What Is an Employer of Record in the Philippines?
An Employer of Record (EOR) in the Philippines is a locally registered company that becomes
the legal employer of your Philippine workforce. It lets companies based anywhere hire people
in Metro Manila, Cebu, Davao, or anywhere else in the country without registering with the
Securities and Exchange Commission, meeting a paid-in capital requirement, or building the
local registration chain that follows incorporation.
The EOR takes on the statutory employer duties, including the employment contract and
regularization standards, PHP payroll, BIR withholding and annualization, SSS, PhilHealth,
and Pag-IBIG contributions, statutory leave, holiday and night shift premiums, 13th month
pay, and lawful separation. You keep control of the employee’s role, priorities, and the
outcome of their work.
This Model Works Especially Well When:
- You want an offshore engineering, finance, customer operations, or shared services team without a Philippine subsidiary.
- You already have contractors in the Philippines who look like employees and need converting before the exposure crystallizes.
- You are testing the market and do not want incorporation, paid-in capital, and a multi-agency registration chain on the critical path.
- You are hiring remotely across several regions and need the correct regional wage floor applied to each person.
- You want the termination and separation position understood before you commit to headcount, not after.
Komp delivers this as part of a single workforce platform, so your Philippine employees sit
alongside contractors, EOR workers, and direct employees in other countries, governed by the
same data, workflows, and controls.
How Komp’s Employer of Record Works in the Philippines
Komp becomes the legal employer for your Philippine team members and takes on their statutory
liabilities, while you run the work. Here is what that looks like in practice.
Skip SEC incorporation and the paid-in capital that can come with foreign ownership, the
barangay clearance and mayor’s permit, BIR registration and books of accounts, and separate
employer registrations with SSS, PhilHealth, and Pag-IBIG. Companies often assume SEC approval
is the finish line; it is the start.
Komp Activate runs onboarding, contracts, regularization standards, and benefits; Komp PayOps
runs PHP payroll with BIR withholding and all three statutory contributions; Komp TimeOps
tracks working time, premiums, and leave; and compliant separation, including due process and
final pay, closes the loop in one flow.
Komp Workforce gives HR, Finance, and Legal a single source of truth for Philippine and global
headcount, covering payroll status, fully loaded employer costs, accrued 13th month and
separation exposure, leave balances, regularization dates, and compliance alerts, with audit
trails built in.
See How It Works →
What Komp Handles Under EOR in the Philippines
Komp manages every part of the Philippine employment relationship so your team can focus on
the work, not the paperwork.
Contracts and regularization standards
We issue contracts that meet the Labor Code and, where the role is probationary, set out the
reasonable standards for regularization in writing at the time of engagement. This is the
step most foreign employers miss, and missing it means the employee is a regular employee with
full security of tenure from day one rather than after six months.
Employer registration across four agencies
Komp maintains the employer registrations with the BIR, SSS, PhilHealth, and Pag-IBIG, and
enrolls each new hire with all of them. Late or missing remittance attracts penalties and
interest and compounds into later benefit claims.
PHP payroll and statutory contributions
Komp PayOps calculates payroll on your chosen cycle and remits SSS against the monthly salary
credit including the employees’ compensation element, PhilHealth on basic salary within the
statutory floor and ceiling, and Pag-IBIG within the maximum fund salary. PhilHealth in
particular is calculated on basic salary only, and including allowances or overtime in the
base is a frequent and costly payroll error.
BIR withholding, annualization, and filings
We withhold monthly on compensation, file the monthly remittance return, annualize before
December payroll so each employee’s total withholding matches their actual liability, issue
the annual certificate of compensation and tax withheld, and file the annual information
return and alphalist. Getting annualization wrong breaks substituted filing for every
affected employee.
13th month pay and the DOLE report
The 13th month is statutory, not discretionary. It is one twelfth of total basic salary
earned during the calendar year, payable on or before 24 December, and a compliance report
must be filed with the DOLE Regional Office in January. Komp accrues it monthly, so it appears
in your cost model rather than arriving as a December cash event.
Regional wage floors and premium pay
We apply the wage order for the region where each employee works and calculate the premiums
that stack on a Philippine payroll: overtime, rest day and holiday rates, and the night shift
differential for hours worked overnight. For a team covering United States hours, night
differential and holiday premiums together are a real cost line that offshore budgets
routinely understate.
Statutory leave and parental entitlements
Komp TimeOps tracks service incentive leave, which must be converted to cash if unused,
alongside expanded maternity leave, paternity leave, solo parent leave, the special leave
for women, and leave under the anti-violence legislation. There is no statutory annual
vacation or sick leave beyond service incentive leave, so anything above it is contractual,
and once granted it cannot be reduced.
