Employer of Record (EOR) Philippines: Hire, Pay & Manage Employees Without a Local Entity
Hire compliantly in the Philippines in as little as five working days. AYP Group is the legal employer for your Filipino talent — handling employment contracts, monthly payroll, SSS, PhilHealth, Pag-IBIG contributions, mandatory 13th-month pay, BIR withholding, and Labor Code compliance — while you direct the work.
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Quick answer: An Employer of Record in the Philippines (also called an EOR Philippines) is a Philippine-registered company that legally employs workers on behalf of a client business. The EOR signs the employment contract under the Labor Code (Presidential Decree No. 442), runs monthly payroll, files contributions to SSS (Social Security System), PhilHealth (Universal Health Care), Pag-IBIG (HDMF), and BIR (income tax withholding), and ensures the statutory 13th-month pay is funded and remitted on time. You retain day-to-day control of the employee's work. AYP Group operates a directly owned Philippine entity with HR specialists in Metro Manila — not a partner network — giving you a single point of accountability for your Philippines hiring.
1. Key Takeways
- EOR Philippines at a glance: Hire Filipino or foreign talent in 5–10 working days without registering a Philippine corporation. AYP's Philippine entity becomes the legal employer; you direct the work.
- Cost certainty: Total statutory employer cost in the Philippines is approximately 8%–11% of gross salary across SSS, PhilHealth, Pag-IBIG and EC contributions,
- 2026 regulatory shifts to know: SSS contribution rate is now 15% (10% employer / 5% employee), up from 14% in 2024 under Republic Act No. 11199 — scheduled to rise to 16% in 2027. SSS Minimum Salary Credit raised to PHP 5,000 and maximum to PHP 35,000. NCR minimum wage rose to PHP 695/day (non-agriculture) for 2026.
- 17 regional wage orders: The Philippines has no national minimum wage. NCR (Metro Manila) leads at PHP 695/day; BARMM is the lowest at PHP 411/day. Companies hiring outside Metro Manila can achieve significant labour cost arbitrage.
- Mandatory 13th-month pay: Under PD 851, the 13th-month pay is statutorily required — not customary like Hong Kong or Vietnam. It is equal to 1/12 of basic salary earned during the calendar year and must be paid by 24 December. Provider quotes that omit this are misleading.
- What to look for in an EOR Philippines provider: A direct local entity (not a partner), Philippines-based HR specialists, fluency in SSS/PhilHealth/Pag-IBIG administration, transparent 13th-month accrual, and the regional scale to support APAC expansion beyond the Philippines alone.
2. What is an Employer of Record in the Philippines?
An Employer of Record (EOR) in the Philippines is a Philippine-registered company that legally employs workers on behalf of a client business. The EOR signs the employment contract under the Labor Code (Presidential Decree No. 442, as amended), runs monthly payroll in Philippine Pesos (PHP), files contributions to SSS, PhilHealth and Pag-IBIG, withholds and remits BIR income tax, and ensures the statutory 13th-month pay and other mandatory entitlements are funded and paid on time. The client company retains operational control — assigning work, managing performance, setting strategy.
For international employers, this resolves a structural problem: you cannot legally employ someone in the Philippines without a local entity. Setting up a Philippine corporation requires SEC registration, BIR registration, LGU business permits, SSS/PhilHealth/Pag-IBIG employer registration, and a local resident director and treasurer. The full process typically takes 8–12 weeks. An EOR Philippines removes that overhead.
EOR vs PEO in the Philippines. A Professional Employer Organisation (PEO) co-employs workers but only works if you already have a registered Philippine corporation. An EOR is the right choice when you have no local entity. AYP offers both — the right model depends on whether you've already incorporated.
3. How AYP's EOR Philippines Service Works
A clear five-step process — designed so your first Philippine hire is contracted, onboarded and on payroll within two weeks.
