☑️ The Basics

Currency: Philippine peso (Rate)

Public Holidays: 20 public holidays in 2023 (see here)

Employer Taxes: 2.375% of gross salary + Social Security

Official Language: Filipino, English

Payroll frequency: Bi-monthly

13th / 14th Salary: (what's this?) ****Employers pay 1/12 of employees' annual salary as 13th salary

Three things to know about employing in the Philippines

1. Employees get a "13th month salary", which is the 1/12th of their annual salary. This can either be paid in full around 24 December, or can be split into two, half of which is paid at the beginning of the school year in June. The 13th month salary is not to be confused with an optional Christmas bonus that some employers can choose to offer.
2. Employees in supervisory or managerial positions are excluded from overtime pay.
3. Employees get five days of paid vacation leave after every 12 months of service. This is called the "service incentive leave" and can be taken as holiday or sick leave.

Employment in the Philippines

Notice Period

Resignations: Employees must provide a minimum of 30 days notice.

Notice period for dismissals over an authorised cause (business or health reasons) is 30 days.

Dismissals over *just cause *****(employee misconduct or neglect) do not require a notice period.

Termination & Severance

Employees are entitled to severance pay only if they were terminated by the employer for authorised causes. Depending on the basis for termination, severance may be up to one month’s salary multiplied by their length of service in years.

Probationary period

Six months

Minimum Wage

537 PHP per day

IP protection and non-compete agreements

The legal validity of non-compete agreements is decided on a per-case basis. To be legally enforceable, they must be limited and reasonable in time, place and scope. Employers are not obligated to pay the employee during the non-competition period.

Working Hours

Eight hours per day and six days a week (48 hours per week).

Overtime

Overtime work beyond eight hours a day is compensated with an additional 25% of the regular basic rate (30% on special holidays).

Employees in supervisory or managerial positions are excluded from overtime pay.

Paid Holidays

Employees are entitled to 12 paid holidays each year. If they are required to work on these holidays, they are entitled to be paid at twice the rate of their regular wage.

In addition, they also get three special, non-working unpaid holidays.

Employees also get five days of paid vacation leave after every 12 months of service. This is called the "service incentive leave" and can be taken as holiday or sick leave.

Sick pay and time off

Employers are not legally required to grant employees paid sick leave. Employees can use "service incentive leaves" as sick leaves.

Employees who have made at least three monthly Social Security System contributions in the last 12-month period can claim sickness benefit (of 90% their salary). However, this allowance will only begin to be paid after all other sick leave has been exhausted.

Parental leave

Eligible employees are entitled to at least 60 days (in case of normal delivery) or 78 days (in case of caeserian delivery) of paid maternity leave.

To be eligible for this, the employee must have made at least three monthly contributions in the 12-month period immediately preceding delovery. The benefit is not based on actual salary but on a Social Security graduated scale, with a maximum monthly salary credit of PHP15,000.

Employees are also entitled to seven days of paid paternity leave.

Taxes in the Philippines

<aside> 💡 You can get a detailed breakdown of the employer contributions for any gross salary by using our Oyster Platform Quote Generator.

For access please email [email protected].

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Employees

• Social Security: 36.30 PHP - 581.30 PHP
• Home Development Mutual Fund (HDMF):
  • Below PHP 1,500: 1%
  • Above PHP 1,500: 2%
• Health Insurance (PHIC): 1.375%

Income tax

• 0-250,000: Nil
• 250,000-400,000: 20%
• 400,000-800,000 (+30,000PHP): 25%
• 800,000-2,000,000 (+130,000PHP): 30%
• 2,000,000-8,000,000 (+490,000PHP): 32%
• 8,000,000 and over (+2,410,000PHP): 35%

Employers

Total social contributions (2.375%)

• Health Insurance (PHIC): 1.375%
• Home Development Mutual Fund (HDMF): 2.0%

Social Security (SSS): 73.70 PHP - 1,178.70 PHP

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