Employer of record in the Philippines: the real cost in 2026

EOR, own company or contractor?

There are three ways to work with someone in the Philippines. Each one fits a different case.

Employer of record

The EOR employs the person for you and runs the payroll. You need no Philippine company. This suits one or a few employees, or a first test of the market.

Your own Philippine company

Foreign investors can own up to 100% of most businesses. A company that is more than 40% foreign-owned and sells to the Philippine market needs a paid-in capital of at least US$200,000. The minimum is US$100,000 for some firms, such as firms where most of the direct employees are Filipino, with at least 15 of them.Republic Act No. 11647, Foreign Investments Act amendments, Republic Act No. 7042, Foreign Investments Act, section 3Checked 1 Oct 2026

A branch of your company

A foreign company needs a licence from the Securities and Exchange Commission (SEC) to do business in the Philippines. The SEC filing fee for a branch office is 1% of the money that the company sends in, and at least ₱3,000.Republic Act No. 11232, Revised Corporation Code, section 140, SEC, applications of foreign corporationsChecked 1 Oct 2026

Contractor

The Supreme Court uses a four-fold test: who selects and engages the worker, who pays the wages, who can dismiss the worker, and who controls the work. Control is the most important element. The Court also looks at the economic realities of the relationship.Supreme Court, Sonza v. ABS-CBN, G.R. No. 138051 (2004), Supreme Court, Francisco v. NLRC, G.R. No. 170087 (2006)Checked 1 Oct 2026

Job contracting rules

An EOR is the legal employer, but the person works for you. The Philippines has strict rules on businesses that supply workers to a client.

Labour-only contracting is banned

The Labor Code (Article 106) calls it "labor-only" contracting when the business that supplies the workers has no substantial capital or investment, and the workers do work that is directly related to the client's main business.Labor Code of the Philippines, DOLE 2022 edition (PDF, ILO NATLEX)Checked 1 Oct 2026

The result

In labour-only contracting, the law treats the supplier as the client's agent. The client is then responsible to the workers as if it employed them directly.Labor Code of the Philippines, DOLE 2022 edition (PDF, ILO NATLEX)Checked 1 Oct 2026

Department Order 174

The Department of Labor and Employment (DOLE) sets the detailed rules in Department Order No. 174 of 2017, which includes the registration of contractors. We could not open DOLE's own copy of the order, so this guide gives no figures from it.Labor Code of the Philippines, DOLE 2022 edition (PDF, ILO NATLEX)Checked 1 Oct 2026

We found no DOLE rule that is written for EORs. Ask each provider these questions before you sign:

• Are you, or your partner, registered with DOLE as a contractor? Can we see the certificate?
• If not, why do you think that the contracting rules do not apply to your service?

These rules are complex. Ask a Philippine lawyer how they apply to your case.

Employment rules

Minimum wage

Each region sets its own minimum wage. In Metro Manila (NCR), it is ₱755 a day for non-agriculture work, since 26 September 2026. It is ₱718 for agriculture, for retail and service firms with 15 workers or fewer, and for manufacturers with fewer than 10 workers.NWPC, NCR minimum wage, Wage Order No. NCR-28 (PDF)Checked 1 Oct 2026

Working hours

The normal hours are 8 a day. Overtime pays at least 25% more. Work between 10 pm and 6 am pays at least 10% more.Labor Code of the Philippines, DOLE 2022 edition (PDF, ILO NATLEX)Checked 1 Oct 2026

Holidays

2026 has 12 regular holidays and 8 national special non-working days. Work on a regular holiday pays twice the regular rate. Work on a special day pays at least 30% more.Proclamation No. 1006, s. 2025, holidays for 2026, Proclamation No. 1189, s. 2026, Eid'l Fitr, Proclamation No. 1264, s. 2026, Eid'l Adha, Labor Code of the Philippines, DOLE 2022 edition (PDF, ILO NATLEX)Checked 1 Oct 2026

Service incentive leave

After 1 year of service, an employee gets 5 days of paid leave a year. This does not apply when the employer already gives at least 5 days of paid vacation leave, or when it regularly employs fewer than 10 people.Labor Code of the Philippines, DOLE 2022 edition (PDF, ILO NATLEX)Checked 1 Oct 2026

Maternity, paternity and solo parent leave

105 days of maternity leave with full pay, and 15 more days for a solo parent. 7 days of paternity leave with full pay. A solo parent with 6 months of service gets up to 7 working days of paid parental leave a year.Republic Act No. 11210, maternity leave, Republic Act No. 8187, paternity leave, Republic Act No. 11861, solo parents, section 8Checked 1 Oct 2026

Probation

Probation can last up to 6 months.Labor Code of the Philippines, DOLE 2022 edition (PDF, ILO NATLEX)Checked 1 Oct 2026

Termination

The employer can end the employment for a just cause, such as serious misconduct, or for an authorised cause, such as redundancy. For an authorised cause, it gives 1 month of written notice to the employee and to DOLE. For a just cause, it gives written notice of the cause and a chance to be heard.Labor Code of the Philippines, DOLE 2022 edition (PDF, ILO NATLEX)Checked 1 Oct 2026