What makes AYP's process different. Many “global” EOR providers route Philippine employment through a third-party partner. AYP operates a wholly owned Philippine entity with HR specialists in Metro Manila. That means one contract chain, one point of escalation, no partner mark-up, and direct accountability for the Philippine-specific nuances — particularly the statutory 13th-month pay, the SSS Monthly Salary Credit brackets, and DOLE termination procedure.
4. EOR Philippines vs Setting Up a Philippine Corporation: Strategic Decision Framework
The right choice depends on headcount, time horizon and capital appetite. Use this framework.
Our honest view. EOR is the right answer for most companies entering the Philippines for the first time, or hiring up to around 20 employees. Past that scale — or when you need PEZA or BOI incentives, want to invoice Filipino customers directly, or are building a large BPO operation — incorporation becomes the better long-term economics. AYP can sequence both: start with EOR, transition to your own Philippine corporation when the time is right.
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5. Philippines Employment Law & Compliance Requirements (2026)
Compliant employment in the Philippines is governed by a layered statutory framework. The headline laws:
- Labor Code of the Philippines (PD 442, as amended) — foundational employment statute covering contracts, working hours, leave, termination, just cause and authorized cause separation.
- Social Security Act of 2018 (Republic Act 11199) — governs SSS contributions; mandated the gradual rate increase from 11% to 15% by 2025, scheduled to reach 16% in 2027.
- Universal Health Care Act (Republic Act 11223) — made PhilHealth coverage universal and progressively raised the premium rate to 5%.
- Pag-IBIG Fund Law (Republic Act 9679) — governs Pag-IBIG (HDMF) contributions. Maximum Fund Salary (MFS) ceiling raised to PHP 10,000 under HDMF Circular 460 (effective February 2024).
- Expanded Maternity Leave Law (Republic Act 11210) — extended maternity leave to 105 days paid, with an additional 30 days unpaid option and +15 days for solo parents.
- 13th-Month Pay Law (Presidential Decree 851) — makes the 13th-month payment legally mandatory, payable by 24 December each year.
Statutory employer contributions (2026)
Important nuance — caps matter. Each agency has different Maximum Salary Credits, so the effective contribution percentage decreases for higher earners. A common error is to assume a flat 15% SSS or 5% PhilHealth across the whole salary — for employees above the ceilings, the actual percentage is materially lower. AYP calculates per-bracket per agency to ensure accurate remittance and accurate cost quoting.
BIR withholding tax brackets (annual taxable income, PHP, 2026)
Mandatory leave entitlements
- Service Incentive Leave (SIL): Minimum 5 days paid leave per year after 1 year of service, convertible to cash if unused
- Maternity leave (RA 11210): 105 days paid; +15 days for solo parents; optional additional 30 days unpaid; covers normal and caesarean deliveries equally
- Paternity leave (RA 8187): 7 days paid for the first four deliveries of a legal spouse
- Solo Parent leave (RA 11861): 7 days additional paid leave per year for qualifying solo parents
- Magna Carta for Women leave: Up to 2 months for gynaecological surgery
- Bereavement and special leaves: Vary by company policy and Collective Bargaining Agreement; no statutory minimum but common in BPO and corporate practice
- Regular holidays: Approximately 12 regular and 6 special non-working holidays per year. Regular holidays pay 200% if worked; special non-working pay 130%
Mandatory 13th-month pay (Presidential Decree 851)
Unlike the customary 13th-month or year-end bonuses found in Hong Kong, Taiwan or Vietnam, the Philippine 13th-month pay is statutorily required by law. It applies to all rank-and-file employees regardless of position, designation or employment status. The formula is straightforward: Total basic salary earned during the calendar year ÷ 12. Payment must be made by 24 December each year. Failure to comply triggers DOLE complaints, monetary awards, and the personal liability of corporate officers under the Labor Code. AYP automatically accrues and schedules 13th-month pay — surfacing it in the original quote so there are no December surprises.
