How to hire employees in the Philippines through an EOR

Hiring employees in the Philippines can be straightforward if you choose the right employment model. If you want to hire staff without setting up a local company, an employer of record (EOR) in the Philippines can handle the legal employment, payroll, taxes, and statutory benefits on your behalf.

Instead of setting up a company in the Philippines, you partner with an EOR that already has a local entity. The EOR becomes the legal employer, while you manage the employee's day-to-day work, responsibilities, and performance.

For most companies hiring a small team or testing the Philippine market, this can be faster and simpler than establishing their own entity. But an EOR does not solve everything: you still need to understand the real cost, local employment rules, and how to screen candidates before making a hire.

This guide explains how to hire in the Philippines through an EOR, what it costs, which employment rules matter, and when an EOR makes more sense than setting up your own entity.

TL;DR

• An employer of record in the Philippines lets you hire employees without setting up a local company. The EOR becomes the legal employer and handles contracts, payroll, taxes, and statutory compliance.
• An EOR is often the simplest option when you want to hire staff in the Philippines quickly or test the market before establishing your own entity.
• Budget around 20% above gross salary for statutory employer costs, before the EOR's own fee. The 13th month pay alone adds 8.33%.
• EOR fees are usually charged per employee per month and vary by provider. Compare the full cost, including onboarding, offboarding, currency conversion, and other extras.
• Philippine employment is not at-will. Probation is capped at six months, and terminating a regular employee requires a valid legal cause and due process.
• If you're considering setting up a company in the Philippines, compare the long-term cost and administrative burden with an EOR before choosing your employment model.
• An EOR handles employment and compliance. It does not determine whether a candidate can actually do the job, so screen candidates before the EOR issues the employment contract.

What is an EOR in the Philippines?

Expanding your team overseas often comes with complex legal hurdles, but utilizing an EOR Philippines simplifies the entire process. Under this model, the provider legally employs staff on your behalf—handling local employment contracts, government registrations, tax withholding, social contributions, and payroll in Philippine pesos, while your internal team retains full control over day-to-day management and project deliverables.

The split is worth stating plainly, because it is where most confusion starts. Legal employer: the EOR. Functional manager: you. On every government document, on the payslip, and in any labor dispute, the EOR's name is the one that appears.

People often mix this up with a PEO. A professional employer organization works as a co-employer, which means you already need a registered Philippine entity for it to share responsibility with. If you have no entity, a PEO is not available to you, and an EOR is the route. That single distinction decides the model for most companies, and it is worth confirming in writing, since some providers market both under one brand.

EOR vs. Local Entity vs. Contractor: Which Should You Choose?

Each option works for a different hiring situation. An EOR is usually the simplest way to hire employees without setting up a local entity. A local entity gives you more control but comes with higher setup and compliance costs. Contractors can work for genuinely independent roles, but misclassifying an employee as a contractor can create legal and tax risks.

There is no single best way to hire in the Philippines. An EOR can make sense for a small or temporary team, while a local entity becomes more economical as headcount grows. Contractors may work for genuinely independent roles, but using them where an employment relationship exists can create misclassification risk.

How do you hire through an EOR in the Philippines?

Hiring employees in the Philippines through an Employer of Record (EOR) involves seven steps, from choosing an EOR provider and defining the role to onboarding employees and managing payroll, benefits, and compliance. Steps 1–3 are handled by you; from Step 4 onward, you work with the EOR provider.

Step 1: Define the role and budget the true cost

To hire an IT staff in Philippines, start with the fully loaded cost, not the salary. A PHP 60,000 monthly salary is not a PHP 60,000 monthly commitment. Add the employer's social contributions, the 13th month accrual, and the provider fee, and the real number is meaningfully higher. The cost section below breaks this down.

Write the role scope down too. The EOR will ask for a job title, duties, salary, start date, and work location for the contract, and a vague scope produces a vague contract. In the Philippines a contract that does not match the actual work is a weak document if the relationship ever ends badly.

Step 2: Choose the provider

Providers differ more than their websites suggest. Five questions separate them:

• Do they own the Philippine entity, or partner with a local firm? Owned entities usually resolve payroll and government-registration problems faster, because nobody is relaying messages between two companies. Partner models are not disqualifying, but ask who actually holds the employment contract.
• How do they handle regional wage rules? Minimum wage in the Philippines is set regionally, not nationally. A provider that treats the country as one wage zone will eventually get a hire wrong.
• What are the support hours? Manila is UTC+8. If your HR team sits in New York or London, confirm there is overlap with someone who can act, not just a ticket queue.
• What happens at termination? Ask this before you sign, not when you need it. Get the process, the notice periods, and who pays separation costs in writing.
• What is the fee, in full? Provider fees are quoted per employee per month and vary by a wide margin between local specialists and global platforms. Ask what is excluded: onboarding fees, offboarding fees, currency spread, and deposit requirements often sit outside the headline number.

