What does a $60,000 hire cost in the Philippines?
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Total annual employer cost
Full cost breakdown
Statutory contributions and typical benefits for an employee in the Philippines at $60,000 base salary.
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Key Takeaways for Hiring in the Philippines
- Payroll runs twice monthly, with legally required pay dates on the 15th and the last working day of the month.
- Social contributions are mandatory for both local and expat hires, covering social security (SSS), health insurance (PhilHealth), and housing fund (Pag-IBIG).
- Employers must provide a 13th-month salary and follow specific rules for regular, special, and non-working holiday pay.
- Termination laws are strict. Dismissal is only allowed for legally defined “just causes” or authorized causes and requires a formal due-process procedure.
Continent
Asia
Capital
Manila
Currency
Philippine Peso (PHP)
Language
Filipino, English
Payroll Cycle
Bi-monthly
VAT
12%
Quick Facts For Hiring in Philippines
Philippines Employment Contract Overview
A well-structured contract is essential for compliant hiring in the Philippines. Make sure it covers these core terms:
What Do You Need To Include in a Filipino Employment Contract?
Philippine labor law expects employers to document the fundamentals of the job. A clear contract helps you stay compliant and gives employees a transparent view of their role. These are the essentials to include:
Employee Information
- Full name
- ID number
- Role / Job title
- Start date
- End date (if applicable)
- Contract duration
- Leave entitlements
- Working hours
- Probation and notice conditions
- Termination provisions
- Compensation details
Payroll
Average employer cost
11.75% + provident fund
| Category | Details |
|---|---|
| 13th Salary | Mandatory; equivalent to 1/12 of an employee’s total basic salary earned within a calendar year, payable no later than December 24 |
| Avg employer tax | 11.75% + provident fund |
Tax Breakdown
Personal Income Tax (PIT)
| Category | Rate / Details |
|---|---|
| ₱0 – ₱250,000 | 0% |
| ₱250,001 – ₱400,000 | 20% of the excess over ₱250,000 |
| ₱400,001 – ₱800,000 | ₱30,000 + 25% of the excess over ₱400,000 |
| ₱800,001 – ₱2,000,000 | ₱130,000 + 30% of the excess over ₱800,000 |
| ₱2,000,001 – ₱8,000,000 | ₱490,000 + 32% of the excess over ₱2,000,000 |
| Over ₱8,000,000 | ₱2,410,000 + 35% of the excess over ₱8,000,000 |
Corporate Income Tax (CIT)
| Category | Rate / Details |
|---|---|
| Standard Rate | 25% |
| Preferential Rate | 20% for domestic micro, small, and medium-sized enterprises (MSMEs) with net taxable income not exceeding PHP 5 million and total assets not exceeding PHP 100 million. |
| Minimum CIT | 2% of gross income, applicable if higher than the regular CIT |
Social Security Contributions
| Category | Rate / Details |
|---|---|
| Employee Contribution | Varies based on monthly salary; ranges from 3.63% to 11.6%. |
| Employer Contribution | Ranges from 7.37% to 13.3% |
VAT
| Category | Rate / Details |
|---|---|
| VAT | 12% |
Mandatory Employee Benefits in the Philippines
| Benefits | Provider | Mandatory? | Notes |
|---|---|---|---|
| Health Insurance | Government | Payroll Contributions | PhilHealth is mandatory for all private-sector employees. Employers must register every new hire and ensure monthly contributions are shared and remitted on time. Enrollment and payment are handled automatically once the employee is added to the system, and employees cannot opt out. |
| Pension/Social Security | Government | Payroll Contributions | SSS contributions are mandatory for all private-sector employees. Employers must register employees and remit both employer and employee shares. Payslips typically show these deductions under “SSS” or “SSS Contribution.” Contributions provide access to retirement, sickness, maternity, disability, and death benefits. Non-compliance leads to penalties. Employees cannot opt out if they are covered under the law. |
What leave are employees entitled to in Philippines?
Annual Leave
There is no statutory minimum for annual leave under the Labor Code. Annual leave is typically set by company policy or a Collective Bargaining Agreement (CBA), and many employers offer five to 15 days of paid annual leave.
Leave entitlements must be included in the contract or employee handbook, and unused leave may be converted to cash at separation depending on company policy.
