Recruitment Guide for the Philippines

Purpose

This guide aims to ensure that the company goes through the correct recruitment process, ensuring that all applicants and hired applicants will be evaluated properly. This guide will serve as a how-to guide for the recruitment procedure in the Philippines.

Key Takeaways

A complete explanation of the things to know before hiring in the Philippines
Hiring Practices for Initial Recruitment (the process, and the challenge)
Hiring Remote Employees in the Philippines, we will discuss the average salary of a remote employee in this part
Employees' Working Hours. How many hours max in a week mandated by law, overtime hours, etc
Discusses the Required Benefits required by law, such as gov't contributions
A brief explanation of the working regulations during holidays includes double pay, 30% additional, etc

Things to Know before Hiring in the Philippines

1. Contracts/Terminations

Most professional professions require contracts because at-will employment does not exist in the Philippines, except for brief probationary periods. Though these agreements can be oral or written, it’s essential to draft a firm written contract in Filipino that includes items like these:

Employers may need to know the rules and ensure that their policies conform with them in the Philippines because the requirements for terminating an employee are pretty extensive.

A six-month probationary period is allowed under Philippine legislation. If the employer and employee decide the partnership isn’t working out during this time, they can easily split ways.

If they have a good reason, employers in the Philippines may remove an employee without severance after the probationary period. Managers must, however, conduct a formal inquiry and submit compelling evidence of the reason for termination to prove the cause. The following are examples of the grounds for firing an employee:

Disobedience with intent
Serious misbehavior
Continual, flagrant failure to perform duties
Defamation of trust or fraud
a criminal or comparable violation committed against the employer or the employer's family
A serious ailment
Redundancy at work

2. Notice

When a corporation fires an employee for a good reason, it must provide the employee with at least 30 days’ notice. It may select one of the following notice options:

A notice indicating the company's intention to fire the employee. The notification must state the grounds for dismissal and give the employee a reasonable opportunity to reply to the allegations that led to the termination.
A meeting or hearing where the employee can react to the allegations. The employee may offer evidence of wrongdoing or refute the company's evidence.
According to the notification of dismissal, the corporation has established grounds to warrant termination. It should demonstrate that the employer carefully evaluates all relevant factors before making a choice.

The employer shall give a copy of the notification to the Regional Office of the Department of Labor and Employment (DOLE) that administers the company’s region and gives it to the employee. An employee who has received notice of termination may file an appeal with an arbitrator, claiming that the ending is unjust. Suppose the arbitrator finds that the employer did not follow the proper processes when firing the employee. The employer may be ordered to pay damages or back wages, or the employee may be reinstated at the company. The amount of severance pay an employee receives is likely determined by the cause for termination. Employees are typically paid a month’s compensation for each year of service. Suppose the employee did nothing wrong, but the employer declared the position redundant. The company must compensate the employee with one month’s pay or one month’s pay per year of service, whichever is greater. If the company retrenches or closes, each terminated employee should be paid one month’s salary or half-salary months for each year of service, whichever is greater.

3. Wages

In the Philippines, the usual workweek is 40 hours long, while the standard workday is eight hours long. Employees who work overtime in the Philippines are entitled to 125% of their regular pay for the extra hours worked and monetary compensation rather than additional time off. Additionally, unless their contracts or Collective Bargaining Agreements (CBAs) specify otherwise, Filipino employees obliged to work on a Sunday or a paid holiday must be paid 130% of their customary salaries for those hours. A CBA in the industry may stipulate specific wage rates, working hours, or other special requirements. These restrictions may not apply to the organization because only roughly 10% of Filipino laborers have joined a union or CBA. In the Philippines, the minimum wage varies by sector and location. For example, minimum wages in the National Capital Region (NCR), which includes metropolitan Manila, are generally more significant than in other places. Your business may need to look into the minimum wage for your industry in the area where you plan to open additional offices.

4. Paid Time off

There are some classifications for Employees paid time off in the Philippines such as paid vacation, paid holidays, maternity leave ,and more. Let’s dive in to understanding more about it:

Employees are entitled to five paid vacation days each year. This period, referred to as service incentive leave, includes vacation and sick days. However, most firms give professional employees 15 paid vacation days per year.

Philippines Employees are entitled to various paid holidays. There are two sorts of holidays in the Philippines:

SSS Paid Maternity Leave

If they have made the requisite contributions to the SSS fund, pregnant employees in the Philippines may get paid maternity leave for their first four pregnancies.

Married fathers may additionally receive up to seven paid days of leave for each of their first four children if they live in the same household.

Meanwhile;

5. Payroll and Tax

Withholding Tax

According to Philippine law, every employer must deduct and withhold taxes from their employees’ pay. As a result, the employer acts as the withholding agent and collects personal income tax from the employee through payroll.

