Employer of Record in Philippines

**Employment Contract Requirements**: All employment relationships must have a written contract in English (or Filipino + certified English translation). The contract must include: job title, duties, salary (basic + allowances), benefits, work schedule, and duration. The employer (EOR) must provide a copy to the employee before work begins. Contracts should comply with DOLE requirements. **Mandatory Benefits Explained**: The 13th-month pay is calculated as total basic salary ÷ 12, payable in full by December 24th each year or pro-rated if employment is less than 12 months. For a ₱50,000/month salary, the 13th-month pay is ₱50,000 (due by December 24th). Service Incentive Leave (SIL) accrues at 5 days per year after one year of service; it's separate from vacation and cannot be forfeited—employees can either use it or be paid out at separation. Employees working on regular holidays (New Year's Day, Araw ng Kagitingan, etc.) or special holidays (company-declared) must be paid 200% of their daily rate. The Philippines has 13+ national holidays annually, which must be paid at 200% if work is required. SSS (Social Security System) requires 8% employer contribution for social insurance and retirement. PhilHealth requires 2% employer contribution for health insurance. Pag-IBIG requires 2% employer contribution for housing and emergency loans. **Social Security Contributions**: The SSS rate is approximately 8% employer contribution (employee contributes 3-4% depending on salary). SSS provides old-age pension, disability, and survivor benefits. Example: For a ₱50,000/month salary, SSS is ₱4,000/month (employer). PhilHealth and Pag-IBIG are each ₱1,000/month for this salary level, totaling 12% employer burden. **Probation Period**: The Philippines allows a maximum 6-month probation period for new employees. During probation, either party can terminate without severance, but all mandatory benefits (13th-month pay, SSS, PhilHealth, Pag-IBIG, SIL accrual) still apply. After probation, termination without just cause requires severance of one month's pay per year of service. Just cause terminations (theft, willful disobedience, gross negligence) don't require severance. **Payroll Timing and Tax Withholding**: Employees must be paid at least twice monthly. Many companies pay once monthly at month-end. Income tax withholding (BIR—Bureau of Internal Revenue) is progressive and automatic based on salary. The EOR handles all tax calculations, withholding, and quarterly filing with the BIR. **Overtime and Scheduling**: The standard workweek is 40-48 hours depending on industry. Anything over 8 hours per day is overtime, payable at 125% of the hourly rate (ordinarily) or 130% (for hazardous work). Rest days and night shift differentials (10% additional) apply automatically. The EOR manages overtime calculations based on time tracking. **DOLE Enforcement and Penalties**: The Department of Labor and Employment actively conducts workplace inspections. Penalties for non-compliance include back payments of all unpaid benefits, fines, and potential criminal liability for serious violations. Using an EOR significantly reduces audit risk because the EOR is the registered employer and maintains all compliance documentation. **Termination and Severance**: Wrongful termination can result in severance of one month's pay per year of service plus damages. Separation pay (one month's salary per year of service) is required if terminated without just cause. Unused SIL must be paid out at separation. Employees are entitled to 5 days paid leave to find new employment.