Hire in the Philippines: A Comprehensive Guide for 2026

Introduction

Hiring employees in the Philippines as a foreign company requires compliance with the Philippine Labor Code (Presidential Decree No. 442), statutory contributions to the Social Security System (SSS), Philippine Health Insurance Corporation (PhilHealth), the Home Development Mutual Fund (Pag-IBIG), and regional minimum wage rules set by the Regional Tripartite Wages and Productivity Boards (RTWPBs).

Most companies enter the market to hire employees in the Philippines through an Employer of Record (EOR), which manages the legal employment relationship and compliance without requiring a local entity. SSS, PhilHealth, and Pag-IBIG follow defined salary bases and ceilings, while also requiring separate monthly remittances and detailed payroll coordination.

This guide covers hiring models, employment laws, payroll obligations, and key considerations for companies hiring in the Philippines.

How to hire in the Philippines?

Hiring in the Philippines is typically structured through three established engagement models: establishing a local legal entity, engaging independent contractors, or partnering with an Employer of Record (EOR). Each model differs in legal responsibility, operational control, and compliance obligations.

Establishing a subsidiary

A subsidiary enables a foreign company to hire employees through a locally incorporated entity in the Philippines. This approach is commonly adopted for long-term market presence and provides comprehensive control over recruitment, payroll, and workforce management.

Incorporation requires registration with relevant government authorities, tax and labor compliance setup, and ongoing statutory reporting. The local entity assumes full responsibility for employment obligations, including payroll administration, statutory contributions, and employee benefits.

Hire independent contractors

Organizations may engage professionals in the Philippines on a project-based or flexible basis. This structure supports workforce planning for specialized or non-permanent requirements. Each engagement is defined through the scope of work, deliverables, timelines, and agreed payment terms.

Clear documentation helps establish an independent professional relationship. It ensures mutual understanding of responsibilities and expected outcomes, enabling structured coordination and consistent execution across engagements.

Employer of Record (EOR) services

An Employer of Record enables companies to hire in the Philippines without establishing a local entity. This model supports market entry and allows organizations to build teams while maintaining operational efficiency. It also provides access to local talent with reduced administrative effort.

Under this structure, the EOR serves as the legal employer while the individual works for the client organization. It supports compliance alignment, payroll management, and statutory obligations, while enabling consistent workforce operations across business environments.

Skuad supports both full-time employees and independent contractors in the Philippines through a unified platform:

EOR for full-time employees

• Acts as the legal employer across 160+ countries, enabling hiring without local entity setup
• Manages employment contract generation aligned with local labor regulations
• Oversees statutory contributions, including social insurance and pension obligations
• Processes payroll in 70+ currencies with tax withholding and reconciliation workflows
• Administers statutory benefits, leave entitlements, and parental provisions
• Supports termination and offboarding processes in alignment with local employment requirements

Contractor management  (AOR)

• Onboards contractors through compliant agreements designed to reduce misclassification exposure
• Facilitates invoice workflows and cross-border payment processing across multiple jurisdictions
• Identifies potential classification risks through structured compliance checks
• Enables multi-currency payouts with coordinated financial tracking
• Maintains centralized records of contracts, payments, and engagement history

See Skuad pricing for full-time and contractor hiring in the Philippines

What are the employment laws in the Philippines?

Employment laws in the Philippines establish the foundational framework for work arrangements, employee compensation, and statutory benefits. The table below outlines key employment categories along with their corresponding requirements.

Philippine employment regulations outline the key framework governing work arrangements and employee entitlements. For a complete breakdown of contracts, leave policies, and compliance requirements, refer to Skuad’s guide to employment laws in the Philippines.

Read Skuad's guide to employment laws in the Philippines

How does payroll and tax work in the Philippines?

Payroll in the Philippines includes salary calculation, statutory benefits, income tax withholding, and mandatory contributions to government agencies such as SSS, PhilHealth, and Pag-IBIG. Employers must also comply with regional wage variations and strict reporting requirements.

Managing payroll in the Philippines can be complex due to varying regional wage rates, mandatory government contributions, income tax withholding rules, and strict compliance and reporting requirements. Employers often struggle to ensure accuracy while keeping up with frequent regulatory updates across multiple statutory bodies.

Skuad’s global payroll solutions help address these challenges by automating payroll calculations, managing statutory contributions, and ensuring compliance with local labor and tax regulations.

For benchmarking salaries across roles before making an offer, Skuad’s Salary Insights tool provides detailed compensation data by role and seniority level across supported markets.

Explore salary benchmarks for the Philippines

How to pay employees in the Philippines?

Typically, paying employees in the Philippines involves direct deposits, checks, or PayPal, which can be an exhaustive and time-consuming manual task, especially when employers already have an in-house team of employees to keep up with. Taking a manual approach leaves the door open for miscommunication, missed payments, and poor working relationships.

Skuad supports employers in managing global payroll and workforce growth, with key payment processes automated as follows:

What are the challenges of hiring employees in the Philippines?

