Payroll and Benefits Guide Philippines
Last updated: May 02, 2023
Contributions
Employer
Employer Payroll Contributions
|
9.50% |
Social Security System (SSS) (maximum contribution 2,155 PHP) |
|
2.00% |
Philippine Health Insurance Corporation (PHIC) (salary ceiling 80,000 PHP PHP) |
|
2.00% |
Home Development Mutual Fund (HDMF) (Pag-ibig) |
|
425 PHP per month |
Provident Fund (WISP) |
|
13.50% + 425 PHP |
Total Employment Cost |
Employee
Employee Payroll Contributions
|
4.50% |
Social Security System (maximum contribution 1,250 PHP) |
|
1.00% – Below 1,500 PHP |
Home Development Mutual Fund (HDMF) (Pag-ibig) |
|
2.00% – Above 1,500 PHP |
Home Development Mutual Fund (HDMF) (Pag-ibig) |
|
2.00% |
Philippine Health Insurance Corporation (PHIC) |
|
225 PHP per month |
Provident Fund (WISP) |
|
Up to 9.50%+225 PHP |
Total Employee Cost |
Employee Income Tax
| 0.0% | up to 250,000 PHP |
| 15.0% of the excess over 250,000PHP | 250,000 PHP – 400,000 PHP |
| 22,500PHP+ 20% of the excess over 400,000PHP | 400,000 PHP – 800,000 PHP |
| 102,500PHP+25% of the excess over 800,000PHP | 800,000 PHP – 2,000,000 PHP |
| 402,500 PHP + 30% of the excess over 2 million PHP | 2,000,000 PHP – 8,000,000 PHP |
| 2,202,500 PHP+ 35% of the excess over 8 million PHP | 8,000,000 PHP and over |
Employer taxes
Employee taxes
Minimum Wage
General
The National 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
MINIMUM WAGE (PER MONTH)
Payroll
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 Hours
General
A standard work day is 8 hours, across 5 or 6 days per week.
Overtime
Hours in excess of the regular workweek are considered overtime and are regulated by the employment contract or collective agreements. In general, overtime is paid at the rate of 125% of the regular pay. On regular holidays, double salary must be given. On special holidays, a minimum of 30% additional pay must be given. There is no limit to overtime hours.
Senior managers are excluded from overtime pay.
Working Week
Monday–Saturday
Leave
Paid Time Off
Paid leave in the Philippines is outlined in the employment contract as a minimum of 5 days paid leave a year after the completion of 1 year of employment. This leave can be used as holidays or sick days.
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
Sick leave allowance falls under paid annual leave.
Maternity Leave
Female employees who have completed at least one years of employment are entitled to a yearly service incentive of 5 days paid leave which they may use towards maternity leave. In addition, the employee is entitled to 105 days paid maternity leave after the due date. For single mothers, the entitlement is increased to 120 days.
The maternity benefit is paid to the employee at the rate of 100% of the regular pay by the employer and is reimbursed to them through social security.
Paternity Leave
The father is entitled to mandatory paid paternity leave of 7 days from the child’s date of birth.
Parental Leave
Additional parental leave in the Philippines consists of 7 days for single parent leave and 10 days for women and their children who are victims of violence.
Termination
Termination Process
Terminating employment is possible for ‘just’ or ‘authorized’ causes as set out in the Labour Law and providing the correct legal procedure is followed. The burden is on the employer to prove the lawfulness of the employee’s dismissal in the proper forum.
‘Just’ causes include serious misconduct, willful disobedience, gross and habitual neglect of duties, fraud or willful breach of trust and commission of a crime.
‘Authorized’ causes are of two types – business reasons and health (diseases of a long term nature). The business reasons are installation of labor-saving devices, redundancy, retrenchment and closure or cessation of operation.
Where dismissal is based on a ‘just’ cause, the employer must give the employee two written notices and a hearing or opportunity to be heard before terminating the employment. Where dismissal is based on ‘authorized’ causes the employer must give the employee and the Department of Labour and Employment written notices 30 days prior to the effectivity of the separation.
The BIR 2316 form (Withholding Tax reporting of the employee) is a compulsory tax form that must be completed upon termination before final payment is released to the worker. Requirements for other documents, such as Quitclaim and resignation letters, can vary according to the specific policies and set up.
Notice Period
A minimum of 30 days’ notice period is required by law.
Severance Pay
Severance pay is applicable if the employer initiated the termination for ‘authorized’ causes and is equal to 1 months’ pay for every year of employment.
Probation Period
The probation period in the Philippines for definite employees is 6 months. Once the probation period is completed the employment contract becomes permanent.
VISA
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)
Remote Working
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 ).
VAT
General
The standard rate of VAT in the Philippines is 12%.
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Payroll and Benefits Guide
in Philippines
What’s covered in this guide:
- Employer/employee contributions
- Minimum wage
- Working hours
- Visa requirements
And more...
Public Holidays Calendar
| Day | Date | Holiday | Notes |
|---|---|---|---|
| Saturday | Jan-1 | New Year's Day | |
| Friday | Feb-24 | EDSA People Power Revolution Holiday | |
| Saturday | Feb-25 | EDSA People Power Revolution | Special Non-working Holiday |
| Thursday | Apr-6 | Maundy Thursday | |
| Friday | Apr-7 | Good Friday | |
| Saturday | Apr-8 | Black Saturday | Special Non-working Holiday |
| Sunday | Apr-9 | Day Of Valor | |
| Saturday | Apr-22 | Eid Al-Fitr | |
| Monday | May-1 | Labour Day | |
| Monday | Jun-12 | Independence Day | |
| Thursday | Jun-29 | Eidul Adha | Tentative |
| Monday | Aug-21 | Ninoy Aquino Day | Special Non-working Holiday |
| Monday | Aug-28 | National Hero's Day | |
| Wednesday | Nov-1 | All Saints Day | Special Non-working Holiday |
| Thursday | Nov-2 | All Soul’s Day | Special Non-working Holiday |
| Thursday | Nov-30 | Andres Bonifacio Day | |
| Friday | Dec-8 | Feast of Immaculate Conception of Mary | Special Non-working Holiday |
| Monday | Dec-25 | Christmas Day | |
| Saturday | Dec-30 | Jose Rizal Day | |
| Sunday | Dec-31 | Last Day of the Year | Special Non-working Holiday |
What does the law say about employment contracts? Are they required?
Hi, good question. In the Philippines, there are no provisions in the law regarding the necessity to provide a written contract to prove that a person is employed at a specific company. That being said, we highly recommend written employment contracts as to avoid any conflict.
How long does a employee has to be in a company to have the February pay out?
Please specify which payout you are referring to. There are 13 and 14 salaries but these are paid in June and December.
Is salary sacrifice possible in the Philippines? (for additional benefits for example)
Technically there is no reason salary sacrifice can’t be done but it will depend on the company set up or policy.
ok thank you
I have question regarding the Employment Income Tax, are the amount stated in range, i.e. upto ₱250,000, in monthly income? Or are these in Annual? Thanks
Numbers are based on annual income.