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Philippines Employer of Record (EOR)
  • By Milly Barker, PhD
  • Updated August 30, 2024
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Milly Barker, PhD
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Milly is an international lawyer and tech entrepreneur who has advised companies on expanding globally for over 5 years. She is an advocate of remote hiring and regularly consults on future of work matters. Milly founded RemotePad to help employers learn more about building and growing international teams.
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Philippines Employer of Record (EOR)

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Key Takeaways 

  • A Philippines Employer of Record (EOR) helps global companies hire in the Philippines without setting up a local entity.
  • A Philippines EOR can save your company time and money, and ensure you are in full compliance with Philippines labor and tax law.
  • The 5 Best Philippines EOR companies are LennorHive, TalentHero, Gloroots and Papaya Global.

What is a Philippines Employer of Record?

A Philippines Employer of Record (EOR) is an organization that provides employment compliance services for companies that want to hire employees in the Philippines but do not have a registered entity in the country. These can be foreign companies looking to expand their operations into the Philippines or even domestic companies that want to outsource their HR functions.

The EOR in the Philippines hires the employees on behalf of the company, taking care of all the employment-related tasks like payroll, benefits, tax filing, and ensuring compliance with Philippine labor laws. This way, the company can focus on their core business operations while the EOR handles the complexities of local employment.

It’s important to note that while the EOR officially becomes the employer of the employees on paper, the company still maintains the day-to-day control over the employees and their work. In essence, the EOR model allows companies to quickly and efficiently expand their operations into new markets like the Philippines without having to navigate the complexities of setting up a local entity and understanding the local labor laws.

How does a Philippines Employer of Record work?

A Philippines EOR provides a wide array of services to businesses seeking to hire employees in the Philippines without establishing a local entity. Here are some of the primary services they offer:

  1. Employment Contracts: EORs draft contracts that comply with local labor laws and employment regulations in the Philippines.
  2. Payroll Management: They manage all aspects of employee payroll, including salary payments, tax deductions, Social Security System (SSS), PhilHealth, and Pag-IBIG Fund contributions, etc.
  3. Benefits Administration: EORs administer benefits in accordance with local laws, which may include health insurance, retirement contributions, and other perks.
  4. Tax Compliance: EORs ensure that all necessary taxes are correctly calculated, withheld, and paid to the appropriate local and national tax authorities.
  5. Legal Compliance: They ensure adherence to all local labor laws and regulations, including compliance with minimum wage laws, overtime, holiday pay, parental leave, etc.
  6. Employee Termination: EORs handle all aspects of employee termination, including severance, notice periods, and other requirements as per Philippine labor laws.
  7. Work Permits and Visa Processing: For foreign employees, EORs can facilitate the process of obtaining work permits and visas.
  8. HR Consultancy: They offer advice on local HR best practices and can help resolve employee issues or disputes.
  9. Risk Management: EORs can help mitigate legal and financial risk by ensuring compliance with local laws and regulations.

By providing these services, an Employer of Record allows companies to focus on their core business operations, while the EOR handles the complexities and administrative tasks associated with hiring and managing employees in the Philippines.

What are the benefits of a Philippines Employer of Record?

Engaging a Philippines Employer of Record (EOR) comes with several benefits:

  1. Ease of Entry: EORs make it much easier for companies to enter the market in the Philippines because they handle all the administrative tasks related to employment. This eliminates the need for the company to establish a legal entity in the country.
  2. Speed: EORs can hire employees quickly and efficiently, allowing companies to scale up their operations in the Philippines faster than they would be able to on their own.
  3. Compliance: EORs ensure compliance with local labor laws, employment regulations, tax obligations, and other statutory requirements. This reduces the risk of non-compliance, which could result in penalties or legal action.
  4. Cost Savings: EORs can help companies save costs in several ways. They eliminate the need for a local HR department and infrastructure. Also, because EORs work with multiple companies, they can often negotiate better rates for benefits and services.
  5. Local Expertise: EORs have in-depth knowledge of the local labor market, employment practices, and regulations. They can provide valuable advice and guidance to companies that are new to the Philippine market.
  6. Risk Management: EORs can help mitigate legal and financial risk by ensuring compliance with local laws and regulations.
  7. Flexibility: EORs offer flexibility, allowing companies to scale their operations up or down as needed without the administrative burden that typically comes with hiring or laying off staff.

