In recent years, China's Ministry of Commerce has supported Chinese enterprises to invest and do business in the Philippines, promoted the synergy between the Belt and Road Initiative and the Philippines' "Build Better, Build More" plan, and expanded new areas of cooperation such as green economy and digital economy. We will work together to promote the construction of "two countries and two parks" and further promote bilateral investment to a new level. When seizing the opportunity to go overseas to the Philippines, Chinese companies should pay attention to cooperation with local talents. Through global employment, Chinese companies can hire local talents, jointly promote economic development and cooperation between the two countries, promote technology transfer and cross-cultural exchanges, and bring common development opportunities to both sides.
The benefits of going overseas to the Philippines
Located in Southeast Asia with Manila as its capital, the Philippines is an important hub in Asia and the Pacific, and its strategic location provides easy access** and business connectivity, making it easier for businesses to enter the Asian market.
The Philippines is made up of more than 7,500 islands, connecting the country's three main islands are Luzon, Visayas and Mindanao. Since the Philippines is a country made up of numerous archipelagos, it is culturally diverse, with more than 150 different languages spoken throughout the country, the main languages being English and Filipino.
During Spanish rule, the Catholic faith was introduced to the country, replacing local religious and cultural traditions. Today, the Philippines is a democratic republic with a population of more than 100 million, making it the 12th most populous country on the planet, half of which is under the age of 25, with professional qualifications and a high level of English proficiency, which makes it easy for multinational companies. The relatively cheap labor force in the Philippines is very attractive to international companies, allowing them to reduce production costs and improve competitiveness.
At the same time, the Philippines** actively promotes foreign investment, providing various incentives and preferential policies to attract foreign investors, allowing 100% foreign ownership in almost all industries. Deregulation of many of the country's top industries to eliminate monopoly structures has opened up unlimited business opportunities for foreign companies.
Recruitment challenges for companies going overseas to the Philippines
In the Philippines, the investment environment is bureaucratic and there can be a series of cumbersome procedures to carry out business activities. According to statistics, there are as many as 16 types of procedures required to start a business in the Philippines, which takes an average of 36 days, while property registration takes 39 days, which may lead to a large number of approval procedures for starting a business, as well as extended waiting times and increased administrative burden.
Paying taxes is also a daunting task in the Philippines, with businesses having to pay up to 47 taxes a year and consuming nearly 200 hours of business hours on average, which will put a high cost burden and time pressure on businesses. Complex tax regimes can lead to uncertainties and compliance risks in terms of tax payments. Businesses may struggle to understand and comply with complex tax regulations, risking tax complications and penalties. Therefore, these factors should be taken into account when deciding to invest in the Philippines. It is important for businesses to familiarize themselves with the local situation in order to minimize risks and make informed decisions.
In the Philippines, you can choose to work with a compliant EOR service provider. The EOR is legally the employee's employer and is responsible for employee employment compliance in the Philippines, including payroll, taxes, statutory benefits, employment contracts, and more.
Hire local staff based on your needs.
Ensure that employees are employed in accordance with local laws.
Competitive benefits options for your team.
Handle local payroll.
File employment-related taxes and statements.
Pay stubs to employees.
Payroll is paid in the local currency.
Mandatory social insurance in the Philippines
Non-mandatory employee benefits in the Philippines
Employment contracts in the Philippines
In the Philippines, most employers will have a written employment agreement in place, which is signed by both the employer and the employee. The parties shall keep their respective copies for the record to clarify the rights, obligations and responsibilities of the parties, as well as working conditions and other important matters. Such an agreement can provide protection for both parties and provide a basis in the event of a dispute over the employment relationship. For example: the employee's salary, benefits, allowances, job duties, working hours and leave policies, contract duration, confidentiality clauses and termination rights, etc. Employment agreements should be developed in accordance with the principles of fairness and reasonableness, protect the rights and interests of employees, and ensure that the rights and responsibilities of employers and employees are balanced.