Separation pay

For redundancy, at least 1 month of pay for each year of service. For retrenchment, at least half a month of pay for each year. Each minimum is at least 1 month of pay, and 6 months or more count as a full year.Labor Code of the Philippines, DOLE 2022 edition (PDF, ILO NATLEX)Checked 1 Oct 2026

Resignation

An employee who resigns gives at least 1 month of written notice.Labor Code of the Philippines, DOLE 2022 edition (PDF, ILO NATLEX)Checked 1 Oct 2026

Payroll and taxes

The employer, or the EOR, takes income tax out of each salary payment and pays it to the Bureau of Internal Revenue (BIR). It files Form 1601-C by the 10th day of the next month, and by 15 January for December. It files the yearly return, Form 1604-C, by 31 January. Each employee gets a certificate on Form 2316.

Income tax is 0% on the first ₱250,000 of yearly income. Above that, the rates go from 15% to 35%. The 13th month pay and other benefits are free of income tax up to ₱90,000 a year.

The employee also pays contributions: 5% for SSS, half of the 5% PhilHealth premium, and 2% for Pag-IBIG, up to ₱200 a month.

SSS uses the monthly salary credit: the monthly pay rounded to a step of ₱500, from ₱5,000 to ₱35,000. The part of the credit above ₱20,000 goes to the Mandatory Provident Fund (MPF), a savings account for the employee. PhilHealth uses the monthly basic salary, from ₱10,000 to ₱100,000.

The employer registers with SSS and reports each new employee within 30 days. It also registers with PhilHealth and Pag-IBIG.

Sources: BIR Form 1601-C guidelines (PDF), BIR Form 1604-C guidelines (PDF), BIR Revenue Regulations No. 11-2018 (PDF), BIR Form 2316 (PDF), SSS Circular No. 2024-006, contribution schedule (PDF), SSS, contribution table, PhilHealth Circular No. 2020-0005 (PDF), DBM Circular Letter No. 2024-2, Pag-IBIG contributions (PDF), SSS, employer registration, PhilHealth, employer registration, Republic Act No. 9679 (Pag-IBIG Fund Law), section 7Checked 1 Oct 2026

Payroll in the Philippines: an EOR or a local payroll company?

A local payroll company calculates the pay, the tax and the contributions, and it files the returns. It does not employ the person. Your company stays the legal employer, with all the duties of an employer under Philippine law.

Registration

SSS asks a foreign-owned company for its Philippine representative, as shown in its SEC registration. PhilHealth asks a company for its SEC registration. We found no official route for a foreign company without a Philippine entity to register as an employer.SSS, employer registration, PhilHealth, employer registrationChecked 1 Oct 2026

Licence to do business

A foreign company needs an SEC licence to do business in the Philippines. Opening an office, even a liaison office, counts as doing business.Republic Act No. 11232, Revised Corporation Code, section 140, Republic Act No. 7042, Foreign Investments Act, section 3Checked 1 Oct 2026

A payroll company is enough when your company already has a Philippine company or a licensed branch. Without one, an EOR is the usual choice. Ask a tax adviser if an employee in the Philippines creates a taxable presence (a permanent establishment) for your company.

Sources: SSS, employer registration, PhilHealth, employer registration, Republic Act No. 11232, Revised Corporation Code, section 140Checked 1 Oct 2026

Benefits

The law requires the SSS, PhilHealth and Pag-IBIG contributions, Employees' Compensation, the 13th month pay, service incentive leave and the holidays that this guide describes.

The 13th month pay is at least 1/12 of the basic salary that the employee earned in the calendar year. The employer pays it by 24 December. All rank-and-file employees who worked at least 1 month in the year get it. Basic salary leaves out overtime, holiday pay, night shift pay, cost-of-living allowances and unused leave paid in cash.

Other benefits, such as private health insurance (HMO), depend on the contract.

Sources: Presidential Decree No. 851, 13th month pay, Supreme Court, G.R. No. 188949 (26 Jul 2010)Checked 1 Oct 2026

How hiring through an EOR works

1. Compare providers and ask for quotesAsk for the monthly fee in the Philippines, the deposit, the exchange rate and the notice period of the EOR contract. Ask about the DOLE contracting rules.
2. Agree the employment termsAgree the basic salary, the start date, the leave and the probation period with the candidate. The salary must meet the minimum wage of the region of work.
3. The EOR signs the contractThe EOR becomes the legal employer. It follows the Labor Code and the rules of the region of work.
4. The EOR runs the payrollEach pay period, the EOR pays the salary and takes out the income tax and the employee's contributions. It pays them, with the employer's share, to the BIR, SSS, PhilHealth and Pag-IBIG. In December, it pays the 13th month pay.
5. You manage the daily workYou set the tasks and the goals. The EOR handles the employment administration.

Sources: BIR Form 1601-C guidelines (PDF), SSS, employer registration, Presidential Decree No. 851, 13th month payChecked 1 Oct 2026