What are the disadvantages of a Philippines Employer of Record?

While engaging a Philippines Employer of Record (EOR) offers numerous advantages, there are also some potential disadvantages to consider:

  1. Loss of Direct Control: When working with an EOR, the company relinquishes a certain level of direct control over employment-related matters. The EOR becomes the legal employer of record, which means the company may have less control over hiring decisions, employee management, and day-to-day operations.
  2. Cost Considerations: While an EOR can provide cost savings in certain areas, there will be EOR fees associated with their services. Companies should carefully evaluate the costs involved and compare them to the expenses of setting up and managing a local entity to determine the most cost-effective option.
  3. Potential Cultural and Language Differences: If the company and the EOR have different cultural backgrounds or operate in different languages, there may be challenges in understanding and aligning on various aspects of employment management, which could potentially impact employee satisfaction and engagement.

It’s important for companies to carefully assess their specific needs and consider these disadvantages when deciding whether to engage an EOR in the Philippines. Conducting thorough research, evaluating the EOR’s capabilities, and maintaining open communication can help mitigate potential drawbacks.

Top 5 Philippines Employers of Record

 

  1. LennorHive: LennorHive are Philippines EOR specialists. Their in-depth knowledge of local compliance and market conditions makes them unrivaled on the EOR market. In addition to their EOR solution, they provide a full recruitment service, ensuring that your company can acquire the talent that it needs. 

  2. TalentHero: TalentHero are a leading Philippines EOR and outsourcing firm. In addition to EOR and payroll services, they also provide recruitment, equipment procurement, and remote office space rentals, making them a comprehensive Philippines employment solution. 

  3. Gloroots: Gloroots is an international EOR and contractor platform with a strong presence in the Philippines. Gloroots will ensure that your employees and contractors are paid in full compliance with the law, whether in the Philippines or anywhere else in the world. 

  4. Papaya Global: Papaya Global provides a comprehensive global workforce management solution, ranging from global payroll to EOR services. The distinguishing feature of Papaya, compared to other Philippines EORs, is their unified platform, which simplifies the management of a global workforce, making hiring and payroll in the Philippines a seamless experience for businesses.

Philippines Employer of Record — Choose the Best Provider for you

A Philippines Employer of Record (EOR) can be a valuable partner for companies looking to expand their operations in the Philippines or hire employees without establishing a local entity. By outsourcing employment-related tasks to an EOR, companies can benefit from streamlined processes, compliance with local labor laws, cost savings, and local expertise.

Ultimately, the decision to engage an EOR in the Philippines should be based on a thorough evaluation of the company’s specific needs, the benefits offered by the EOR, and a careful consideration of the potential drawbacks. 

Philippines Business Guides

Frequently Asked Questions

Setting up a local entity in the Philippines involves establishing a legal presence such as a subsidiary or branch office, which requires significant time, resources, and knowledge of local laws and regulations. On the other hand, engaging a Philippines EOR allows companies to hire employees and operate in the country without the need for establishing a local entity. The EOR takes care of employment-related tasks, ensuring compliance with labor laws, managing payroll and benefits, and handling legal and tax obligations. It provides a more streamlined and efficient way to enter the market, reducing administrative complexities and allowing companies to focus on their core business.

Yes, a Philippines EOR can be beneficial for short-term or project-based employment needs. Whether a company requires temporary staff for a specific project, seasonal workers, or contract-based employees, an EOR can handle the necessary employment processes. The EOR can quickly hire and onboard employees for the required duration, manage their payroll and benefits, and handle compliance matters. This flexibility allows companies to access the talent they need for short-term engagements without the long-term commitment or administrative burden typically associated with employment arrangements.

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