Step 3: Screen the candidate before anyone signs

This is the step most guides skip, and it is the one with the most money attached. More on it further down, because it deserves its own section.

Step 4: Collect the new hire's information

The EOR needs a specific set of details to register the employee. Most providers send a form or portal link, and the employee fills it in directly:

• Full legal name, exactly as it appears on their bank account
• Date of birth, address, and contact details
• Bank account details for peso payroll
• Agreed monthly salary in PHP, plus any allowances or bonus terms
• Tax Identification Number, issued by the Bureau of Internal Revenue
• SSS number
• PhilHealth number
• Pag-IBIG membership number

Candidates who have worked in the formal sector already hold all four government numbers. First-time employees may not, and registering them adds a few days. Ask early so it does not surprise you on start date.

Step 5: Issue a compliant employment contract

The provider drafts it, but read it. A Philippine employment contract needs to state the employment status and probationary terms, working hours and rest days, the salary and pay schedule, the applicable regional wage rate, statutory benefits, leave entitlement, and the grounds and process for termination.

Two clauses deserve real attention. First, probationary status has to be stated explicitly, along with the standards the employee must meet to become regular. If those standards are not communicated at hiring, Philippine jurisprudence tends to treat the employee as regular from day one. Second, the termination grounds have to track the Labor Code. Borrowing an at-will clause from a US template makes it unenforceable, not flexible.

One clause that gets left out and should not be: data handling. The Philippines has its own Data Privacy Act, enforced by the National Privacy Commission, and a remote employee working on customer records is processing personal data under it. Agree in writing who supplies the laptop, who controls the device, where company data may be stored, and what happens to it on the employee's last day. An EOR administers employment, not your security policy. If the role touches customer or candidate data, that gap is yours to close in the contract and in onboarding.

Step 6: Fund payroll and let the EOR remit

You pay one consolidated invoice, usually monthly. The EOR pays the employee in pesos, withholds income tax, and remits the employer and employee shares of SSS, PhilHealth and Pag-IBIG on the government deadlines. Payroll in the Philippines is commonly semi-monthly, so expect two pay runs a month rather than one.

Check the invoice line items in month one. It is the cheapest time to find out that a benefit you assumed was included is billed separately.

Step 7: Manage the relationship

Onboarding is not the end of the provider's job. Ongoing, the EOR should process leave, administer statutory benefits, keep contracts current as wage orders and contribution rates change, and run any termination properly. Rates in the Philippines move. Wage boards issue new orders, and contribution schedules get revised. A good provider tells you before the invoice changes.

What does it cost to employ someone in the Philippines?

Three layers: gross salary, statutory employer costs, and the provider fee. Only the middle layer is fixed by law, and it is the one teams forget.

Add the statutory lines and the load sits near 20 percent above gross for a mid-range salary. It falls as pay rises, because SSS and PhilHealth both stop scaling once salary passes their ceilings. A PHP 25,000 hire carries proportionally more statutory cost than a PHP 150,000 hire, which is the opposite of what most finance teams assume when they model headcount.

Pro Tip: Ask the provider for a full cost quotation on a real salary figure, itemized, before you compare two vendors. Headline per-employee fees are close to meaningless on their own. One provider quoting a lower monthly fee while marking up the currency conversion can cost more than the pricier one.

What employee benefits are mandatory in the Philippines?

Philippine employees are entitled to benefits such as 13th month pay, service incentive leave, SSS, PhilHealth, Pag-IBIG, holiday pay, overtime pay, and applicable night shift differentials. An EOR handles these statutory benefits and payroll requirements on the employer’s behalf.

For employees working night shifts, remember that the 10% night shift differential increases the actual employment cost.

• 13th month pay. Presidential Decree 851 requires every private-sector employer to pay rank-and-file employees one twelfth of their basic annual salary, on or before 24 December each year. Anyone who worked at least one month in the calendar year qualifies, pro-rated. This is not a bonus and it cannot be withheld for performance.
• Service incentive leave. Five paid days a year, once the employee has completed twelve months of service. An employer already granting five or more days of paid vacation meets the requirement.
• Social security, health, and housing. SSS, PhilHealth and Pag-IBIG registration and remittance, on the employer side as well as the employee side.
• Night shift differential. At least 10 percent on top of the basic hourly rate for hours worked between 10pm and 6am. This one catches companies hiring Philippine staff to cover US business hours, which is a very common reason to hire there in the first place. It stacks on overtime and holiday premiums.
• Holiday pay and overtime. The Philippines has both regular holidays and special non-working days, and they are paid at different premium rates.
• Maternity and paternity leave. The Expanded Maternity Leave Act provides 105 days of paid maternity leave, with additional days for solo parents. Paternity leave is separately provided.

