- Overview: Philippines
- Global HR Compliance
- Global PEO and Payroll
- Work Permit for Hiring Expats via PEO
- Expand without a company set up
- Contractor vs. Employee: Which Is Better?
HR Compliance in the Philippines
HR, legal and tax compliance are crucial when hiring a Filipino workforce for your company or your clients. Acumen International takes the guesswork of global compliance with our innovative global employment solution. We help you navigate the complexities and nuances of the Philippines’ labor legislation. With us, you get a single global partner who can handle compliant employee onboarding, payroll, and compensation management, including mandatory and voluntary benefits on your behalf. We can reduce all this to a single monthly invoice while ensuring you stay fully compliant and avoid legal and financial risks.
Your home country’s labor laws and regulations may not apply to Filipino employees. Lack of in-country expertise in managing HR compliance and employment requirements in the Philippines can be a significant hurdle to your company’s hiring and payrolling overseas staff. You will need to research the country to learn about their employment requirements for hiring, compensating, and terminating your global talent.
Quick and Compliant Market Entry
Acumen’s global employment and compliance solution is designed especially for companies like yours to help meet your global hiring needs and keep you compliant. At the same time, you grow your business in the Philippines. This is where we take the hassle off your shoulders and handle it for you. Acumen’s Philippines employment, aka Employer of Record (EOR) solution, makes it possible for you to quickly hire a local and expatriate workforce without establishing a legal in-country business entity. This removes the need to go through the most complex process of setting up your subsidiary or branch office, which includes 16 procedures and can take up to 40 days to complete.
To circumvent the complexities of Philippine employment laws, some businesses hire contractors, consultants, and sales agents, rather than dealing with official employment regulations head-on. But while those tactics may save you time and money early on, they can put you at risk of misclassification charges and lead to hefty fines and penalties. You must also be mindful of the various employment agreements and civil contracts required for employees vs. contractors.
Our dedicated global expert team works around the clock to monitor changes in the in-country HR compliance requirements. Our system is constantly updated to keep our international clients abreast of legislative changes that impact them. So we never miss a beat in keeping your Filipino talent fully compliant.
How to Hire a Workforce in the Philippines
Before hiring local workers in the country, you should familiarize yourself with effective regulations governing employment, existing practices to help you stay compliant and standard benefits in the Philippines.
The Filipino Labor Code generally regulates employment relationships. This law can also be applied to foreign citizens who work in the Philippines.
Laws Governing Discrimination
The Philippines government strictly prohibits employment discrimination based on ethnicity, race, religious beliefs, sex or gender, pregnancy, sexual orientation, civil status, and HIV. In addition, there is legislation to protect employees from sexual harassment.
The demand for professional personnel is high in the Philippines, and you should leverage all local media to advertise open positions, including print, airwaves, and online resources. Nevertheless, there are no guarantees that candidates will choose your firm over your competitors.
Acumen International can help you find and select the best talent and arrange for in-country employment for your chosen candidates. Our global employment solution lets you outsource the hiring, compensation, and termination of your workforce in the Philippines to us, to administrate on your behalf so that you can focus on your business operations.
*Note: While talent recruitment is not an essential service of Acumen International, we can provide on-demand sourcing and recruitment of job candidates as a particular service upon your request and employ your selected candidates on your behalf.
Running Background Checks in the Philippines
During the recruitment process, it is essential to run a background check on prospective candidates before onboarding to ensure they are legally allowed to work in the Philippines. Acumen can assist you in arranging to screen for criminal background checks, address checks, and other relevant information.
Employment agreements in the Philippines can be oral or written, in English or Tagalog (Filipino). Like in most countries, a dual language contract will be concluded by Acumen International for Philippine nationals. The contract must detail the terms of the employee’s compensation, benefits, and termination. The offer of employment letter and employment agreement must express the salary and other compensation amounts in Philippine Pesos (PHP).
You must provide a detailed employment agreement to legally hire an employee in the Philippines for longer than one month. In addition to basic details like the names of the business and the employee, the agreement should provide a starting date of employment and termination date if the duration of employment is limited; job title and associated duties; salary and benefits; working hours and designated time off; confidentiality covenants to protect intellectual property and sensitive data and other details relevant to the terms of employment.
Failure on the employer’s part to live up to the terms of the employment agreement can result in harsh fines and penalties.
Backdated Employment Contracts
Backdating employment agreements is not recommended, as it may impact the candidate’s taxes and other government-mandated contributions. To stay legally compliant, the employee must be onboarded on the hire date, with up to a one-week window of leeway. Backdating may be considered fraud by Philippines tax authorities, a criminal offense. With our solution, you can have your employees legally onboarded for you within several business days, eliminating the need for backdating.