Service Incentive Leave (SIL): Employees with at least one year of service are entitled to five days of paid SIL each year.
Public Holidays
The Philippines recognizes two types of holidays and typically has around 19 public holidays per year.
The Philippines recognizes two types of holidays and typically has around 19 public holidays per year.
Regular Holidays (12 days): Employees receive 100% pay even if not worked. If they work, they receive 200% pay for the first eight hours
Examples include:
-
New Year’s Day (January 1)
-
Maundy Thursday & Good Friday (dates vary)
-
Independence Day (June 12)
-
National Heroes Day (last Monday of August)
-
Christmas Day (December 25)
-
Rizal Day (December 30)
Special Non-Working Holidays (Seven days): Typically follow the “no work, no pay” rule. If worked, employees receive 130% pay.
Examples include:
-
Ninoy Aquino Day (August 21)
-
All Saints’ Day (November 1)
-
Black Saturday (date varies)
Sick Leave
There is no statutory sick leave requirement in the Labor Code. Sick leave is defined by company policy or a CBA.
Many employers provide five to 15 days of paid sick leave annually.
Maternity Leave
Female employees are entitled to:
-
105 days of paid maternity leave, with an option to extend by 30 days unpaid
-
120 days for solo mothers
Employers pay the benefit upfront, and the SSS reimburses the employer.
To qualify, the employee must have at least three months of SSS contributions in the 12 months before childbirth.
Paternity Leave
Married male employees are entitled to seven days of paid paternity leave for the first four deliveries of their legitimate spouse.
Leave must be used within 60 days of childbirth, and the employer pays the full salary.
Other Types of Leave
-
Solo Parent Leave: Seven days paid leave annually
-
Adoption Leave: 60 days paid leave for a solo parent adopting a child under 10
-
Special Leave for Women: Two months paid leave for gynecological surgery
-
Leave for Victims of Violence Against Women and Children: 10 days paid leave
-
Bereavement Leave: Not mandated by law, but typically three to five days based on company policy
Termination And Offboarding in Philippines
| Type | Possible? |
|---|---|
| Termination for Cause (poor performance, misconduct, etc.) | Yes |
| Termination without Cause | No. Under Philippine labor law, an employer cannot legally terminate an employee without a valid reason. |
| Mutual Termination Agreement (MTA) | Yes |
| Redundancy | Not possible under the EOR setup |
Employee Termination (Resignation)
Notice
Form
Written.
Notice period
Employees must give at least 30 days’ written notice before the intended resignation date (Article 300 of the Labor Code).
Payment in lieu of notice or notice waiver
The employer/employee can waive the 30-day notice and allow an earlier release.
End-of-Service Benefits
Severance/Gratuity
Separation pay is not required if the employee resigns voluntarily.
Other Benefits
- Last salary earned
- Pro-rated 13th month pay
- Any unused leave credits
- Tax refund (if applicable, this is not employer burden)
- Other due benefits (e.g., commissions, incentives)
Termination Documentation
- Employment Certificate
- Payslip
- 2316 (Tax Certificate)
Employer Termination With Cause in the Philippines
Acceptable grounds
Under the Philippine Labor Code, employers may only terminate a permanent (indefinite) employee for “Just Causes” under Article 297 (formerly Article 282). These grounds are strictly defined and cover situations such as:
- Serious misconduct or willful disobedience
- Gross and habitual neglect of duties
- Fraud or willful breach of trust
- Committing a crime or offense against the employer, their family, or authorized representatives
- Other analogous causes recognized under the law
Notice
Unlike resignations or authorized dismissals, termination for just cause does not follow a fixed notice period. Instead, employers must follow the two-notice rule as part of procedural due process:
- First Notice (Notice to Explain): The employer issues a written notice that outlines the allegations and gives the employee a reasonable chance to respond, typically at least five calendar days.
- Second Notice (Notice of Termination): After reviewing the employee’s explanation, the employer issues a final written notice confirming the dismissal and the specific grounds for it.
- Payment in lieu of notice: Garden leave or pay in lieu of notice does not apply to dismissals for just cause.
End-of-Service Benefits
Severance
No separation pay is legally required for dismissals due to just cause.
