BIR 1601-C

4. What's the difference between an EOR and a Contractor of Record (COR) in the Philippines?

An EOR becomes the legal employer under Labor Code P.D. 442, running SSS, PhilHealth, Pag-IBIG, and BIR payroll with full statutory benefits. A COR processes contractor invoices and payouts without taking on the legal employer role, suitable for engagements that pass the DOLE D.O. 174-17 classification test. 

5. What are the penalties for misclassifying a contractor as an employee in the Philippines?

BIR typically imposes a 25% surcharge plus 12% annual interest on unpaid withholding tax. SSS penalties start at PHP 5,000 with possible imprisonment under Republic Act 11199. PhilHealth can levy up to PHP 50,000 per affected employee, with six to twelve months imprisonment.

6. How quickly can an EOR onboard an employee in the Philippines?

Most EOR providers in the Philippines typically complete onboarding within three to fourteen working days once candidate documents are collected, including SSS, PhilHealth, and Pag-IBIG registration. For foreign nationals requiring an Alien Employment Permit from DOLE and a 9G visa, processing generally adds four to eight weeks.