Documents Required for On-boarding Filipino Workers
- Detailed employee information sheet
- The employment agreement, dated and signed by both parties
- Employee’s legal birth certificate
- Form BIR 2316 from the employee’s previous employer
*Check out what mandatory documents are required to get a visa or work permit for your expatriate personnel in the Philippines in our Work permit for hiring ex-pats via PEO in the country block.
Terminating Employees and severance in the Philippines
Firing employees is never easy. To avoid conflict and complications, the employment agreement’s conditions for employee termination should be clearly defined. They should include such details as a list of employee behaviors and conduct that justify immediate termination, the duration of notice required for termination by either party, circumstances under which the employee will receive severance pay and the amount of severance pay. As a legal employer for your workforce in the Philippines, the Acumen team will handle this and other HR issues to ensure smooth employee termination.
Philippine labor law prohibits at-will dismissal of employees without due cause, even with notice or with salary payment instead of notice.
Reasons considered valid for termination include:
- Severe misconduct and/or the neglection of duties
- Fraud or breach of trust
- Criminal behavior against the employer
- Installation of labor-saving technology
- Downsizing or closure of the business
- Diseases that threaten other workers.
The consequences for invalid or premature dismissal and failure to follow correct procedures for termination can be dire for employers. Improper termination can result in costly court proceedings and payment of court-mediated damages to the wrongfully terminated employee.
Acumen International can help you navigate the detailed procedures for terminating your Filipino employees, to avoid compliance violations and legal repercussions. When employee behavior or performance is the impetus for termination, complexities can arise with unpleasant consequences. In such cases, Acumen will guide you through all legislative nuances, handle all documentation, and make all necessary payments to terminate your Philippines employees, sparing you from unnecessary complications and penalties.
Employee Benefits and Contributions in the Philippines
Multiple mandatory and optional benefits exist when negotiating a candidate’s employment agreement in the Philippines. Acumen’s global employment solution can support your company’s benefits strategy to ensure you attract and retain the country’s top talent while remaining compliant with in-country laws and regulations. Trust Acumen International as an industry expert to handle the tailored, best-matched benefits and compensation programs for your international employees in the Philippines.
Mandatory Employee Benefits and Contributions
Compensation and wages
- Minimum wage
- Overtime pay
- Premium pay
- Night shift differential
- 13th-month pay
- Separation pay
- Retirement pay
- Meal and break time
- Paternity and maternity leave
- Special leave for female employees
- Up to 2 months with pay for gynecological-related surgery
- Up to 10 days with pay for victims of domestic violence or sexual assault
Contributions (deducted from employee’s gross monthly salary)
- Social Security System (SSS)
- Home Development Mutual Fund (HDMF/Pag-IBIG)
- Philippine Health Insurance Corporation (PhilHealth)
Voluntary employee benefits in the Philippines
In addition to mandatory benefits, employers may offer additional benefits and incentives, to be detailed in the employment agreement.
- Performance bonuses
- Employee share schemes (ESS)
- Enhanced medical insurance or healthcare
- Company car
- Company phone/laptop/tablet
- Travel allowance
- Meal vouchers
- Work from home or flexi-time plans
- Professional development opportunities
- Global mobility options
- Access to fitness or leisure facilities
- Children’s educational stipends
Acumen International: your Philippines HR compliance partner
Avoid possible non-compliance pitfalls in the Philippines by partnering with Acumen International, your global employment and HR compliance partner. Trust us to navigate for you the numerous in-country complexities that can arise surrounding your employee onboarding, payroll, and termination. Reduce compliance risks and streamline your HR processes in the Philippines.
Along with our core solution for hiring a remote workforce, Acumen International’s team of English-speaking professionals can deliver a custom solution for you, with payroll and various perks for your offshore teams. Thus reducing your HR processes to a standard unified procedure and saving you time, money, and valuable resources.
If you’re looking to streamline your company’s operations and get a handle on global workforce management, partnering with a professional employer organization (PEO) can be a great solution. PEOs can provide a full suite of services to help you replace the following numerous vendors.
- Payroll Company
- Employee Benefits Broker
- HR Consultants
- Background Checks Vendors
- IP Attorney
- Tax Advisor
- Translation service
- Legal Advisor
- Immigration Advisor
- HR Compliance Advisor.
- Licensing Consultancy
To learn more, request your Free Express Quote for the Philippines, or ask us a question. Our team is always ready to assist you, no matter your time zone.