Hiring in the Philippines Without an Entity: The 2026 EOR Guide
Quick answer: A Philippines EOR (employer of record) lets you hire employees in the Philippines without registering a local company. The EOR becomes the legal employer under the Labor Code: it issues a DOLE-compliant contract, runs payroll in pesos, withholds income tax, pays SSS, PhilHealth and Pag-IBIG contributions and the mandatory 13th month pay, while you manage the day-to-day work. Local hires can usually start within one to two weeks.
Key takeaways
- Philippine law gives employees strong security of tenure. Getting probation, overtime and termination wrong is where foreign employers get caught.
- Mandatory extras include 13th month pay, night shift differential, holiday pay and service incentive leave.
- Employers pay SSS, PhilHealth and Pag-IBIG contributions on top of salary, and withhold income tax monthly.
- A Philippines EOR avoids foreign-ownership and minimum-capital rules that apply to many locally incorporated companies.
- Long-term, full-time contractors are a misclassification risk. The Philippines applies a control test that looks at substance, not the contract.
What a Philippines EOR Does
The EOR employs your team through its own Philippine entity. You choose the people, set their work and manage performance. The EOR carries the legal employer obligations:
- Employment contracts that follow the Labor Code and Department of Labor and Employment (DOLE) rules
- Payroll in Philippine pesos, including overtime, night shift differential and holiday pay
- Income tax withholding and BIR filings
- SSS, PhilHealth and Pag-IBIG registration and monthly contributions
- 13th month pay, statutory leave and benefits administration
- Compliant terminations, including notices, final pay and certificates of employment
If you are weighing this against other routes, our guide to choosing an EOR provider covers what to ask. For a country overview, see hiring in the Philippines.
Philippine employment law: the rules that catch foreign employers out
Contracts and probation
Probationary employment can last up to six months. The standards the employee must meet to become regular have to be communicated at the start. If they are not, the employee can be treated as regular from day one. After probation, employees gain security of tenure and can only be dismissed for a just or authorised cause.
Working hours, overtime and night shift
- Normal hours: eight hours a day
- Overtime on an ordinary working day: at least 25% on top of the hourly rate
- Work on a rest day or special non-working day: at least 30% extra
- Work on a regular holiday: 200% of the daily rate
- Night shift differential: at least 10% extra for work between 10pm and 6am
The night shift rules matter for offshore teams covering US or European hours. Build them into your salary budget from the start.
13th month pay
Under Presidential Decree 851, rank-and-file employees who have worked at least one month in the calendar year are entitled to 13th month pay of at least one twelfth of their total basic salary for the year, paid on or before 24 December. The 13th month pay and other benefits are tax-exempt up to PHP 90,000 a year.
Leave
- Service incentive leave: five paid days a year after one year of service
- Maternity leave: 105 days under the Expanded Maternity Leave Law
- Paternity leave: seven days for eligible married fathers
- Regular holidays: paid even when not worked
Payroll contributions: SSS, PhilHealth and Pag-IBIG
| Contribution | Total rate | Employer share | Employee share | Notes |
|---|---|---|---|---|
| SSS | 15% | 10% | 5% | Based on monthly salary credit, capped at PHP 35,000 (2025 schedule) |
| PhilHealth | 5% | 2.5% | 2.5% | Salary floor PHP 10,000, ceiling PHP 100,000 |
| Pag-IBIG (HDMF) | 4% | 2% | 2% | Calculated on a maximum fund salary of PHP 10,000 |
Employers also withhold income tax under graduated rates (0% on the first PHP 250,000 of annual taxable income, rising to 35%), remit it monthly and issue each employee a BIR Form 2316 at year end. Contribution tables change regularly, so check the current rates with the Social Security System and other agencies before budgeting. For how this compares with other markets, read multi-country payroll taxes.
Ending employment: just and authorised causes
Employees can only be dismissed for a just cause (such as serious misconduct, wilful disobedience, gross and habitual neglect or fraud) or an authorised cause (such as redundancy, retrenchment, closure or disease).
- Just cause: follow the two-notice rule, with a written notice of the charges, a real chance to respond and a written notice of decision.
- Authorised cause: give at least 30 days’ written notice to both the employee and DOLE, and pay separation pay. Redundancy means at least one month’s pay per year of service; retrenchment and closure not due to serious losses mean at least half a month’s pay per year (or one month, whichever is higher).
- Illegal dismissal can lead to reinstatement plus full back wages.
Hiring foreign nationals in the Philippines
Foreign employees generally need an Alien Employment Permit (AEP) from DOLE and a pre-arranged employment visa, commonly the 9(g), from the Bureau of Immigration. Both require a sponsoring employer in the Philippines. Many EORs can act as that sponsor, so confirm it with your provider early. Our global mobility team runs the permit alongside the employment contract.
Philippines EOR vs Entity vs Contractors
| Philippines EOR | Your own entity | Contractors | |
|---|---|---|---|
| Time to first hire | Usually 1 to 2 weeks | Several months | Days |
| Setup requirements | None | Registration, capital requirements, local filings | None |
| Who holds employment compliance | The EOR | You | Nobody. The risk sits with you |
| Misclassification risk | None | None | High for full-time, directed work |
| Best for | Small to mid-size teams, market entry | Large permanent teams | Genuinely independent, project-based work |
Two points are specific to the Philippines. First, a foreign-owned company selling into the domestic market generally needs substantial paid-up capital (US$200,000, reduced to US$100,000 in some cases, such as when the company employs at least 15 Filipino staff), and some sectors restrict foreign ownership. An EOR sidesteps this. Second, courts apply a four-fold test (selection, payment of wages, power of dismissal and, above all, control over how the work is done). Contractors who work fixed hours under your direction are likely to be treated as employees. More in our guide to contractor vs employee classification.
What a Philippines EOR Costs
You pay the salary, the employer contributions above, 13th month pay (roughly an extra 8.3% of annual basic salary) and any premiums for overtime or night work, plus the EOR’s monthly fee per employee. Because SSS, PhilHealth and Pag-IBIG are capped, the employer contribution rate falls as a share of salary for higher earners. Model a specific hire with our employment cost calculator, or see why companies use an EOR for offshore work.
AgileHRO employs people in 150+ countries, with in-country specialists rather than a ticket queue. Talk to an Employment Specialist about hiring in the Philippines.
Philippines EOR: FAQs
Can a foreign company hire employees in the Philippines without an entity?
Yes. A Philippines EOR employs your staff through its own local entity and takes on the Labor Code, payroll, tax and social security obligations, so you do not need to incorporate or meet local capital requirements.
Is 13th month pay mandatory in the Philippines?
Yes, for rank-and-file employees who have worked at least one month in the year. It must be at least one twelfth of total basic salary for the year and paid by 24 December.
What contributions do employers pay in the Philippines?
SSS (10% employer share of the monthly salary credit under the 2025 schedule), PhilHealth (2.5%) and Pag-IBIG (2%, on a capped fund salary), plus Employees’ Compensation. The employer also withholds income tax and the employee’s shares.
How do you terminate an employee in the Philippines?
Only for a just cause, using the two-notice due process, or an authorised cause such as redundancy, with 30 days’ notice to the employee and DOLE plus separation pay. An EOR manages this process for you.
How long does it take to hire through a Philippines EOR?
Local hires can usually be onboarded in one to two weeks. Foreign nationals need an Alien Employment Permit and a work visa first, which adds time.