Best Philippines Employer of Record (EOR)

If you are hiring employees in the Philippines, it is important to understand the main rules that protect workers. The government’s Department of Labor and Employment manages these laws. The most important set of rules is the Labor Code of the Philippines. Think of this as the main rulebook for all jobs in the country. It covers essential areas like how many hours a person can work, the lowest legal pay, rules for paid time off, and the correct way to end someone’s employment.

The Labor Code of the Philippines (Presidential Decree No. 442), enforced by the Department of Labor and Employment (DOLE), governs employment relationships. The law covers minimum wages, working hours, benefits, leave entitlements, termination, and social-security contributions.

Employers must also follow region-specific wage orders issued by the Regional Tripartite Wages and Productivity Boards (RTWPB). Each region periodically adjusts the minimum wage based on inflation and cost-of-living considerations.

Other key statutes include:

• Social Security Act of 2018 (RA 11199) – governs SSS coverage and contributions.
• National Health Insurance Act (RA 7875, as amended) – mandates PhilHealth participation.
• Home Development Mutual Fund Law (RA 9679) – establishes Pag-IBIG contributions.
• Data Privacy Act of 2012 (RA 10173) – regulates employee data handling.

Foreign employers hiring through an EOR must follow these laws to ensure workers receive lawful benefits and protections. 

The Philippines does not have a national minimum wage. Instead, the amount is set for each specific region, like Metro Manila, Central Visayas, or Northern Mindanao. Local groups called Regional Tripartite Wages and Productivity Boards (RTWPB) decide on these wage levels. 

They review and adjust the rates every so often based on the current cost of living in that area. 

This means the minimum wage in a major city will be different from the wage in a rural province. For a foreign company using an Employer of Record, these rules are not optional. The EOR’s job is to make sure that every worker receives all the benefits and protections listed in these laws.

1. Written Contracts

Philippine law requires that every employee have a written employment contract specifying the terms and conditions of work.

Typical contents include:

• Job title and description
• Work schedule and location (on-site or remote)
• Salary, benefits, and allowances
• Probationary period (if applicable)
• Leave entitlements
• Notice period and termination terms
• Confidentiality or non-disclosure clauses

In the Philippines, when a new employee is hired, they usually start with a “probationary” status. This is a trial period that allows the company and the employee to see if the job is a good fit.

• This initial period can last up to six months.
• Its main purpose is to give the employer enough time to observe the employee.
• The employer will set goals and provide feedback to help the employee succeed.
• At the end of the six months, the employer must make a decision.

If the employee has performed satisfactorily and meets the company’s reasonable standards, they must be given “regular” employment status. A regular employee gains strong job protection.

This means they cannot be dismissed from their job without a just or authorized cause as clearly defined by the Philippine Labor Code. Essentially, the law makes it much harder to terminate a regular employee, ensuring their employment is stable and secure. 

The Philippine Department of Labor and Employment (DOLE) sets specific standards that all contracts must follow. A proper contract must clearly state that the employee’s salary meets or, ideally, exceeds the official minimum wage for that region. Also, all the statutory benefits the employee is entitled to, such as SSS, PhilHealth, and Pag-IBIG contributions.

2. Working Hours

Standard working hours in the Philippines are governed by Articles 83 to 90 of the Labor Code.

• Normal Hours: Eight hours per day, six days per week, which is 48 hours total.
• Overtime: Work beyond eight hours requires an additional 25 % of the regular hourly rate, or 30 % if performed on rest days or holidays.
• Night Shift Differential: Employees working between 10 PM and 6 AM receive an extra 10 % of their hourly pay.
• Rest Days: At least one rest day per week, typically Sunday.
• Meal Breaks: A minimum of one hour for meals is mandated for every eight-hour shift.

An Employer of Record (EOR) uses specialized digital systems to carefully monitor the hours your team works. The platform is specifically configured to align with the official rules set by the Philippines’ DOLE regarding work hours, pay, and night shift differentials.

