Payroll Information

The payroll system in the Philippines is regulated by a comprehensive set of laws and regulations, which are designed to protect the rights of employees and ensure fair employment practices.

‍

Payroll Cycle

The payroll cycle in the Philippines typically runs on a monthly basis, with salaries being paid at the end of each month. In addition to the regular salary, employees are entitled to receive a 13th-month pay, which is equivalent to 1 month's salary, and is typically paid out in December.

‍

Employment Law

Employment in the Philippines is governed by the Labor Code of the Philippines, which provides a comprehensive framework for labor and employment practices. The Code sets out the minimum standards for wages, hours of work, overtime pay, and other employment benefits. It also includes provisions for employment termination, employee rights, and employer obligations.

‍

Employment Contract

Employment contracts in the Philippines are typically for an indefinite period, with probationary periods ranging from 3 to 6 months. The contract should specify the terms and conditions of employment, including the job title, duties, compensation, benefits, working hours, and leave entitlements. Employers are required to provide a written contract to employees within the first month of employment.

In addition to the employment contract, employers are required to provide their employees with a detailed pay slip, which outlines the employee's gross pay, deductions, and net pay. The pay slip should also include details of any taxes, social security contributions, and other deductions.

Employers in the Philippines are also required to contribute to the social security system, which provides retirement, disability, and other benefits to employees. The contributions are based on the employee's salary and are deducted from the employee's pay.

‍

Probation Period / Trial Period

The probationary period in the Philippines typically lasts for 6 months, although it can be shorter or longer depending on the agreement between the employer and the employee. During this period, either party may terminate the employment contract without notice or pay in lieu of notice.

‍

Working Hours

The standard working hours in the Philippines are 8 hours per day, 5 days per week. Employers may require employees to work up to 48 hours per week, with any additional hours considered overtime. In certain industries, such as healthcare and transportation, employees may be required to work longer hours.

‍

Overtime

Employees who work beyond their regular working hours are entitled to receive overtime pay, which is typically 125% of their regular hourly rate. If the overtime work is done on a rest day or holiday, the employee is entitled to receive a higher rate, typically 150% or 200% of their regular hourly rate.

‍

Bonus

In addition to the 13th-month pay, employers in the Philippines may also provide bonuses to their employees, typically at the end of the year. The bonus amount is usually a percentage of the employee's annual salary and is often based on the company's performance.

‍

Termination

Employment contracts in the Philippines can be terminated by either the employer or the employee. Termination may be initiated by the employer for valid reasons, such as redundancy or poor performance. Employees may terminate their employment for personal reasons or due to a breach of the employment contract by the employer.

‍

Notice Period

Employment contracts in the Philippines typically require a notice period before termination. The notice period is usually 30 days for employees who have worked for less than a year and up to 90 days for employees who have worked for more than 6 years. Employers may also opt to provide pay in lieu of notice.

‍

Redundancy / Severance Pay

Employers in the Philippines may need to implement redundancy measures due to business restructuring, downsizing, or closure. In such cases, employees are entitled to receive a redundancy pay, which is typically equivalent to 1 month's salary for every year of service. Employers are also required to provide advance notice of the redundancy and to follow a fair and transparent process in selecting employees for redundancy.

‍

Maternity Leaves

Female employees in the Philippines are entitled to a maternity leave of 105 days with full pay. This includes 60 days of paid leave provided by the employer and 45 days of paid leave provided by the Social Security System (SSS). The maternity leave can be availed of by the employee before or after giving birth, but it cannot be divided into multiple periods.

‍

Paternity Leaves

Male employees in the Philippines are entitled to a paternity leave of 7 days with full pay for the first four deliveries of their legitimate spouse. The leave can be availed of within 60 days from the date of delivery.

‍

Parental Leaves

The Philippines does not currently have a specific parental leave entitlement for both parents.

‍

Vacation and Annual Leaves

Employees in the Philippines are entitled to a minimum of 5 days of annual leave after one year of service. The number of days of annual leave increases with the length of service. Employees who have worked for more than 10 years are entitled to 15 days of annual leave per year.