Separation handled within due process
We manage exits through the route the Labor Code requires: the twin-notice procedure with a
genuine opportunity to be heard for just causes or notice to both the employee and DOLE
thirty days ahead with the statutory separation pay formula for authorized causes. Procedural
shortcuts cost money even where the underlying cause is sound.
See How It Works →
Employer of Record vs Entity Setup in the Philippines
In the Philippines, the choice between an Employer of Record and your own
entity depends on how quickly you need to hire, whether you need to employ
foreign nationals, and whether you plan to build a large permanent operation.
| Criteria |
Employer of Record (Komp) |
Own Philippine Entity |
| Best suited for |
Market entry, offshore delivery pods, contractor conversion,
small to mid-sized headcount
|
A large permanent delivery center, or an operation seeking
PEZA or BOI incentives
|
| Time to hire |
As soon as the candidate accepts
|
Weeks to months end to end, since SEC approval is followed by
local permits, BIR, and three agency registrations
|
| Capital |
None
|
A minimum paid-in capital requirement can apply where foreign
ownership exceeds the statutory threshold, with exceptions
that depend on how the business is structured
|
| Upfront cost |
No setup cost; predictable per-employee fee
|
Incorporation, local permits, professional fees, and capital
locked in a Philippine bank account
|
| Ongoing obligations |
Handled by Komp
|
Monthly remittances and withholding returns, quarterly and
annual BIR filings, audited financial statements, and
corporate secretarial work
|
| Work permits for foreign nationals |
Not available through an EOR; an alien employment permit is
tied to a registered local employer
|
Available, through the DOLE permit and the corresponding
work visa
|
| Exit |
Offboard employees and stop
|
SEC and BIR dissolution is slow and documentation-heavy
|
| Workforce visibility |
Philippine data unified with your global workforce in one platform
|
Often a separate local payroll provider and a separate HR system
|
8.5 EOR vs PEO vs BPO: Which Model Fits
These three are routinely confused in the Philippine market, and the difference matters because it determines who carries employment liability.
| Question |
Employer of Record |
PEO / co-employment |
BPO / outsourcing |
| Who legally employs the worker |
The EOR, on its own payroll
|
Shared, which requires you to have a local entity
|
The BPO provider
|
| Who directs the outcome of the work |
You
|
You
|
The provider, against a service level
|
| Do you need a local entity |
No
|
Yes
|
No
|
| Do you choose the individual hired |
Yes
|
Yes
|
Usually not
|
| Where employment liability sits |
With the EOR
|
Shared
|
With the provider
|
| Best suited to |
Building your own named team offshore
|
Augmenting an existing local entity
|
Buying a managed function or process
|
Employer of Record Cost in philippines
EOR pricing in the Philippines varies by provider, service scope, and team size. The comparison worth running is not the fee alone. It is the fee against incorporation, paid-in capital where it applies, local permits, an accountant, an audit, and the monthly and annual filing cycle that comes with being a Philippine taxpayer.
It is also worth understanding how Philippine employer cost behaves, because it is not a flat percentage. Statutory contributions are capped in absolute peso terms, so they fall sharply as a share of payroll at professional salary levels. The 13th month, by contrast, is a little over eight percent of annual basic pay at every salary level and does not cap. For a team on a United States shift, night differential and holiday premiums add further. Komp models all of it rather than quoting one number.
EMPLOYER STATUTORY CONTRIBUTIONS
| Contribution |
Employer share |
Employee share |
Basis and cap |
| SSS |
10% |
5% |
15% of the monthly salary credit, which runs between a statutory floor and ceiling
|
| Employees’ Compensation |
A small fixed monthly amount |
None |
Employer-funded, charged on top of SSS, stepping up above a salary credit threshold
|
| PhilHealth |
2.5% |
2.5% |
5% premium on monthly basic salary only, between an income floor and ceiling
|
| Pag-IBIG |
2% |
1% or 2% |
Applied to the maximum fund salary, which caps each side at a fixed monthly amount
|
| 13th month pay |
One twelfth of annual basic salary |
None |
Statutory, uncapped, payable on or before 24 December
|
What Shapes Your Price
-
Salary level relative to the caps:
statutory contributions are capped in peso terms, so employer cost flattens at professional salaries.
-
Region where each employee works:
the applicable minimum wage follows the employee’s location, not your head office.
-
Shift pattern:
a team covering United States hours attracts the night shift differential, and holiday premiums stack on top.
-
Benefits scope:
private medical cover is near-universal in the professional market, and once granted cannot be reduced.
-
Integrations and reporting:
HRIS, ERP, and finance system connections.
Why EOR Delivers Strong ROI
-
Faster revenue:
your Philippine hire starts contributing weeks before an entity could be registered and operational.
-
Lower overhead:
no incorporation, capital lock-up, local permits, accountant, or audit.