Practical consequence: a Philippine hire covering a US night shift costs more per hour than the salary implies. Build the night differential into the offer rather than discovering it on the first invoice.

What are the probation and termination rules in the Philippines?

Probationary employment can last up to six months. Employers must communicate the standards for regularization at the start of employment. Once an employee becomes regular, termination requires a legally valid cause and due process.

The Philippines does not follow at-will employment, so employers should understand termination requirements before hiring.

What is the minimum wage and working hours in the Philippines?

The Philippines has no single national minimum wage. Regional wage boards set minimum rates, so the applicable rate depends on where the employee works. Most foreign companies hiring through an EOR pay above the minimum, but the correct regional rate still matters for compliance.

The standard workday is generally eight hours, with overtime and holiday premiums applying where required.

I'd remove the ILO 44-hour statistic from this section. It doesn't really help answer the reader's question and distracts from the Philippines-specific information.

What are common mistakes when hiring in the Philippines?

The biggest EOR hiring mistakes are misclassifying employees as contractors, treating probation as at-will employment, assuming the EOR evaluates candidates, and underestimating the total employment cost.

An EOR handles employment administration and compliance, but you are still responsible for choosing the right person and setting the right compensation. Given below are a few other common mistakes.

Misclassification. A company hires a "contractor" who works fixed hours, uses company systems, reports to a manager, and has no other clients. Philippine authorities apply a control test, and the label on the invoice is not what decides it. A finding of employment brings back pay, unremitted contributions, and penalties. If you direct someone's daily work, they are an employee. Use an EOR or accept the risk.

Treating probation as a trial you can end freely. Probation ends dismissal-at-will; it does not extend it. Without documented standards communicated at hiring and a documented assessment against them, a probationary dismissal can be overturned.

Assuming the EOR vets the candidate. It does not. An EOR is a compliance and payroll function. It will onboard whoever you name, at whatever salary you set, with no view on whether the person can do the work.

Under-budgeting. Salary plus fee, with no 13th month, no night differential, and no provider extras. The gap between the modeled cost and the real one is usually large enough to matter to whoever approved the headcount.

How Should You Screen Candidates Before EOR Hiring?

Because terminating employees in the Philippines can be more complex than hiring them, thorough screening matters. Assess candidates against the skills required for the role before the EOR begins onboarding.

Use a structured skills assessment, consistent interview process, and reference checks to compare shortlisted candidates. An EOR manages employment and compliance; it does not determine whether a candidate can do the job.

For cross-border hiring, role-specific skills assessments can provide a more consistent signal than resumes alone. Testlify skills assessments can help you assess candidates before onboarding.

Hiring in Manila or Cebu? Bring your job description and see how to build a role-specific assessment. Book a demo

Key Takeaways

• An EOR solves employment, not hiring. It gives you a legal employer in the Philippines within weeks and carries the compliance load, which is genuinely valuable. It has no opinion on whether your candidate can do the job, so the quality of the hire stays entirely your problem and needs its own process.
• Budget about 20 percent above gross, then check the ceilings. SSS at 10 percent of the salary credit, PhilHealth at 2.5 percent, Pag-IBIG at 2 percent, and the 13th month at 8.33 percent stack up fast. Because SSS and PhilHealth stop scaling at their caps, lower-paid roles carry a proportionally heavier statutory load, which matters when you model a support team rather than a few senior hires.
• Six months is a hard deadline, not a guideline. Probation cannot exceed six months, and an employee still working on day 181 is regular by operation of law. Communicate the standards for regularization in writing at hiring, assess against them, and diarize the decision date rather than trusting anyone to remember it.
• Termination needs cause and process. There is no at-will employment. Just or authorized cause, written notice, a chance to respond, and 30 days' notice to DOLE for authorized causes. Read the provider's indemnity clause before you sign, because many pass wrongful-dismissal cost back to you.
• Night differential is a real line item. At least 10 percent extra for hours between 10pm and 6am, stacking with overtime and holiday premiums. Any role built to cover US or European hours costs more than the salary suggests, so price it into the offer rather than absorbing it later.
• Front-load the screening. Hiring takes two weeks and unwinding a bad hire takes months, so the return on assessment effort before the contract is far higher than anywhere else in the process. Structured, job-relevant evidence is the one signal that reads the same across a border, and it is cheap compared to a regular employee you cannot easily part with.

Frequently asked questions (FAQs)