Payroll and Benefits Guide Philippines

Employer

Employer Payroll Contributions

Employee

Employee Payroll Contributions

Employee Income Tax

General

The National Daily Minimum Wage in the Philippines is set per sector/industry, as below.

375 PHP for Non-Agriculture

375 PHP for retail/service employing 11 employees or more

345 PHP for retail/service employing less than 11 employees

345 PHP for Agriculture and Cottage & Handicraft

Payroll Cycle

The payroll cycle in the Philippines is generally monthly, paid on the last working day of the month.

13th Salary

A 13th salary must be paid on or before 24th December and is equivalent to one month’s pay (aguinaldo). Employers may choose to pay half in June and half in December.

Working Week

Monday–Saturday

Paid Time Off

Paid leave is a minimum of 5 working days per year after the completion of 1 year of employment.

If no carryover policy is in place, unused leave should be paid out.

Public Holidays

Public holidays that fall on the weekend are usually lost unless announced otherwise by the Government.

‘Regular Holidays’ are non-working paid days off. ‘Special Holidays’ are non-working unpaid days off, however, if someone works on this day salary must be paid.

Work on regular holidays are subject to additional 100% holiday rate for first 8 hours and additional 260% of hourly rate on overtime work after 8 hours.

For work on Special Non-Working holiday which falls on a weekend, work on this day is subject to 150% overtime rate for first 8 hours and additional 195% of hourly rate on overtime work after 8 hours.

Some religious holidays are determined by the lunar cycle and will show as ‘Tentative’ until they are confirmed nearer the date of the holiday.

Sick Days

There is no legal requirement to provide paid or unpaid sick leave. Workers can use their annual leave days to cover sickness. Many employers will create their own sickness policy above the statutory requirement.

Employees who have made contributions to the Social Security System (SSS) for a minimum of 3 months within the preceding 12 months can claim the equivalent to 90% of their average daily salary in the scenario that they are hospitalized for more than 3 days. Employers will make the initial payment once the employee has used all the paid sick leave allowance and will then be reimbursed by the Social Security System.

Special Leave for Women

Females employees who have at least six months of continuous service is entitled to 2 months leave with full pay for treatment/surgery of gynecological disorders. A medical certification is required for eligibility.

Maternity Leave

Female employees who have completed at least one year of service are entitled to 105 calendar days maternity leave. For single mothers, the entitlement is increased to 120 calendar days leave. If the worker has made at least three monthly contributions to the Social Security System in the 12-month period immediately preceding her childbirth or miscarriage, they will be paid a daily maternity leave benefit equivalent to 100% of the average daily salary. The employer will make the full payment and will be reimbursed by the Social Security System up to a cap of PHP 70,000.

Mothers can also choose to take an additional 30 days of maternity leave without pay.

Paternity Leave

Fathers are entitled to paid paternity leave of 7 calendar days from the child’s date of birth. Payment is made by the employer and reimbursed by the Social Security System.

Parental Leave

Solo parents with at least 1 year of service are entitled to 7 working days per year paid parental leave to care for children under the age of 18.

Domestic Violence Leave

A female employee who falls victim of domestic violence is entitled to paid leaves of up to 10 days paid leave to attend medical and legal concerns.

Termination Process

VISA

Any foreigners coming to work in the Philippines are required by the Bureau of Immigration (BI) to secure a work visa.
Different work visas/permits are available depending on the individual’s circumstances, skills, and work type. The following documentation must be referenced, completed, and returned to the government agencies to fulfill this application.
For a work visa, the following documents need to be completed:

• 9(g) Pre-Arranged Employee Commercial Visa
• 9(g) Pre-Arranged Employee Non-Commercial Visa
• Special Non-Immigrant Visa or 47(A)(2)
• Special Non-Immigrant Visa under EO 226, as amended by RA 8756 (ROHQ)

For work permits:

• Special Work Permit (SWP)
• Provisional Work Permit (PWP)
• Alien Employment Permit (AEP)

General

The Telecommuting Act that which applies to all employers and employees in the private sector that implement a telecommuting program.

The terms and conditions of telecommuting shall not be less than the minimum labor standards, or less than any applicable company policy or practice, individual contract, or collective bargaining agreement.

Telecommuting employees should be treated fairly and afforded the same treatment as employees who work at the regular workplace.

Any facilities or equipment or supplies that are necessary for the completion of work, are considered ordinary and necessary costs for the employer.
The employer should report the implementation of telecommuting arrangements to the DOLE (Department of Labor and Employment ).

General

The standard rate of VAT in the Philippines is 12%.

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