Probationary period in the Philippines
According to the labor laws of the Philippines, the maximum duration of the probationary period is 6 months, which can be shortened by negotiation between the employer and the employee. Before the end of the probationary period, the employer has the right to decide whether to continue employing the employee. During the probationary period, employees enjoy the same working conditions and rights as regular employees, including compensation, benefits, working hours, vacations, etc., and employees are also expected to comply with the company's rules and policies.
The probationary period must not abuse or violate the employee's rights. During the probationary period, the employer may not discriminate against the employee or deprive him of his or her basic rights. Before the end of the probationary period, the employer usually evaluates the employee's performance, which includes a comprehensive consideration of factors such as job performance, adaptability, ability, etc., and can terminate the employment if the employer believes that the employee has failed to meet the job requirements or the company's expectations. If an employer decides to continue employing an employee, it can negotiate the terms and conditions of a formal employment contract with the employee.
Salary payment forms and cycles in the Philippines
Employers are required to pay wages to employees in accordance with the agreed payment cycle. Typically, the salary payment cycle is bi-weekly or monthly, and the payment cycle should be determined at the time of the establishment of the employment relationship and clearly stated in the employment agreement. Wages can be paid in a variety of ways, including direct deposit, check, or cash payments, among others. Among them, direct deposit is the most common payment method. Employers will often require employees to provide valid bank account information in order to make payroll deposits.
Payslips are an important basis for employees to reconcile paychecks and tax purposes. It is the employer's responsibility to provide the employee with a pay stub detailing all aspects of the salary, including the amount of wages, deductions (such as taxes, insurance premiums, etc.), and the amount actually paid.
Working hours and overtime laws in the Philippines
The maximum working hours and overtime laws in the Philippines are set and administered by the Philippine Department of Labor, and employers must follow the minimum legal standards and conditions when hiring in the Philippines. The standard workweek for full-time employees is Monday through Friday, and the working hours are generally 8 hours per day or 40 hours per week.
According to Philippine labor law, employees can often receive additional overtime pay when they work overtime. Generally, employers cannot require employees to work overtime unless there are certain exemptions and compensation is paid. The employer must state in the contract that the employee agrees to work overtime. Overtime pay is an additional remuneration and the rate for overtime work exceeding 8 hours on a normal working day, special non-working holiday, regular holiday, rest day, or work period from 10 p.m. to 6 a.m. will vary, as detailed below:
Overtime on a regular working day:The increase in overtime pay is 25% (overtime pay = hourly wage * overtime hours * 125%)
Stipulate overtime on rest days:The overtime pay will be increased by 30% (overtime pay = hourly wage * overtime hours * 130%)
Arrange overtime on rest days and at the same time be a special non-working holiday:The increase rate of overtime pay is 95% (overtime pay = hourly wage * overtime hours * 130% * 150%)
Overtime on statutory holidays:The increase rate of overtime pay is 160% (overtime pay = hourly wage * overtime hours * 200% * 130%)
Default Rest Day Overtime:The increase rate of overtime pay is 160% (overtime pay = hourly wage * overtime hours * 200% * 130%)
Overtime on a statutory holiday, which is also a rest day arranged by the employee, and the working hours are from 10 p.m. to 6 a.m.:The proportion of overtime pay is increased to 186% (overtime pay = hourly wage * overtime hours * 200% * 130% * 110%)
Considerations for Filipino Employee Termination
In the Philippines, employers are not allowed to terminate a contract at will outside of the probationary period and must terminate the contract for just cause. An employer can only dismiss an employee if it is reasonable to do so. Termination of employment by mutual means usually involves the following situations: company merger, reorganization, business adjustment, poor condition, closure of operations, serious violations of company rules and regulations, professional ethics or misconduct (fraud and crime), etc.