Working hours and overtime
Standard 8 hours per day, 48 hours per week (typically 5 or 6 days). Overtime premium 25% on regular days; 30% on rest days and special holidays; 100% (double pay) on regular holidays. Night shift differential 10% for work between 10 PM and 6 AM. Common BPO 'graveyard shift' staff are entitled to this differential as well as overtime where applicable.
Regional minimum wages (key DOLE wage orders, 2026)
Regional arbitrage matters. A BPO operation hiring 100 customer-service agents at NCR rates costs materially more than the same operation in Central Visayas or Davao — even before accounting for office rent differentials. AYP supports placements nationwide and quotes by region to reflect local wage orders correctly.
6. Cost of Hiring in the Philippines: True Employer Cost (2026)
Here is a fully loaded monthly cost example for a Filipino employee in Metro Manila earning a gross monthly salary of PHP 60,000.
Why the contribution caps make Philippine senior hires more cost-efficient than they look. For an employee earning PHP 200,000 monthly, the SSS contribution doesn't scale linearly — it caps at PHP 3,530 (MSC of PHP 35,000). Pag-IBIG caps at PHP 200. Only PhilHealth scales linearly to its PHP 100,000 ceiling. Total statutory employer cost for a PHP 200,000-monthly senior hire is approximately PHP 6,230 — just 3.1% of gross. Add 8.33% for 13th-month pay, and total fully loaded cost is approximately 11.4% above gross — meaningfully cheaper than Vietnam (24%+), Indonesia (17%), or Singapore (17%).
What this excludes. Optional employer-funded benefits (HMO / supplementary health, group life, transport allowance, rice subsidy), discretionary bonuses beyond statutory 13th-month, and one-off costs (9G visa fees, AEP, relocation). AYP itemises every line in your quote.
7. Work Visas & Permits for Foreign Employees in the Philippines
Foreign nationals working in the Philippines need both an immigration visa and a work authorisation. The Bureau of Immigration and the Department of Labor and Employment administer these separately.
Foreign workers and contributions. Foreign employees with valid 9(g) visas are required to contribute to SSS (mandatory since 2019) and PhilHealth. Pag-IBIG is optional for foreign workers but recommended where the foreigner intends a long stay. AYP handles all registrations as part of the EOR onboarding.
8. Termination & Separation Pay in the Philippines
The Philippines is a relatively employer-protective termination jurisdiction by APAC standards — but the procedural requirements under Articles 297 (just cause) and 298 (authorized cause) of the Labor Code are strict. Procedural defects, even where substantive grounds exist, can result in nominal damages or reinstatement at the National Labor Relations Commission.
Just cause vs Authorized cause
Final pay components
- Unpaid basic salary up to the last working day
- Pro-rated 13th-month pay
- Cash conversion of unused Service Incentive Leave (5 days minimum)
- Separation pay (if authorized cause)
- Tax refund or any final BIR withholding adjustments
Final pay deadline. Under DOLE Labor Advisory No. 06-20, final pay must be released within 30 days of separation unless the employment contract or company policy specifies a shorter period. AYP processes final pay within this window and ensures the BIR Certificate of Compensation Payment / Tax Withheld (Form 2316) is issued.
How AYP protects you. Our HR advisors structure terminations to fit the correct Article 297 or 298 grounds, draft compliant twin-notice letters, conduct administrative hearings where required, calculate separation pay using the right multiplier, and complete BIR and SSS deregistration. We have closed dozens of Philippine exits without an NLRC complaint.
9. Why AYP Group is the Best EOR Philippines Provider
Comparing EOR Philippines providers, the meaningful differences come down to four factors. Here is how AYP performs against each.
Our three commitments to you
- No Uncertainty — clear advisory at every step from a named Manila-based HR specialist, not a generic ticketing queue.
- No Penalty — we hold the compliance liability and stand behind every SSS, PhilHealth, Pag-IBIG and BIR filing.
- No Hidden Costs — one transparent fee structure, with statutory 13th-month pay accrued and itemised upfront, before you sign.
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10. Get Started with EOR Philippines Today
You have three options.