Employer Termination Without Cause in the Philippines
No. Under Philippine labor law, an employer cannot legally terminate an employee without a valid reason.
Mutual Termination Agreements in the Philippines
MTA is a voluntary agreement signed by both parties (employer and employee) to terminate an employment contract by mutual consent.
Notice
Notice period
Any notice period is acceptable as long as both the employer and the employee agree to it.
End-of-Service Benefits
Severance/Gratuity
Not mandatory.
Other Benefits
- Last salary earned
- Pro-rated 13th month pay
- Any unused leave credits
- Tax refund (if applicable)
- Other due benefits (e.g., commissions, incentives)
Kindly note that MTA is considered voluntary and employees are not entitled to unemployment benefits.
Termination Documentation:
- Employment Certificate
- Payslip
- 2316 (Tax Certificate)
Offboarding Process for the End of Fixed-term Contracts in the Philippines
If the Fixed-Term Contract Ends Normally
Notice
No legal notice requirement is needed if the fixed term contract clearly specifies the end date and the term expires per that date. The contract “terminates on its own” at that date.
End-of-Service Benefits
Severance/Gratuity
Generally no separation pay under Articles 298/299 (formerly 283/284) is required just because a fixed‐term contract expired per schedule.
Other Benefits
Even when the contract ends normally, certain statutory benefits still apply. These include:
- unpaid wages up to the last workday,
- proportionate 13th-month pay,
- mandatory contributions (SSS, PhilHealth, Pag-IBIG)
- conversion of unused leaves, service incentive leave if applicable
If the Employer Terminates Early
Notice
Employers must show a valid cause, either a just cause or an authorized cause, and follow the required due process.
For just cause, this means applying the “twin-notice” rule.
For authorized causes (such as redundancy or installation of labor-saving devices), employers must give the employee and DOLE at least one month’s written notice.
End-of-Service Benefits
Severance/Gratuity
If the early termination is due to an authorized cause, the employee is entitled to separation pay.
- Redundancy or labor-saving devices: at least 1 month pay per year of service or 1 month’s pay (whichever is higher).
- Retrenchment, closure, or disease: at least half-month pay per year of service or one month’s pay (whichever is higher).
Other Benefits
- Illegal dismissal → reinstatement + back wages.
- Damages for breach of contract for the unexpired portion of the fixed term.
- Accrued benefits must still be paid.
- Separation pay must be paid on or before separation.
Final Payment Timing & Immigration and Visa Compliance in the Philippines
DOLE recommends final pay be released within 30 days from the employee’s last working day unless company policy states a shorter period.
Supporting Guides
Frequently Asked Questions
What’s the 13th-month pay and when do I need to pay it?
The 13th-month pay is a mandatory bonus equal to one-twelfth of an employee’s basic annual salary. It must be paid no later than December 24th each year. All rank-and-file employees are entitled to it, regardless of their employment status or method of payment.
Do I need to provide paid annual leave in the Philippines?
There’s no statutory requirement for paid annual leave under the Labor Code. However, employees with at least one year of service are entitled to five days of Service Incentive Leave (SIL) annually. Most employers offer five to 15 days of paid annual leave as company policy.
Can I terminate an employee without cause in the Philippines?
No. Philippine labor law doesn’t allow termination without a valid reason. You can only dismiss employees for “just causes” (misconduct, fraud, negligence) or “authorized causes” (redundancy, retrenchment, business closure), and you must follow strict due-process procedures.
What’s the difference between SSS, PhilHealth, and Pag-IBIG?
SSS (Social Security System) covers retirement, disability, sickness, maternity, and death benefits. PhilHealth provides mandatory health insurance. Pag-IBIG is the housing development fund. All three are mandatory for both local and expat employees, with contributions shared between employer and employee.
How quickly must I pay employees after they leave?
The Department of Labor recommends releasing final pay within 30 days of the employee’s last working day, unless your company policy specifies otherwise. Final pay includes last salary, pro-rated 13th-month pay, unused leave credits, and any other due benefits.
Do public holidays count as paid time off?
For regular holidays (12 days), employees receive 100% pay even if they don’t work. For special non-working holidays (seven days), it’s typically “no work, no pay” unless the employee works that day. If employees work on regular holidays, they receive 200% pay.