-
Lower risk:
no misclassified contractors, no failed probationary documentation, and no missed remittances.
-
Less admin:
one platform, one invoice, one partner for Philippine employment.
Request Your Custom Philippines Pricing →
Who Should Use an EOR in the Philippines?
Technology and engineering teams
Build a development, QA, data, or platform pod with English-language working and a
cost base well below the United States, United Kingdom, or Australia, without a
subsidiary supporting ten or twenty people.
Global capability and shared services centers
Stand up finance, accounting, procurement, HR operations, or customer support
delivery in the second largest offshore services market in the world, where the
talent pool and the management layer already exist.
Companies with contractors already in the Philippines
This is the most common reason companies come to us for this market. If people have
been invoicing you monthly for a year, working your hours on your systems with no
other clients, the arrangement is employment in substance and the exposure grows
every month.
Companies serving United States customers
Place customer operations, support, and revenue roles in a market with deep
familiarity with United States business norms and a full overnight shift overlap,
with the premium costs modeled honestly up front.
Companies hiring outside Metro Manila
Cebu, Davao, Clark, Iloilo, and Bacolod offer lower cost and lower attrition than
the capital. An EOR lets you hire in any of them without a presence in any of them.
HR and Finance leaders
Get predictable costs, consolidated invoicing, accrued 13th month visible rather
than arriving in December, and audit-ready records for every Philippine hire.
Why Komp Is Different from Generic EOR Providers
Many providers can put a Philippine employee on payroll. Komp is built as workforce
infrastructure, combining AI intelligence, owned payment rails, and human governance
so you can grow in the Philippines with confidence.
AI Agent Swarms with human control
Autonomous agents continuously check payroll, classification, contracts,
regularization dates, and regulatory change. Recommendations are surfaced for review
before anything is executed: autonomous intelligence, human control.
Regularization tracked, not remembered
The six-month probationary limit runs from the first day worked and converts by
operation of law, whatever the contract says. Komp tracks the date for every
probationary hire and prompts the decision before it is made for you.
Regional wage orders applied per employee
Seventeen regional boards issue wage orders on their own cycles, and orders are
sometimes amended or challenged in court. A provider applying one national figure
will be wrong for most of your team. Komp applies the order for each employee’s
region.
Current with the 2026 changes
The de minimis benefit ceilings that determine how much of an allowance package is
tax-exempt were raised with effect from January 2026. Most offshore payroll
configurations have not picked that up, and the result is employees paying tax they
do not owe.
AES-256 encryption, SOC 2 Type II, ISO 27001, GDPR compliance, role-based access
control, and AWS hosting with multi-region redundancy protect your Philippine
employee data, alongside Data Privacy Act obligations.
Komp Activate, Komp Workforce, Komp TimeOps, and Komp PayOps connect hiring,
workforce records, time, and pay across the Philippines and 150+ countries.
Start Hiring in the Philippines →
Philippine Employment Compliance: What Global Employers Must Manage
Philippine employers answer to DOLE for labor standards and termination, to the BIR
for withholding, and to the SSS, PhilHealth, and Pag-IBIG for contributions. These
are the areas that matter most, and how Komp covers them.
Contracts and the Probationary Period
Probation is capped at six months from the first day worked. For it to have any
effect, the reasonable standards for becoming a regular employee must be
communicated in writing at the time of engagement. If they are not, or if the
employee is allowed to work past the six months, they become a regular employee
by operation of law with full security of tenure. This is the most common and
most consequential documentation failure foreign employers make here.
Security of Tenure
There is no at-will employment. A regular employee may be dismissed only for a
just cause or an authorized cause, and only with due process, and the burden of
proving a valid dismissal rests on the employer throughout. There is no
performance-based authorized cause, so performance management must be run as
documented just cause or converted into a genuine redundancy, which will be
scrutinized.
Just Causes and Authorized Causes
Just causes turn on employee fault, such as serious misconduct, willful
disobedience, gross and habitual neglect, fraud, or breach of trust, and carry
no separation pay. Authorized causes are business or health grounds, such as
redundancy, retrenchment, installation of labor-saving devices, closure, or
disease, and each carries its own statutory separation pay formula calculated
per year of service.
Due Process and the Twin-Notice Rule
For a just cause the employer must issue a written notice setting out the
specific acts and grounds with several days to respond, hold a genuine hearing,
and then issue a written decision. For an authorized cause, written notice must
go to both the employee and the DOLE Regional Office thirty days before the
effective date. Procedural failure costs nominal damages even where the
substantive cause is valid.
Illegal Dismissal
Where there is no valid cause, the remedy is reinstatement without loss of
seniority plus full backwages from dismissal to actual reinstatement, which is
uncapped and accrues throughout any appeal. The reinstatement aspect is
immediately executory pending appeal, so an employer must either take the person
back or reinstate them on payroll while contesting the case.