When an employee logs extra hours, the system counts them and automatically identifies which hours qualify as official overtime and instantly applies the correct, legally-mandated pay rate to them.

3. Paid Leave

Philippine law provides various paid leave benefits. The Labor Code and subsequent acts outline these entitlements:

• Service Incentive Leave (SIL): Regular employees who have worked for at least one year are entitled to five paid leave days annually. Some employers convert unused SIL to cash.
• Vacation Leave: Many companies offer 15 days per year, though not legally required beyond SIL.
• Sick Leave: Commonly provided at 10 to 15 days per year as part of company policy.
• Public Holidays: The Philippines observes 18 official holidays (12 regular and 6 special non-working). Regular holidays require 200 % pay if worked.
• Maternity Leave: Under RA 11210, female employees receive 105 days of fully paid maternity leave for childbirth, with an additional 15 days for solo mothers.
• Paternity Leave: Married male employees receive 7 days of paid paternity leave for the first four deliveries of their spouse.
• Parental Leave for Solo Parents: Up to 7 days paid leave annually under RA 8972.
• Special Leave for Women: Two-month leave for gynaecological surgery under RA 9710, known as Magna Carta for Women in the Philippines.

EOR providers ensure these leave benefits are properly tracked and paid in accordance with the law.

4. Maternity Benefits

The Expanded Maternity Leave Law (RA 11210) grants women 105 days of paid leave for live childbirth, whether normal or cesarean, plus an optional 30-day unpaid extension. Solo mothers receive 120 days.

In the Philippines, the process for certain benefits, especially maternity leave, works on a reimbursement system. This means the employer provides the financial support to the employee first, and then gets paid back by the government later. When a qualified employee, such as a new mother, needs to take a leave that is covered by the Social Security System, the employer has an important job. 

They must pay the employee’s full salary for the duration of their approved leave. This is an advance payment made on behalf of the SSS to ensure the employee has financial support when they need it most. Under SSS rules, both adoptive mothers and surrogate mothers are also entitled to this paid leave, provided they have made the required number of monthly contributions to the SSS before the claim.

5. Termination Rules

Termination in the Philippines is tightly regulated to protect employee rights. Employers can terminate employment for just causes (e.g., misconduct, neglect, fraud) or authorized causes (e.g., redundancy, closure, retrenchment).

Procedural due process is mandatory:

1. First Notice: Explains the cause and gives the employee a chance to respond within five calendar days.
2. Hearing or Conference: The employee may present evidence or a written defense.
3. Second Notice: Formally communicates the decision and effective date of termination.

The law is very specific about how the employee must be informed. The company is legally required to provide a written notice, a full 30 days before the employment ends. 

This notice is not only for the employee. A copy of the same notice must also be sent to the nearest regional office of the Department of Labor and Employment (DOLE). This gives the government a chance to review the situation and ensure the company is following the rules.

This is a complex and sensitive area where mistakes can lead to serious legal complaints and financial penalties. An EOR manages this entire procedure to ensure it is handled correctly and fairly.

6. Employer Obligations

Employers must follow multiple mandatory contributions and benefits systems. EORs manage these consistently to avoid penalties.

1. Social Security System (SSS): All private-sector employees are covered under RA 11199. Employers contribute 8.5 % of the monthly salary (up to ₱30,000 salary credit), while employees contribute 4.5 %.
2. PhilHealth: Health insurance contributions are shared equally between the employer and employee. For 2025, the rate is 5 % of the monthly salary, split 50/50.
3. Pag-IBIG Fund: This savings and housing fund requires employer and employee contributions of 1–2 % each, depending on income.
4. 13th-Month Pay: Mandatory under Presidential Decree 851, every rank-and-file employee must receive a 13th-month bonus equal to 1/12 of their total basic salary earned during the year. It must be paid by December 24 annually.
5. Withholding Taxes: Employers must withhold and remit BIR income taxes monthly and file quarterly reports. An EOR handles all these remittances accurately, ensuring government filings are completed before deadlines.