‍

Sick Leaves

Employees in the Philippines are entitled to 5 days of paid sick leave per year. If an employee is hospitalized, the employer is required to provide additional sick leave for the duration of the hospitalization, up to a maximum of 120 days per year.

‍

Other Leaves

Other types of leave that employees in the Philippines may be entitled to include bereavement leave, study leave, and special leave for certain circumstances such as domestic violence.

‍

Other Benefits

Employers in the Philippines may provide other benefits to their employees, such as health insurance, life insurance, retirement benefits, and education assistance. These benefits are not mandated by law but may be provided as part of the employer's compensation package. Additionally, employees who have worked for at least 1 year are entitled to a service incentive leave of 5 days with pay.

‍

Holidays

There are 14 public holidays in the Philippines, which are observed nationwide. These include New Year's Day, Good Friday, Labor Day, Independence Day, Christmas Day, and other significant cultural and religious holidays.

‍

Taxation

Taxation in the Philippines involves both national and local taxes. The Bureau of Internal Revenue (BIR) is the agency responsible for collecting national taxes, while local governments collect local taxes. Here is an overview of the main taxes that individuals in the Philippines are subject to:

‍

Personal Income Tax

The personal income tax in the Philippines is a graduated tax system, with rates ranging from 0% to 35%. The tax rates are as follows:

• Income of up to PHP 250,000: 0%
• Income above PHP 250,000 up to PHP 400,000: 15%
• Income above PHP 400,000 up to PHP 800,000: 20%
• Income above PHP 800,000 up to PHP 2,000,000: 25%
• Income above PHP 2,000,000 up to PHP 8,000,000: 30%
• Income above PHP 8,000,000: 35%

In addition to the above rates, there is a 5% tax on gross income earned by self-employed individuals and professionals, and a 25% final tax on certain passive income.

‍

Social Security

The Social Security System (SSS) is a government agency that provides social security benefits to employees in the Philippines. Both employers and employees are required to contribute to the SSS. The contribution rate is 13% of the employee's monthly salary, up to a maximum of PHP 20,000 per month. The employer is required to match the employee's contribution. The SSS provides benefits such as sickness, maternity, disability, and retirement benefits, among others.

‍

‍

Visas and Foreign Worker

General Information

A work visa in the Philippines is a type of visa that allows foreign nationals to legally work in the country.

Here are some general information about work visas in the Philippines:

‍

Visa Types

There are several types of work visas available in the Philippines, including 9G visas for pre-arranged employment, 47(A)(2) visas for executives and managers of multinational companies, and Special Work Permits (SWP) for short-term or project-based work.

‍

Application Process

The application process for a work visa in the Philippines usually involves the following steps:

• The employer in the Philippines applies for a work permit on behalf of the foreign employee at the Department of Labor and Employment (DOLE).
• The employer obtains a Certificate of No Objection (CNO) from the DOLE, which certifies that there are no available Filipino workers who are qualified and willing to fill the job position.
• The employee applies for a work visa at the Philippine embassy or consulate in their home country or country of residence.
• The employee provides supporting documents, such as a valid passport, medical certificate, police clearance, and employment contract.
• The embassy or consulate reviews the application and issues the work visa if approved.

‍

Requirements

The requirements for a work visa in the Philippines may vary depending on the type of visa and the specific job position, but generally include:

• A valid passport with at least 6 months validity
• A medical certificate showing the applicant is fit to work
• A police clearance certificate showing the applicant has no criminal record
• An employment contract or job offer letter from a Philippine-based employer
• A Certificate of No Objection (CNO) from the DOLE
• Payment of visa application fees

‍

Validity and Renewal

The validity of a work visa in the Philippines depends on the type of visa and the specific job position, but usually ranges from 1 year to 3 years. The visa can be renewed before it expires by filing an application with the Philippine Bureau of Immigration.

‍

Restrictions

Holders of work visas in the Philippines are only allowed to work for the employer specified in their visa and in the job position specified in their employment contract. They are also required to obtain an Alien Employment Permit (AEP) from the DOLE before they can start working in the country.

‍

It's important to note that immigration policies and requirements may change over time, so individuals are advised to check with the relevant government agencies or consult with an immigration lawyer for the latest information on work visas in the Philippines.

‍