Employees who have been dismissed for just cause are not entitled to severance pay. On the other hand, termination without cause requires the employer to give advance notice and pay corresponding financial compensation based on the number of years the employee has worked for the company.
If the employer does not provide a notice period, it may be necessary to pay compensation in lieu of the notice period. The dismissal process should be based on the principles of fairness, including giving the employee the opportunity to be heard and heard. Employers should ensure that the dismissal decision does not involve discrimination, retaliation, or illegal acts.
According to the PhilippinesLabor lawprovisions,Employers must give a reasonable notice period when terminating an employee. Generally, the length of the notice period depends on the number of years the employee has been with the company
Employees who have worked for the company for no more than 6 months: at least 1 month's notice.
Employees who have worked for the company for more than 6 months but not more than 1 year: at least 2 months' notice.
Employees who have worked for the company for more than 1 year: at least 3 months' notice.
Pay in lieu of notice: Employers may also choose to pay wages equal to the notice period without actually notifying the employee.
Casual pay is an indemnity paid to an employee when they are terminated, the company goes out of business, or undergoes a reorganization. In the Philippines, severance pay is calculated based on the employee's years of service with the company and base salary, which is as follows:Calculationsstandards
Employees who have been working for less than 1 year: Half a month's salary.
Employees who have been working for more than 1 year but less than 2 years: 1 month's salary.
Employees who have been more than 2 years but less than 3 years: 15 months' salary.
Employees who have been working for more than 3 years but less than 4 years: 2 months' salary.
And so on, with each additional year, it increases by 05 months' salary.
The payment of severance pay shall be made within 30 days of the effective date of the dismissal.
Employee vacation in the Philippines
Public holidays in the Philippines
There are 18 public holidays in the Philippines every year, and public holidays are divided into regular public holidays and special non-working day holidays. As a predominantly Catholic country, the biggest holidays in the Philippines are usually around Easter and Christmas. It is worth noting that the southern region has a large Muslim population, so there are also many important Islamic festivals. Here are the recognized public holidays in the Philippines in 2024:
Work visas and immigration in the Philippines
Various types of visas for the Philippines, including immigrant visas, non-immigrant visas, and special visas. It is important to note that the detailed regulations and requirements for work visas and immigration procedures are very complex, and each visa and immigration category has specific application requirements and procedures and is subject to review by the Philippine Immigration Bureau.
Register company in the Philippines
The Philippines is located as an important transportation hub in Asia, and its convenient geographical location allows companies registered in the Philippines to better connect to the markets of ASEAN countries and the Asia-Pacific region.
The Philippines** offers a variety of preferential policies and incentives for businesses registered in the Philippines to attract foreign investment and promote economic development, including tax breaks, tax incentives, export incentives, and investment protection. There are a variety of company types to choose from in the Philippines, including sole proprietorship, partnership, limited liability company, and shares*** You can choose the right type of company based on your business needs and legal requirements. To set up a company in the Philippines, it is usually necessary to submit registration documents, which include the basic information of the company, such as the company name, registered address, list of shareholders or members, etc.
Once you register your company, your company will become a legal entity with a separate legal status. However, administrative procedures in the Philippines can be relatively cumbersome, including processes such as registration, license application, tax registration, and more. Procedures may require patience and time, and may involve multiple departments and agencies. In addition, the Philippine legal and regulatory system is complex, with various regulations and requirements to be followed. Understanding and complying with the business laws of the Philippines is a challenge for foreign businesses and investors.
In a thriving country full of opportunities, businesses can achieve the goals of globalization and achieve stable growth and sustainable development. At the same time, however, expanding into a market can also be subject to cumbersome payroll tax administration processes and complex local legal requirements.
To optimize your business management processes, you can choose to work with a high-quality global HR and payroll compliance service provider. With its advanced technology and automation tools, it helps you improve the efficiency of your business and reduce the time and cost of human resource management. As a result, we can focus more on business development and market development, and achieve greater success.