Constructive Dismissal and Non-Diminution
A resignation prompted by conditions a reasonable person would find intolerable,
such as demotion, reduced pay or benefits, or an unreasonable transfer, is
treated as dismissal, with the burden on the employer to show a valid exercise
of management prerogative. Established benefits cannot be withdrawn, which
makes restructures and compensation redesigns the usual flashpoint for offshore
teams.
Statutory Contributions
SSS, PhilHealth, and Pag-IBIG are each mandatory, each has its own base, floor,
and ceiling, and each is remitted on its own schedule. PhilHealth is calculated
on basic salary alone, so including overtime or allowances overstates it.
Contributions are capped in peso terms, which means employer cost as a share
of payroll falls sharply at senior salaries.
Withholding Tax and Annualization
The employer is the withholding agent and is personally liable for
under-withholding. Tax is withheld monthly, then annualized before December
payroll so that each employee’s total withholding matches their actual annual
liability, with the difference refunded or collected in the final run. A
combined annual exclusion covers 13th month pay and other benefits up to a
statutory ceiling, above which the excess is taxable.
De Minimis Benefits
Certain allowances are exempt from income tax within published ceilings and do
not count against the benefits exclusion. Those ceilings were raised with
effect from January 2026, which means allowance packages configured before then
may be withholding more tax than is due.
13th Month Pay
Statutory for all rank-and-file employees who worked at least one month in the
calendar year, calculated as one twelfth of total basic salary earned, payable
on or before 24 December, and reported to DOLE in January. It may be paid in
two installments provided the total is complete by the deadline.
Regional Minimum Wages
There is no national minimum wage. Seventeen regional boards set rates by
region, by sector, and in some cases by establishment size, through wage orders
with their own effective dates and sometimes staged tranches. Orders are
occasionally challenged in court, so the operative rate can change at short
notice, and the rate that applies is the one for the region where the work is
performed.
Working Time and Premium Pay
The normal day is eight hours with a rest day after six consecutive working
days. Overtime, rest day work, regular holidays, and special non-working days
each carry their own premium, and a night shift differential applies to hours
worked overnight. Managerial employees and field personnel are exempt from
these provisions and misapplying that exemption to senior individual
contributors is a common and expensive error.
Where the Real Risk Sits
The expensive mistake in the Philippines is usually the contractor you
already have, not the employee you are about to hire.
Philippine tribunals apply a four-fold test looking at who selects and
engages the worker, who pays the wages, who holds the power of dismissal,
and above all who controls the work. They look at substance rather than
contract labels. A person engaged as a contractor who works full-time for
a single client, follows that client's hours and methods, uses that client's
systems, and has done so for years is an employee in the eyes of the law,
whatever the agreement says.
When that is established, the liability is retroactive and compounding:
unpaid SSS, PhilHealth, and Pag-IBIG contributions with penalties,
unremitted withholding tax, accrued service incentive leave, 13th month pay
for every year of the relationship, separation pay, and attorney's fees,
with backwages running from the date of any dismissal through to final
judgment rather than stopping at the complaint.
Employing people properly through Komp removes that exposure at the point
it is cheapest to remove, which is before anyone raises it. It is worth
saying plainly that no employment structure in this market eliminates every
risk, and any provider claiming otherwise is overselling. What a well-run
Employer of Record does is move you from an arrangement that is difficult
to defend to one that is ordinary, documented, and defensible.
Employer of Record Coverage Across the Philippines
Philippine offshore delivery began in Metro Manila and has spread steadily to
the regions, where cost and attrition are both lower. Komp lets you hire
compliantly anywhere in the country, applying the correct regional wage order
for each employee.
Employer of Record in Metro Manila
The National Capital Region, spanning Makati for financial services and
corporate headquarters, Bonifacio Global City for multinationals and global
capability centers, and Ortigas, Quezon City, and Alabang. The deepest talent
pool in the country, and the highest wage floor and salary expectations.
Employer of Record in Cebu
The established second city and the strongest alternative to Manila, with a
mature information technology, creative, and design talent base, a lower cost
structure, and a long track record of hosting offshore delivery.
Employer of Record in Davao
The principal hub in Mindanao, growing steadily, with a lower cost base and
notably lower attrition than the capital, which makes it attractive for teams
where continuity matters more than scale.
Employer of Record in Clark and Pampanga
The Central Luzon freeport corridor, where infrastructure investment and
proximity to Manila without Manila's congestion have drawn both delivery
operations and technology employers.
Employer of Record in Iloilo and Bacolod
Western Visayas, consistently identified among the next wave of delivery
locations, with improving infrastructure, university supply, and a cost base
below both Manila and Cebu.
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