Hiring in Philippines

The Philippines' employment framework is built around the Labor Code of the Philippines (Presidential Decree No. 442), along with a web of Department of Labor and Employment (DOLE) orders and special laws. The Labor Code covers everything from hiring and working conditions to termination and benefits. One of the most important things to understand is that Philippine labor law is heavily pro-employee, and the DOLE and National Labor Relations Commission (NLRC) tend to rule in favor of workers when disputes arise. This makes compliant employment practices especially important for foreign companies hiring Filipino workers.

Termination in the Philippines follows strict rules under Articles 297-299 of the Labor Code. There are two categories: just causes (serious misconduct, willful disobedience, gross negligence, fraud, crime against the employer) and authorized causes (redundancy, retrenchment, closure, disease). For just cause terminations, employers must follow a two-notice rule: a first written notice specifying the grounds, a hearing or opportunity to respond, and a second written notice communicating the decision. For authorized cause terminations, employers must give 30 days written notice to both the employee and DOLE. Separation pay is required for authorized cause terminations: 1 month pay or 1 month per year of service for redundancy and closure not due to losses, and half a month per year of service for retrenchment and disease. No separation pay is required for valid just cause dismissals.

Leave entitlements start with the Service Incentive Leave (SIL) of 5 paid days per year for employees who have worked at least 1 year, under Article 95 of the Labor Code. Beyond that, Republic Act 11210 (the Expanded Maternity Leave Law) provides 105 days of paid maternity leave for all female workers, with an option to extend by 30 unpaid days. Solo mothers get an additional 15 days. Paternity leave under RA 8187 gives married fathers 7 days of paid leave for the first four deliveries. The Solo Parents Welfare Act (RA 8972) provides 7 additional days of parental leave. The Special Leave for Women (RA 9710) grants 60 days of paid leave for gynecological surgery. There is no statutory minimum for annual vacation beyond the 5-day SIL, though many employers offer 15 vacation days and 15 sick days as standard practice.

The Philippines has two types of holidays: regular holidays and special non-working days. In 2026, there are 12 regular holidays (including New Year's Day, Maundy Thursday, Good Friday, Araw ng Kagitingan, Labor Day, Independence Day, National Heroes Day, Bonifacio Day, Christmas Day, and Rizal Day) and roughly 8 special non-working days (including Ninoy Aquino Day, All Saints Day, and additional days declared annually). Employees who work on a regular holiday earn 200% of their daily rate. Those who work on a special non-working day earn 130% of their daily rate if they reported, or nothing extra if they did not (the no work, no pay principle applies to special non-working days only).

Payroll in the Philippines involves several mandatory contributions. The Social Security System (SSS) uses a table of salary brackets, with the combined contribution rate at 14% of the monthly salary credit (employer pays 9.5%, employee pays 4.5%) as of 2025. PhilHealth (national health insurance) contributions are set at 5% of basic salary, split equally between employer and employee, with a monthly salary floor of PHP 10,000 and ceiling of PHP 100,000. The Home Development Mutual Fund (Pag-IBIG) requires a standard contribution of PHP 200 per month total (PHP 100 from each side) for salaries over PHP 1,500, with an optional higher contribution up to PHP 5,000 per month. Withholding tax follows a progressive schedule from 0% on income up to PHP 250,000 annually, scaling to 15%, 20%, 25%, 30%, and 35% on income over PHP 8,000,000 under the TRAIN law (RA 10963).

The 13th month pay is one of the most important mandatory benefits in the Philippines, required under Presidential Decree No. 851. Every rank-and-file employee who has worked at least 1 month during the calendar year must receive 13th month pay, calculated as total basic salary earned during the year divided by 12. It must be paid on or before December 24 each year. The first PHP 90,000 of 13th month pay and other bonuses combined is tax-exempt. Overtime pay is 125% of the hourly rate for work beyond the standard 8-hour workday, increasing to 130% for overtime on rest days or special non-working days, and higher on regular holidays. Night shift differential (10 PM to 6 AM) adds 10% to the regular wage.