Salary Hosting in the Philippines at a glance
Regular work hours are 40 hours a week, Monday to Friday, typically 9AM to 6PM, with one hour lunch break. Night shift is common for certain professions. However, night work hours (between 10PM and 5AM) are usually paid 10 to 20% higher. For operational reasons, it is possible to decide an 2 rest days a week other than Saturday and Sunday, without any additional cost. Overtime is counted for hours in excess of 8 hours a day or 40 hours a week. Overtime laws can be quite complex and we suggest you contact us for more information.
National holidays are listed on the Philippines Government website. It is common for the government to decide on additional Holidays. Depending on the nature of the Holidays (regular, special non working, local, etc), businesses may or may not have to pay special rate to their employees. In addition, employees have a yearly accrued credit of Vacation Leave and Sick Leave. The amount of Vacation Leave and Sick Leave varies per industry, but employment laws specify minimum amounts to be followed. Holidays and overtime / holiday rate can be quite complex, so we advise you to contact us for more details.
Employees, foreigners of Filipino, are subject to income tax on their earnings. The Filipino tax code has a number of similarities with the US tax system. Therefore, employers perform tax withholding on the employee’s salary. Then, withheld taxes are remitted to the Bureau of Internal Revenue. Income Tax and Corporate tax rates are high in the Philippines. Since 2019, the TRAIN law aims to harmonize, simply and lower tax withholding for employees. Tax brackets vary per income level or per type of employment status (contractor, full time employee, etc), and can be quite complex. Please contact us for more information.
Full time employees and their employer participate in mandatory social contributions. The main contributions are the Philippines Social Security System, the Philippines Health Insurance Corporation (PhilHealth), and the Philippines Housing Fund (Pag-iBig). The law requires both Filipino and foreign employees working in the Philippines to contribute to these funds. Therefore, the employer is responsible for collecting the contributions and to remit them on a monthly basis, on behalf of the employee.
Employment in the Philippines can have many status, but the two common statuses are Contractual (fixed time contract) and Full Time Employee (regular employment). Usually, full Time Employee have a legal probationary period of up to 180 days upon start of employment. Then, employees are deemed regular afterwards. Depending on the employment agreement, company benefits may start on day 1 or after the probationary period.
Usually, salaries in the Philippines are released in two monthly payments, on the 15th and the 30th. In addition, full time employees typically have a 13th month pay on top of the regular 12 months pay. Furthermore, the 13th month is pro-rated when employees join or leave a company during the year, and needs to be paid in full before Christmas. Computation of salaries, taxes and other benefits can be difficult when combined with attendance, leave policies etc. In our Wage Hosting offering for Philippines, our payroll service takes care of these issues.