Build a Team in the Philippines Without a Legal Entity

build team in philippines
Table of Contents

With these 5 tips, you can build a team in the Philippines quickly and easily, without needing the help of a legal entity. AYP’s EOR solutions will do it all for you.

Expanding your business overseas can get messy and complex, especially with the local laws and regulations your business has to know to avoid getting in legal trouble. But the future of work is global, with remote working increasingly gaining traction every day. So how do you expand your business overseas legally and easily?

AYP EOR solutions can help, so geographical constraints, time zones, and paperwork will no longer stop you from business expansion. In fact, AYP can help you hire overseas, onboard remotely, and manage your tax responsibilities and compliance across countries. Here are 5 quick tips on how to build a team in the Philippines:

Know the best practice for contracts and termination

The contract should be written in Filipino and cover aspects such as position, jobscope, compensation, employment benefits, and termination requirements.

Any given probation should last for a maximum of six months, and the working relationship can be terminated easily during this time. Once probation ends, employers may dismiss an employee without severance if there is a justifiable reason. Reasons may vary from willful disobedience, severe misconduct, to commission of a crime towards the employer.

Of course, the managers should conduct a formal investigation to present compelling and relevant evidence of the cause of termination.

Offer 30 days notice and appropriate severance

To terminate an employee, the company has to offer at least 30 days notice and do so in these appropriate ways:

  • A notice of its intent: specify dismissal grounds, provide employee with sufficient opportunity to respond to grounds of termination
  • A conference or hearing: employee may respond to charges by presenting evidence or rebut the company’s evidence for termination
  • A notice of dismissal: company has already established grounds for termination, show that employer has looked at all possibilities before considering termination

Upon confirmation, the company has to give the employee and the Regional Office of the Department of Labor and Employment (DOLE) a written copy of the termination notice each.

The employee’s severance pay is dependent on the reason for termination, and it would generally be a month’s salary for each year of service. As for retrenchment, the employee receives either one month’s pay or one month’s pay per year of service, whichever is higher.

Learn about Philippines’ Social Security System (SSS)

SSS provides disability and illness protections, as well as retirement pensions and assistance with funeral expenses. There are also separate social security funds to provide housing loans, and the Philippine Health Insurance Corporation (PhilHealth) offers social security health benefits to Filipino employees.

Employees under 60 earning more than 1,000 Philippine pesos a month must contribute to SSS. Their contributions come out of their salary as withholdings, with the maximum amount of 800 Philippine pesos per month.

Employers contribute a maximum of 1,630 Philippine pesos per month for each employee.

Note that a standard workweek is 40 hours long

In the Philippines, the standard workweek is 40 hours long and each work day lasts eight hours. Employees working overtime should receive 125% of their usual wages for the extra work hours, and this has to be monetary compensation rather than additional days off. To add on, employees who work on a Sunday or a public holiday should receive 130% of their usual salary, but this is dependent on their contract with the company.

However, do take note that the Collective Bargaining Agreements (CBAs) may affect these rates. It’s also good to take note of the minimum wage of different sectors and regions in the Philippines.

Take note of the anti-discrimination law and regulations

According to the law, companies cannot discriminate employees or hiring prospects for these characteristics: race, ethnicity, gender, sex, religion, social status, and sexual orientation. To avoid any accusations, most companies avoid asking such personal and unnecessary questions even during job interviews.

These five tips offer a broad understanding of what your business should take note of when expanding to the Philippines. But of course, there would be many other details you should pay attention to, and these rules and regulations may also change over the years.

To quickly build a team in the Philippines without any worry, you should count on AYP EOR solutions. You can outsource all of your HR tasks to us, and start building a team even without a legal entity.

Featured Content

1. 6 Facts about Employment Insurance System in Malaysia

2. All thing You Have To Know Before Expand Business to Singapore

3. 5 Benefits of Global Expansion to New Asia Markets

Share this post on:
Your 6-Step Global Workforce Strategy for Balancing Growth, Cost, and Talent
workforce strategy for balancing growth, cost and talent

Talk to our HR Experts

Discover AYP’s award-winning Employer of Record (EOR) solution

ayp group global