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Philippines

Payroll in the Philippines

Remote hiring is great for your business. It gives you access to the best talent, helps you to develop worldwide coverage, and opens the door to global expansion.

But hiring team members in another country can also be really confusing. A large part of the equation is international payroll — with all of its complicated rules and regulations, along with your own worries about compliance. Wouldn’t it be handy to have a payroll calculator for the Philippines?

Did you know you don’t have to manage payroll in the Philippines yourself? You can outsource the task to a payroll provider in the Philippines (like Skuad).

What you need to know about payroll in the Philippines

A few payroll basics for the Philippines

The currency in the Philippines is the Philippine peso (₱, PHP). According to the exchange rate at the time of writing 1 USD is equivalent to around 51 PHP.  

Wages in the Philippines are usually paid every two weeks, with no longer than 16 days between payments.

Working hours in the Philippines

Most employees work 40 hours per week, eight hours per day Monday to Friday. If for whatever reason an employee works for six consecutive days, their employer has to allow a 24-hour break before they return to work.

Overtime rules in the Philippines

If an employee works more than 40 hours a week, this is considered overtime. Overtime rates are agreed upon in the employment contract but most employers pay overtime at a rate of 125% of the normal salary.

Minimum wage requirements in the Philippines

Minimum wage requirements vary across the Philippines. The rate an employer has to pay depends upon the region of the country in which their employee is based.

In the capital city of Manila, employees are entitled to a minimum wage of 537 PHP per day. But in a poorer, more rural region like Ilocos, the minimum wage falls to 243PHP per day. The average wage in the Philippines is around 44,600PHP per month.

Employees working at night are entitled to 110% of their standard salary. Employees working on a public holiday are entitled to 130% of their usual salary.

In the Philippines, employers have to award “rank and file” employees a 13th-month bonus. To be eligible, employees can’t be managers and they must have worked at least one month during the year.

The 13-month payment has to be at least 1/12 of the employee’s annual salary and this sum is paid to the employee no later than December 24 each year.

Severance pay in the Philippines

Severance pay equals one month’s pay for every year of service.

Chat to one of the Skuad team about how we can help simplify your payroll in the Philippines and take the weight off your shoulders.

Everything you need to know about payroll in Philippines

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Tax and payroll deductions in the Philippines

As part of the Philippines payroll statutory requirements, employers and employees need to make the following contributions:

Employer contributions

  • 8.5% - Social security (SSS)
  • Between 42.50 PHP and 425 PHP per month if an employee earns more than 20,000 PHP per month – Mandatory Provident Fund (WISP - a pension fund)
  • 2% - Home development mutual fund (this contribution is capped at 100 PHP)
  • 1.75% - Philippine Health Insurance Corporation (PHIC)

Employee contributions

  • 4% - Social security (SSS)
  • Between 22.50 PHP and 225 PHP per month if an employee earns more than 20,000 PHP per month – Mandatory Provident Fund (WISP - a pension fund)
  • 2% - Home development mutual fund (this contribution is capped at 100 PHP)
  • 1.75% - Philippine Health Insurance Corporation (PHIC)

Income tax

Payroll tax in the Philippines is charged at a progressive rate. There are five tax bands, with annual earnings up to 250,000 PHP (approximately 4,900 USD) exempt:

  • 251,000 PHP to 400,000 PHP: 20%
  • 400,000 PHP to 800,000 PHP: 25%
  • 800,000 PHP to 2,000,000 PHP: 30%
  • 2,000,000 PHP to 2,410,000 PHP: 32%
  • 2,410,000 PHP +: 35%

Don’t sweat the small stuff, let Skuad manage payroll and payroll deductions for your employees in the Philippines.

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If your head is already spinning, leave your payroll activities in Philippines to Skuad.

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Employee leave entitlement in the Philippines

Public holidays

Filipinos celebrate 21 public holidays per year. Nine of these days are considered “Special Holidays” on which employees are entitled to paid leave.

Paid leave

According to Filipino labor law, employees are entitled to a minimum of five days’ paid leave per year after one year of employment. This leave can be used as vacation or sick days.

Sick days

There is no statutory sick leave in the Philippines. Sick days are deducted from an employee’s five-day leave allowance.

Maternity / Paternity leave

Mothers get up to 105 days of paid leave as long as they have made at least three social security contributions in the year before their child’s birth.

Single mothers are entitled to an extra 15 days’ paid leave. Any mother can claim an additional 30 days’ leave, although this will be unpaid.

Fathers can take up to seven days’ paid leave after the birth of a child.

Employers are responsible for paying 100% of their employee’s salary during maternity or paternity leave. They can later claim this sum back from social security.

Single parent leave

Single parents in the Philippines can take up to seven days’ leave per year to take care of their child.

Leave for victims of VAWC

Workers who are Victims of Violence Against Women and Children (VAWC) can take up to 10 days' leave per year to receive medical treatment or fulfill legal obligations.

Special leave for women

Female employees can take up to two months’ leave after undergoing gynecological surgery.

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It’s crucial to get your payroll taxes and deductions correct in Philippines and elsewhere in the world. Book a demo with Skuad to see how we can help.

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Payroll compliance in the Philippines

If you employ workers in the Philippines, it’s important that you stick to the rules and regulations listed above. It’s also the responsibility of the employer to ensure contributions reach the relevant authorities by the required deadlines.

Businesses that make late or incomplete payments or fail to keep appropriate tax records face interest payments and fines.

Only by running a watertight payroll system in the Philippines can you avoid potentially costly mistakes.

Want to get started with a fully compliant payroll management system in the Philippines? The Skuad team experts will tell you exactly what’s expected of your business. Book a demo today.

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Want to get started with payroll management in Philippines? Book a Skuad team demo to understand exactly what’s expected of your business.

Book a Demo

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Outsourcing payroll in the Philippines: what are your options?

If running payroll in the Philippines yourself seems like a tall order, it’s time to outsource. Luckily, there are a number of payroll solutions in the Philippines. You just need to decide which type of payroll service best suits your business.

Here are the two primary options:

Work with a dedicated HR and payroll solution in the Philippines

Pick a payroll company in this category and they will take care of payroll for your Filipino employees. However, you will continue to run payroll for any employees back home.

This can create problems. By running two payroll systems simultaneously, the process can become disjointed and time-consuming.

In addition, if you want to employ talent in other countries around the world, you could end up working with multiple payroll companies. This increases the chance of human error and the risk of non-compliance.

Work with a payroll partner like Skuad who can manage HR and payroll in the Philippines, as well as for other employees

Skuad provides an easier alternative. With us, you can outsource all HR and payroll responsibilities for all employees.

You can manage payroll for team members in the Philippines, the U.S., and in any other country, all from the same intuitive dashboard. It’s a one-system, company-wide solution for all your HR and payroll needs.

What’s more, you get the help and support of the expert Skuad team. We’ll advise you of your payroll responsibilities in the Philippines and across the world, keeping your process 100% compliant.

Add in HR capabilities, including international onboarding and a competitive benefits package, and you have everything you need to hire, manage and pay remote talent.

Start hiring and paying employees in the Philippines and around the globe! Book a free Skuad demo to see our global payroll and HR platform in action.

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