Recruiting Employees in the Philippines
Embracing a remote team brings the advantage of tapping into global talent. The era of being confined to local staffing options is long gone, thanks to technological advancements that connect us with talent worldwide. The Philippines emerges as a popular choice for hiring employees due to its substantial skilled workforce. If you're considering Filipino workers for your team but are unfamiliar with the hiring process, local labor laws, and more, we've compiled a list of FAQs covering almost everything you need to know.
1. Why Choose the Philippines for Hiring?
As one of Southeast Asia's largest economies, the Philippines boasts a robust workforce, primarily comprised of young individuals with a median age of 23. The country's emphasis on education is evident, with a significant portion of Filipinos holding college degrees, particularly in fields such as Business, Education, Engineering, IT, and Agriculture.
Two factors make hiring Filipino workers appealing: competitive wages and English proficiency. The average daily minimum wage ranges from PHP 290 to PHP 537, and with English as the second official language, language barriers are minimal. These factors contribute to the Philippines being a top destination for global talent acquisition.
2. Where to Find Remote Talent in the Philippines?
Referrals are a preferred method for hiring in the Philippines, but if you lack local contacts, various cities like Metro Manila, Cebu, Davao, Cagayan de Oro, and Zamboanga are hotspots for talent. Top universities in these cities enhance English proficiency and educational levels.
3. Minimum Wage in the Philippines
Minimum wage varies by region, with Metro Manila having a minimum wage of PHP 537 ($10.24) per day, and the national average at PHP 343.63 ($6.22) per day.
4. Average Salaries for Filipino Remote Employees
Consider the following average yearly salaries for different positions:
| Job Title | Average Salary Range (PHP) | Average Salary Range (USD) |
|---|---|---|
| Accounting Manager | 83,333 – 166,666 | 1,735 – 3,470 |
| Web/Mobile App Developer | 108,333 – 250,000 | 2,275 – 5,250 |
| Data Scientist | 125,000 – 208,333 | 2,625 – 4,375 |
| Test Analyst | 83,333 – 158,333 | 1,750 – 3,325 |
| Project Manager | 166,667 – 333,333 | 3,500 – 7,000 |
| Sales Manager | 108,333 – 425,000 | 2,275 – 8,925 |
These figures gain context when compared to income groups in the Philippines.
5. Income Tax Computation in the Philippines
The Philippines imposes high corporate (30%) and personal income tax (32%). Freelancers face tax challenges, and after hiring, using Professional Employer Organizations (PEOs) can ensure compliance with local taxation laws.
6. Working Hours in the Philippines
Filipino employees typically work 8 hours a day, five days a week, with mandatory one-hour breaks. Overtime incurs an additional 25% of the hourly pay rate.
7. Statutory Benefits in the Philippines
Mandatory benefits include 13th-month pay, annual/sick leaves, and insurance contributions (SSS, PhilHealth, Pag-Ibig). Specific benefits vary by income group.
8. Additional Benefits and Allowances
While not legally mandated, non-taxable allowances, de minimis benefits, and other perks like stipends for business expenses are common and expected.
9. Regulations on Working During Holidays
Regular Holidays and Special Non-Working Days have different pay rates, with specific rules for working on holidays.
10. Hiring Remote Employees in the Philippines
For businesses registered abroad, using a Professional Employer Organization (PEO) simplifies hiring, ensuring compliance with local laws.
11. Cost of Hiring in the Philippines
Factors contributing to hiring costs include job posts, scrutiny, employer taxes, statutory benefits, fringe benefits, payroll, and salaries.
12. Probation Periods
While not mandatory, if included, probation periods cannot exceed six months.
13. Payment of Filipino Remote Employees
PEOs facilitate easy payroll and compliance. Payments are typically bi-monthly but can be monthly, with salaries usually in the local currency.
14. Payment in Foreign Currencies
While salaries may be based on the U.S. dollar, paying in the local currency is recommended for ease of tax and contribution calculations.
15. Termination of Filipino Remote Employees
Termination depends on the cause, with just causes requiring adherence to specific rules and authorized causes making employees eligible for severance pay. Many employers opt for a lengthy probation period to navigate the termination process effectively.
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