Employer of Record (EOR) in the Philippines: 2026 Guide
Guide to using an EOR in the Philippines — costs, compliance, top providers, and comparison with setting up a local entity.
The Philippines is one of the world's premier outsourcing destinations. With a large English-speaking workforce, strong cultural affinity with the United States, competitive labor costs, and a growing economy (projected 5.3-5.7% GDP growth in 2026), it is a top choice for companies building offshore teams — particularly in customer support, IT services, and back-office operations.
However, hiring employees in the Philippines requires navigating mandatory 13th-month pay, complex social security contributions (SSS, PhilHealth, Pag-IBIG), and strict termination rules under the Labor Code. An Employer of Record (EOR) handles all of this for you.
Why Use an EOR in the Philippines?
High entity setup cost. Registering a foreign-owned subsidiary in the Philippines requires a minimum equity investment of $200,000 and registration with the SEC, BIR, SSS, PhilHealth, and Pag-IBIG. The process involves at least four officials, two of whom must be Philippine residents.
13th-month pay. The Philippines mandates a 13th-month salary payment to all employees by December 24th each year. This is not a bonus — it is a legal requirement that carries penalties for non-compliance.
Complex social contributions. Employers must contribute to three separate government programs (SSS, PhilHealth, Pag-IBIG), each with different contribution rates, salary ceilings, and filing requirements.
Labor Code protections. The Philippine Labor Code provides strong employee protections. Termination requires authorized or just cause, a 30-day notice period, and one month of severance per year of service. Wrongful dismissal claims can be expensive.
Regional wage variations. The Philippines does not have a national minimum wage. Rates are set by Regional Tripartite Wages and Productivity Boards, creating 16 different minimum wage structures across the country.
Important
For a detailed breakdown of Philippine labor laws including minimum wages, working hours, payroll taxes, and leave policies, see our Philippines Labor Law Compliance Guide.
How EOR Works in the Philippines
- You select and interview the candidate. The EOR does not recruit for you.
- The EOR drafts a compliant employment contract under the Philippine Labor Code.
- The EOR registers the employee with SSS, PhilHealth, Pag-IBIG, and the BIR.
- The EOR runs monthly payroll — calculating withholding tax, social contributions, and 13th-month accruals.
- The EOR administers benefits — managing mandatory contributions and any supplementary benefits you offer.
- You manage the employee's daily work — tasks, schedules, and performance.
Key Employment Regulations
| Regulation | Details |
|---|---|
| Minimum wage | PHP 695/day in Metro Manila (varies by region) |
| Standard hours | 8 hours/day, 48 hours/week |
| Overtime | 125% of regular pay (130% on rest days/holidays) |
| Night differential | 110% for work between 10 PM and 6 AM |
| Paid vacation | 5 days after 1 year of service |
| 13th-month pay | Mandatory, paid by December 24th |
| Maternity leave | 105 days paid (live childbirth) |
| Paternity leave | 7 days for first four pregnancies |
| Regular holidays | 10 per year |
| Special non-working days | 8 per year |
| Notice period | 30 days |
| Severance | 1 month per year of service (authorized cause) |
Critical: 13th-Month Pay
All rank-and-file employees who have worked at least one month during a calendar year are entitled to 13th-month pay. It is calculated as total basic salary earned during the year divided by 12. The first PHP 90,000 of 13th-month pay and bonuses combined is tax-exempt. Most employers split payment into two installments.
EOR Costs in the Philippines
Provider Fees
EOR fees for the Philippines are typically lower than Western markets, ranging from $300 to $500 per employee per month.
| Included | Typically Extra |
|---|---|
| Payroll processing and BIR withholding | HMO/private health insurance |
| SSS, PhilHealth, Pag-IBIG administration | Life and accident insurance |
| 13th-month pay calculation and distribution | Equipment procurement |
| Employment contract drafting | Background verification |
| Leave and attendance tracking | Visa/immigration support |
| Onboarding and offboarding | Recruitment services |
Statutory Employer Costs
| Statutory Cost | Rate |
|---|---|
| SSS (employer share) | 10% of Monthly Salary Credit + 1% EC |
| PhilHealth (employer share) | 2.5% of basic salary |
| Pag-IBIG (employer share) | 2% (max PHP 200/month) |
| 13th-month pay | ~8.33% of annual basic salary |
Total statutory employer costs add approximately 20-25% on top of gross salary in the Philippines.
Total Cost Example
For a customer support representative earning PHP 35,000/month (~$620 USD):
| Component | Monthly Cost |
|---|---|
| Gross salary | PHP 35,000 |
| Statutory employer costs (~22%) | PHP 7,700 |
| 13th-month accrual (~8.33%) | PHP 2,917 |
| EOR provider fee (~$400/mo) | PHP 22,600 |
| Total monthly cost |
EOR vs Setting Up a Local Entity
| Factor | EOR | Local Entity |
|---|---|---|
| Setup cost | $0 (provider fee only) | $20,000-$50,000+ ($200K equity requirement for foreign-owned) |
| Setup time | 5-10 business days | 4-12 weeks (SEC, BIR, SSS, PhilHealth, Pag-IBIG registration) |
| Ongoing admin | Handled by EOR | BIR filings, SSS/PhilHealth/Pag-IBIG remittances, SEC annual reports |
| Compliance risk | EOR assumes liability | Your responsibility |
| Flexibility | Easy to scale up or down | $200K equity requirement creates high commitment |
| Best for | 1-20 employees | 20+ employees, BPO operations |
Break-even point: Due to the $200,000 equity requirement for foreign-owned entities, the break-even point for setting up a Philippine entity is typically 15-25+ employees, making it one of the countries where EOR remains cost-effective even for medium-sized teams.
Top EOR Providers for the Philippines
| Provider | Owned Entity | Starting Price | Strengths |
|---|---|---|---|
| Multiplier | Yes | ~$400/mo | APAC specialist, competitive pricing |
| Deel | Yes | $599/mo | Fast onboarding, strong platform |
| Remote | Yes | $599/mo | All owned entities |
| Oyster HR | Partner | $599/mo | Good employee experience |
| Papaya Global | Yes | $650/mo | Enterprise payroll |
The Philippines is a high-volume market for most EOR providers. Key things to look for:
- Experience with BPO/outsourcing teams — Many EOR clients in the Philippines hire for customer support and back-office roles
- Night shift and schedule flexibility — If your team works US hours, the provider should support non-standard schedules
- HMO partnerships — Private health insurance (HMO) is a key employee benefit in the Philippines; look for providers with quality HMO options
- Multi-region compliance — If you hire outside Metro Manila, ensure the provider handles regional wage variations
For a full comparison, see our Best Employer of Record Companies guide.
When to Choose EOR vs Direct Hiring in the Philippines
Use an EOR when:
- You have no Philippine entity and want to build an offshore team
- You want to avoid the $200,000 equity requirement for foreign-owned entities
- You are hiring 1-20 employees and want to minimize overhead
- You need compliant payroll with 13th-month pay and social contributions handled for you
- You are testing the Philippine market before committing to a permanent presence
Hire directly when:
- You already have a registered entity in the Philippines
- You are building a BPO operation with 20+ employees
- You need a physical office for your operations
- You want full control over compensation, benefits, and HR policies
Pro Tip
In the Philippines, offering a quality HMO (private health insurance) plan is one of the most effective ways to attract and retain talent. While PhilHealth provides basic coverage, employees strongly prefer employers who offer supplementary health insurance. Ask your EOR provider about their HMO options and coverage levels.
Managing a Team in the Philippines?
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