There are two main challenges associated with hiring employees in the Philippines:

An employee in the Philippines sits at a laptop, ready for work

Employee regulations

The Labor Code is the primary legislation that sets guidelines for hiring employees in the Philippines. It outlines basic hiring conditions, including:

• Regional minimum wage rates set by the Regional Tripartite Wages and Productivity Boards (RTWPBs)
• Anti-discrimination provisions covering factors such as sex, age, marital status, pregnancy, and disability
• Rules on probationary employment and conditions for regularization
• Statutory employee benefits and mandatory entitlements as defined under applicable labor standards

Ensuring registration and tax compliance

Employers in the Philippines must remit payroll taxes on a monthly basis, due on either the 10th or the 15th of each month. Income tax brackets change accordingly:

• ₱0 to ₱250,000: 0%
• ₱250,001 to ₱400,000: 15%
• ₱400,001 to ₱800,000: 20%
• ₱800,001 to ₱2,000,000: 25%
• ₱2,000,001 to ₱8,000,000: 30%
• Above ₱8,000,000: 35%

Hiring in the Philippines requires compliance with labor laws, payroll obligations, and statutory requirements. An Employer of Record (EOR) can simplify these responsibilities and reduce administrative effort.

Skuad helps with this through Shield by managing employment processes, handling payroll, and ensuring compliance with local regulations, so your team doesn’t need to manage compliance complexity directly.

Here is what Skuad helps with:

• Supports employment contract generation across 160+ countries, aligned with local labor law requirements
• Facilitates statutory contribution workflows across supported markets, covering applicable social insurance and pension obligations
• Supports payroll processing in 70+ currencies with automated tax withholding and statutory deductions
• Assists with worker classification checks to help identify misclassification risk before it becomes a compliance issue

How much does it cost to hire an employee in the Philippines?

The cost of hiring an employee in the Philippines includes salary plus mandatory employer contributions across three government agencies.

Estimating these costs upfront can be complex and time-consuming for businesses, making accurate budgeting difficult. Skuad supports companies through its global employment infrastructure, enabling them to manage payroll, statutory contributions, and compliance in the Philippines without setting up a local entity.

Calculate your cost of hiring in the Philippines

Customer story: How did VRP Consulting establish a Philippines operations hub?

VRP Consulting, a San Francisco–based IT consulting company with more than 450 employees across 10 countries, aimed to establish the Philippines as a strategic operations hub but faced challenges, including incorrect salary calculations, delayed payments, and limited payroll transparency.

After working with Skuad in 2022, the company onboarded and managed 38 employees and contractors across the Philippines and India. This enabled accurate and timely payroll processing, correct social security contributions, and proper worker classification.

The platform also supported localized onboarding, multi-currency payroll, and full compliance across both regions, helping streamline global workforce operations.

"Skuad's solutions empowered us to scale our workforce globally with ease, ensuring timely payroll, compliance, and a seamless onboarding experience, all on one powerful platform."

- VRP Consulting

Read the full case study

Build a compliant workforce in the Philippines

At this stage, you have an understanding of how hiring works in the Philippines; the next step is to build a structured and compliant workforce aligned with local labor laws and statutory requirements.

Companies can choose between setting up a local entity, hiring independent contractors, or using an Employer of Record (EOR). Each model comes with different levels of control, responsibility, and compliance obligations, so the right choice depends on long-term business goals.

Regardless of the approach, employers must comply with mandatory contributions such as SSS, PhilHealth, and Pag-IBIG, along with wage laws, tax regulations, and employee benefits to avoid compliance risks.

For companies looking to manage hiring, payroll, and compliance in one place, Skuad supports organizations in building and managing a fully compliant workforce in the Philippines without setting up a local entity.

Start hiring in the Philippines without entity setup. Book a demo.

FAQs

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

An employer of record in the Philippines is a third-party entity that serves as the legal employer of your workforce. The EOR manages employment contracts, payroll, SSS, PhilHealth, and Pag-IBIG contributions, and ensures compliance with the Philippine Labor Code, while your company retains full operational control of employees.

2. What does an EOR service include in the Philippines?

EOR services in the Philippines typically cover payroll processing, statutory contributions such as SSS, PhilHealth, and Pag-IBIG, and employment contract management. They also handle employee onboarding and ensure compliance with the Philippine Labor Code. Service scope may vary depending on the provider and level of HR and compliance support required.

3. Can a foreign company hire in the Philippines without a local entity?

Foreign companies can hire in the Philippines without a local entity by using an Employer of Record. The EOR becomes the legal employer, manages compliance under the Philippine Labor Code, and handles SSS, PhilHealth, and Pag-IBIG registration and remittances on behalf of the hiring company.

4. What are the risks of misclassifying workers as contractors in the Philippines?

Misclassifying a worker as a contractor in the Philippines can lead to back payments of SSS, PhilHealth, and Pag-IBIG contributions, BIR penalties, and labor disputes filed with the Department of Labor and Employment (DOLE). Under the Philippine Labor Code, workers performing regular duties under company supervision are generally considered employees regardless of contract classification.

5. How does an EOR differ from entity setup in the Philippines?

Setting up a local entity in the Philippines typically takes three to six months and involves SEC registration, capital requirements, and ongoing BIR compliance. An EOR removes this setup requirement by acting as the legal employer, enabling companies to hire under the Philippine Labor Code without establishing a local entity.

6. How long does it take to onboard an employee in the Philippines through an EOR?

Onboarding through an EOR in the Philippines typically takes a few days to three weeks, depending on document readiness and role complexity. The EOR manages SSS, PhilHealth, and Pag-IBIG registration, contract preparation, and DOLE-required documentation, ensuring a compliant and streamlined onboarding process prior to the employee joining the organization.