Expanding Your Business: Payroll in The Philippines

If you're looking to hire in the Philippines, leverage Paylocity's integrated global payroll solution with real-time access to aggregated payroll data.

Payroll in the Philippines

Managing employees and payroll in the Philippines can be challenging, with unique tax and payroll regulations that can cause issues with compliance if not managed properly.

The corporate tax rate liability in the Philippines is determined on the residency status and net income during the business year. New companies need to register with the Social Security System, the Philippine Health Insurance Corporation, and the Bureau of Internal Revenue to get started.

Philippines Labor Laws

What is the Minimum Wage in The Philippines?

The minimum wage is PHP 500-537.

Overtime Policies

Any work after 8 hours per day is considered overtime. Employees are paid additional 25% overtime premium.

Workers are paid 30% additional for work on holidays.

Severance Policies

Severance is paid according to the reason for dismissal and can vary up to half a month’s salary for every year of service.

Minimum severance pay is 1 month salary.

Philippines Payroll Taxes

Tax rates range from 20-35%.

Self-employed residents, professionals, or business people whose income does not exceed PHP 3,000,000 can choose to be taxed at a flat rate of 8% on gross receipts over PHP 2,500,000 or at progressive rates. Income above PHP 3,000,000 is taxed at progressive rates.

Employees who earn minimum wage are not required to pay income tax.

Non-residents pay a flat tax rate of 15%.

Both employees and employers pay contributions to the social security system.

Philippines Leave Requirements

Employees who have one year of service receive 5 days of paid annual leave.

There are no provisions concerning sick leave.

Maternity and Paternity Leave

Female employees receive 105 days of paid maternity leave. If the mother is a single parent, she is eligible for 120 days.

Maternity leave must begin 2 weeks before childbirth.

The law provides for 7 days of paternity leave to all married male employees working in the private sector.

Retirement Policies

Employees may retire upon reaching retirement age established in the employment contract, collective bargaining agreement or company policy. If there is no set agreement, an employee may retire at age 60 but not after 65 years of age.

Employees become eligible for pension if they have paid at least 120 monthly social security contributions.

Holidays in the Philippines

When planning to hire in the Philippines, it's crucial to be aware of the official holidays when employees may not be available for work.

  • January 1 – New Year’s Day
  • February 1 – Chinese Lunar New Year’s Day
  • February 25 – People Power Anniversary
  • April 9 – The Day of Valor
  • April 14 – Maundy Thursday
  • Good Friday
  • Black Saturday
  • May 1 – Labor Day
  • May 3 – Eidul-Fitar
  • June 12 – Independence Day
  • July 10 – Eid al-Adha (Feast of the Sacrifice)
  • August 21 – Ninoy Aquino Day
  • August 29 – National Heroes Day
  • November 1 – All Saints’ Day
  • November 30 – Bonifacio Day
  • December 25 – Christmas Day
  • December 30 – Rizal Day
  • December 31 – New Year’s Eve

Easily Hire and Pay Employees in the Philippines

Is the Philippines in your hiring or expansion plans? Paylocity can help. Our cloud-based platform helps you navigate the waters of international payroll.

And don’t sweat complicated compliance — our hybrid service model includes a U.S.-based team and in-country experts in the Philippines to help when you have questions.

Want to learn more? Request a demo today!

Pay Employees in the Philippines, Simply and Seamlessly

Establish a Presence

Easily set up business entities and simplify compliance with local requirements. Hire in-country and manage your expat employees.

All Payroll in One Place

Reduce manual processes and compliance issues by creating, managing, and paying domestic and global employees in a single place.

Tap into Local Experts

A U.S.-based service team and direct access to in-country professionals relieve the headaches of paying an international workforce.

Request a Blue Marble Payroll Demo

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