Individual citizens and resident aliens earning purely compensation income, as well as individuals engaged in business and the practice of the profession, are subject to the graduated income tax rates outlined in Section 24(A)(2) of the Tax Code of 1997, as amended by Republic Act No. 10963, or the Train Law, which became effective on January 1, 2018.

Amount of Taxable Income (PHP)	Rate
Up to 250,000	0%
Over 250,000 up to 400,000	20% of the excess over P250,000
Over 400,000 up to 800,000	P30,000 + 25% of the excess over P400,000
Over 800,000 up to 2,000,000	P130,000 + 30% of the excess over P800.000
Over 2,000,000 up to 8,000,000	P490,000 + 32% of the excess over P2,000.000
Over 8,000,000	P2,410,000 + 35% of the excess over P8,000.000

Withholding taxes must be paid according to the following schedule:

Type of Payment	Payment due to date
Manual Payment	On or before 10th of the following month
Online Payment	On or before 15th of the following month

Social Security System

SSS is a privatized social insurance program designed to protect members and their families against the financial and economic consequences of disability, sickness, maternity, old age, death, and other unforeseen events.

This initiative requires all private employees and companies to participate. Employee and employer Social Security premiums will differ depending on the employee’s monthly wage band. Employers must deduct Social Security contributions from employees’ salaries and remit them to the SSS or any certified bank and the employer’s portion of contributions.

Employers are required to:

Demand to view a prospective employee's Social Security number;
Within thirty (30) days after starting work, all workers must report for SSS coverage.
Deduct monthly SSS contributions from employees following the contribution schedule
Provide an overview of all employees' contributions.

6. Law & Restrictions

In the Philippines, companies are prohibited from discriminating against employees belonging to various protected classes. As well as from discriminating against job candidates or employees based on the following characteristics:

Employers frequently avoid asking questions regarding these topics during recruiting interviews to prevent even the appearance of discrimination.

7. Cost of Hiring

Employee hiring costs in the Philippines vary by business and industry. Your company will need to consider both indirect and direct hiring costs when it adds new personnel, including the following:

Advertisements for jobs
Time spent reviewing and interviewing applicants
Payroll
Taxes
Salaries
Benefits
Bonuses
Allowances
Insurance

Companies in the Philippines are required to provide their employees a 13th-month bonus equal to the monthly salary they get during the year. The law demands that dividends be paid by December 24, although it is good practice for employers to pay them earlier in December. Some firms offer a 14th-month incentive to recognize their employees for their hard work and foster team loyalty. Many businesses in the Philippines provide allowances for costs like accommodation, transportation, and medical expenses not covered by the employee’s insurance, albeit they are not required. Employers frequently offer insurance benefits in addition to those required by law, such as life insurance and additional health insurance coverage.

Hiring Practices for Initial Recruitment

Process

Locate and source qualified people for your company. Following that, you can interview each prospect to select the best candidates.

Fees

The fees depend on the job platform you will use when looking for a qualified candidate.

Challenges

If you need individuals with a specific set of abilities, it will either slow down the hiring process or raise the cost of hiring people.

Hiring Remote Employees

The distance between countries may force you to interview and hire individuals remotely as you analyze possible personnel for your operations in the Philippines. Here are a few pointers to help the procedure go smoothly:

Prepare ahead of time: Remote interviews may require more organization and planning than in-person interviews. Make sure you understand how to use the technology platform you’re using, and select ahead of time who will handle which questions to make the most of the time you have with your applicants.

Be flexible: If a candidate is late for an in-person interview, you could wonder about their reliability. However, despite a candidate’s best efforts, technological issues can arise. Avoid connecting the candidate’s nomination with any internet outages or platform concerns, and instead, focus on their strengths and role appropriateness.

Use Social Media: If you cannot meet applicants in person at career fairs or university recruiting events in the Philippines, you may often use social media to your advantage. Facebook and LinkedIn are also popular in the country, and many employers find success on GitHub and industry-specific sites. Because many Filipino prospects use their phones for job searches and applications, you should make sure your company’s website is mobile-friendly.

Average Salary of a Filipino Remote Employee

While the average daily minimum wage in the Philippines ranges from PHP 290 (USD 5.70) to PHP 537 (USD 10.61), the average compensation will vary depending on the employee’s region.

Here’s a rough estimate of the average annual income for different jobs:

Job Title	Average Salary Range (PHP)	Average Salary Range (USD)
Accounting Manager	83,333 – 166,666	1,735 – 3,470
Web/Mobile App Developer	108,333 – 250,000	2,275 – 5,250
Data Scientist	125,000 – 208,333	2,625 – 4,375
Test Analyst	83,333 – 158,333	1,750 – 3,325
Project Manager	166,667 – 333,333	3,500 – 7,000
Sales Manager	108,333 – 425,000	2,275 – 8,925

But first, let’s put the typical pay data in context. Based on their monthly income, the Philippine Institute for Development divides families into various income groups:

Income Group	Range of Monthly Family Incomes for a family of 5 (PHP)	Range of Monthly Family Incomes for a family of 5 (USD)	Number of Households	Number of Persons
Poor	Less than 11,690 per month	Less than 243 per month	2.9m	17.7m
Low Income	Between 11,690-23,381 per month	Between 243-487 per month	8.4m	40.7m
Lower Middle Income	Between 11,690-46,761 per month	Between 487-973 per month	7.6m	31m
Middle Middle Class	Between 46,761-81,832 per month	Between 973-1,703 per month	3.1m	11.2m
Upper Middle Class	Between 81,832-140,284 per month	Between 1,703-2,919 per month	1.2m	3.8m
Upper Income	Between 140,284-233,806 per month	Between 2,919-4,865 per month	358k	1m
Rich	At least 233,807	At least 4,865	143k	360k

Working Hours In The Philippines

Employees in the Philippines often work an average of 8 hours each day, five days per week. Filipinos are also obligated to take at least one hour of rest each day. If you ask your employee to work overtime, you will be charged an additional 25% of their hourly pay rate. Overtime has no maximum hours and is entirely of your choice.

Required Benefits by Law

13th Month Pay

This pay is a statutory payment in the Philippines, equal to 1/12 of an employee’s yearly income. Salary is often prorated if the person is not a full-time employee. This is usually paid on or before December 24, together with the first December salary check, usually on December 15.

Annual/Sick Leaves

According to the Philippines Labour Code, employers must provide employees with a minimum of 5 days of annual leave. Take notice that these five days include any sick days. If your employee takes less than five days of vacation in a year, the employer is required by law to pay the leftover vacation days at the end of the year.

Parental Leaves

Type of Leave	Benefits
Maternity Leave	100% of daily pay rate for 105 days (7 of which can be transferred to the father, regardless of marital status)
Maternity Leave for miscarriages or emergency termination of pregnancy	100% of daily pay rate for 60 days
Solo Parent Maternity Leave	100% of daily pay rate for 120 days
Paternity Leave	7 days

Working Regulations During Holidays

Holidays in the Philippines are separated into two types: regular holidays and special non-working days. Regular Holidays have a set date, such as New Year’s Day, Christmas, Independence Day, National Heroes Day, Labor Day, etc. In contrast, Special Non-Working Days are more flexible and may only apply to specific locations. The wage disparity between the two is represented in their different pay rates. You must pay your Filipino employee 200% of their daily salary for the first 8 hours if you ask them to work on a Regular Holiday. If your employee is compelled to work on a Special Non-Working Day, on the other hand, you must pay them 130% of their daily wage for the first 8 hours.

Places to Look For Remote Talent in the Philippines

If you’re looking to hire qualified workers in the Philippines, the following cities are considered to be the best places to look:

These cities also house the majority of the country’s finest universities. You should expect talent from these locations to have a greater degree of English proficiency and education.

Company Requirements to Hire Employees in the Philippines

Hiring new staff in the Philippines can be a labor-intensive and time-consuming procedure, especially if you choose to do business through a subsidiary. If you create a subsidiary corporation, you may need to meet the following requirements:

Registering your business with the Securities and Exchange Commission (SEC)
Notarizing the treasurer's affidavit and the articles of incorporation
Getting your tax identification number (TIN)
Making an account with a bank
Making a minimum share capital deposit with the bank
The Business Permit and Licensing Office issues your business permit (BPLO)
Obtaining barangay clearance confirms that your business complies with local community regulations.
Getting your community tax certificate (CTC) and paying your annual community taxes

This procedure could take weeks and cost your organization thousands of Philippine pesos. You could collaborate with a professional employer organization (PEO), also known as an Employer of Record (EOR), to streamline operations and hiring. You’ll be able to complete the procedure considerably faster, ensure that you’re following all requirements, and accelerate your progress toward creating a viable and profitable foreign staff.

Managing Employees In The Philippines

Culture

The Philippines is a welcoming nation. Expect to be invited to a Karaoke bar when you arrive, where you will be asked to sing! It’s also possible that it’ll end up on YouTube!

Gentle People

In the Philippines, the culture is more gentle. We recommend that you avoid publicly berating or demeaning your colleagues and that any mistakes be handled quietly.

Respectful

Filipinos often treat their superiors and supervisors with respect. You should not be startled if you are constantly addressed as Ma’am or Sir.

Clarity

Because most of your staff will not speak English as their first language, clarity is essential. As a result, it’s simple to misunderstand and lose things in translation. Because most employees are courteous, you may need to encourage them to speak up to ensure that they have fully comprehended everything. Requesting that they provide emails detailing meeting topics is an excellent method to ensure that your message is received.

Family

In the Philippines, there is a considerable lot of family pressure, so keep that in mind when asking someone to work overtime or on weekends. Employees are frequently the sole breadwinners for huge families, including their parents and siblings. Providing healthcare to your employees’ dependents is an important retention tool as well.