Book a 30-minute call — Speak with a Manila-based HR specialist about your role, region, timeline and budget. We'll send a transparent quote within one working day.
Read the Philippines Hiring Cost Guide (2026) — Full breakdown of SSS, PhilHealth, Pag-IBIG, BIR tax brackets, 13th-month pay scheduling and indicative salaries by function and region.
Compare AYP vs other EOR Philippines providers — See how we stack up against Deel, Remote, KMC Solutions, InCorp Philippines and CXC Global on price, coverage and compliance.
Questions?
We're here to help
For a Filipino citizen with no visa requirement, AYP can have the employee contracted, registered with SSS/PhilHealth/Pag-IBIG, set up with a BIR TIN, and on payroll in 5–10 working days from quote acceptance. Foreign hires requiring 9(g) visa + AEP take 6–10 weeks, driven by Bureau of Immigration and DOLE processing timelines.
Yes. AYP sponsors 9(g) Pre-Arranged Employment Visas and Alien Employment Permits as the registered Philippine employer. We also support Special Work Permits for short-term assignments. Foreign workers must contribute to SSS (mandatory since 2019) and PhilHealth, paid in PHP.
An EOR is the legal employer when you have no Philippine corporation. A PEO co-employs workers, but only if you already have a registered Philippine entity. AYP offers both, and advises which fits your stage.
Yes — and this distinguishes the Philippines from most APAC markets. Presidential Decree 851 makes the 13th-month payment legally required for all rank-and-file employees, regardless of position or employment status. It equals 1/12 of basic salary earned during the calendar year, and must be paid by 24 December. Provider quotes that omit 13th-month pay accrual are misleading — they understate true cost by about 8.33%. AYP surfaces this in every quote upfront.
Pricing varies by provider and seniority of role. Transparent flat monthly fees in the market typically range from US$300–US$600 per employee per month. AYP quotes per role based on complexity and scope. Statutory employer costs (SSS, PhilHealth, Pag-IBIG, 13th-month pay) are passed through at cost.
Under Republic Act 11199 (Social Security Act of 2018), the SSS contribution rate increased from 14% to 15% effective January 2025, with employer's share rising from 9.5% to 10% and employee's share from 4.5% to 5%. The Monthly Salary Credit floor was raised to PHP 5,000 and the ceiling to PHP 35,000. A further increase to 16% is scheduled for January 2027. AYP's contribution engine is automatically updated for each adjustment.
Yes — and this is increasingly important. DOLE Department Order No. 174 and Supreme Court case law have intensified scrutiny of contractor and 'labour-only contracting' arrangements. If your contractor works fixed hours, reports to a manager, uses your tools and is integrated into your business, an audit will likely re-classify them as a regular employee with back-payment liability for SSS, PhilHealth, Pag-IBIG, 13th-month pay and BIR. AYP can convert them cleanly via EOR.
Yes. The Philippines has 17 regional wage boards setting separate daily minimum wages — there is no national minimum wage. NCR (Metro Manila) is the highest at PHP 695/day for non-agriculture in 2026; BARMM is the lowest at PHP 411/day. Companies setting up BPO or shared services centres outside Metro Manila — in Cebu, Davao, Iloilo or Clark — can achieve 20–30% lower base wage costs. AYP quotes by region.
Yes, end-to-end. We structure terminations to fit either Article 297 (just cause) or Article 298 (authorized cause) of the Labor Code, draft twin-notice letters, conduct administrative hearings where required, calculate separation pay correctly (1 month/year vs ½ month/year depending on ground), file the 30-day DOLE notice for authorized cause terminations, and complete BIR Form 2316 and final pay disbursement within 30 days.
BPO, IT-BPO and shared services, financial services, technology, e-commerce, FMCG, pharmaceuticals, professional services and manufacturing. We have placed employees across Metro Manila, Cebu, Davao, Pampanga (Clark), Iloilo and Bacolod.
More questions?
We're here to help. Whether it's pricing details, country-specific compliance, or how we compare to other EORs, let's talk.
