Here’s How to Hire Employees in the Philippines
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Wondering how to hire employees in the Philippines? Accessing global talent is easier than ever, thanks to technology. Gone are the days of being confined to local hiring; now, you can tap into skilled professionals worldwide.
“With thriving industries in manufacturing, agribusiness, and services, the country offers a rich pool of talent. Known for its outsourcing prowess and a young, English-speaking workforce, the Philippines is a top choice for companies looking to expand globally,” said Ruffy Galang, CEO and Co-Founder Remote Employee.
In this blog post, we’ll cover your options for hiring from the Philippines, some routes you can take to do so, and general best practices to keep in mind.
Can Overseas Companies Hire in the Philippines?
Absolutely! You can hire in the Philippines by either establishing a legal entity or partnering with an Employer of Record (EOR).
- Partner with an EOR: Simplify hiring by partnering with an EOR to handle compliance and payroll.
- Set up a legal entity: Establish your own business presence in the Philippines for full control over your hiring process. Though this route is legally detailed and can be a challenge.
Note: Hiring local contractors can be risky and limits your growth potential. We recommend choosing the secure, scalable way to expand your team.
Wondering how to hire employees in the Philippines directly? You’ll have to set up a legal entity, as mentioned above.If you choose this route, keep in mind you’ll likely be facing the following:
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How to Hire Employees in the Philippines
Before answering this question, we need to get into the details of employee classification for this context.
Misclassifying employees can lead to millions of PHP in back taxes and hurt your company’s reputation. It also deprives workers of essential benefits like minimum wage, overtime pay, and employment insurance.
Here’s the difference:
- Employees work for an employer and receive wages or remuneration. They are entitled to statutory benefits like retirement, sick leave, vacation pay, holiday pay, unemployment insurance, health insurance, parental leave, and 13th-month pay.
- Contractors provide services independently and are not entitled to employee benefits. They include self-employed individuals, consultants, and freelancers.
Here are a few ways you can take on hiring in the Philippines.
Work With an EOR
Partnering with an Employer of Record (EOR) offers a quick and efficient way to grow your team without the complexities of setting up your own entity.
The EOR acts as the legal employer, handling all compliance aspects, so you don’t have to worry about local laws. They manage payroll, contracts, benefits, taxes, and employee onboarding, ensuring full compliance with Philippine regulations. Plus, they already have facilities and the recruiting process already set up. This all makes hiring Filipino workers a breeze.
By taking care of administrative tasks, an EOR allows you to concentrate on scaling your business. Enjoy hassle-free compliance as the EOR navigates the complexities of local laws, ensuring everything is up to standard. Quickly integrate new hires without the administrative burden, and save on the high costs and lengthy process of establishing a legal entity.
How to Choose an EOR to Hire in the Philippines
Geographical Coverage
Make sure the EOR operates in the Philippines and any other countries where you plan to expand. This is critical for your global hiring strategy.
Data Security
Confirm the EOR’s data protection measures. They must have secure technology to protect your sensitive information from potential breaches.
Data protection should include:
- Compliance with regulations in relevant countries
- Secure infrastructure
- 24/7 monitoring
- Personnel vetted by experts
Hands-On Solutions
Look for an EOR that takes on tasks like onboarding, benefits enrollment, and payroll management. Automation can save time and reduce administrative workload.
Support and Expertise
Make sure the EOR provides accessible, knowledgeable support staff who are experts in Philippine regulations. This is vital for navigating local employment laws and ensuring compliance.
Local Entity
Is your EOR of choice established as a local entity? This way, you’ll have better data security and better treatment of your team members from the EOR side. You’re working together to get you more team members, not working with a third party that can increase your fees unexpectedly.
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How to Hire Contractors Based in the Philippines
For this option, there are several things you need to keep in mind.
Familiarize yourself with the Department of Labor and Employment’s (DOLE) Department Order No. 174, series of 2017. This regulation ensures compliance and provides additional insights to hiring in the Philippines.
Decide if you need to report to the IRS or withhold taxes on payments to contractors. Typically, hiring a contractor doesn’t add extra tax obligations, but it’s essential to verify. Make sure your contractors fill out IRS Form W-8BEN to protect against false information and ensure you aren’t held liable for inaccuracies.
Contractors in the Philippines must register with the Bureau of Internal Revenue (BIR) and comply with local tax regulations. Understanding these requirements helps avoid legal issues and delays. Create a detailed contract outlining the scope of work, payment terms, and compliance with local laws. Seeking legal advice can ensure your contract is legally binding.
Source: BusinessWorld
How You Can Set Up a Legal Entity in the Philippines
If you choose this route, here’s a brief overview of the steps you need to take.
To establish a business, you need to register with the Philippine Securities and Exchange Commission (SEC) for corporations or the Department of Trade and Industry (DTI) for sole proprietorships. Additionally, registration with the Bureau of Internal Revenue (BIR) is necessary for tax purposes.
Next, obtain clearance from the barangay, the local district administrative body, by providing your SEC Certificate of Registration, two valid IDs, and proof of your company’s local address.
After that, secure a business permit from the local municipality by submitting your SEC Certificate, Barangay Clearance, two IDs, and proof of address. This permit allows you to operate legally within the municipality.
Furthermore, you’ll have to:
- Register your company with the Bureau of Internal Revenue (BIR) to obtain a Taxpayer Identification Number (TIN)
- Complete BIR Form 1903 and provide your SEC Certificate, Barangay Clearance, Mayor’s Permit, proof of address, and valid IDs
- Register your business with the Social Security System (SSS), Philippine Health Insurance Corporation (PhilHealth), and Home Development Mutual Fund (HDMF or Pag-IBIG Fund)
Once registered, you can fully engage in hiring, adhering to local employment laws. Setting up your business in the Philippines enables you to tap into a skilled workforce.
Ready to Hire Staff in the Philippines? Working With an EOR Has Never Been Easier
Expanding your team in the Philippines doesn’t have to be complex or costly. With Remote Employee as your Employer of Record (EOR), you can simplify the entire process.
We handle compliance, payroll, contracts, and onboarding, ensuring full compliance with Philippine regulations.
Work with us and enjoy:
- Seamless integration: Quickly and efficiently integrate new hires into your team without administrative headaches.
- Data security: Protect your sensitive information with our robust security measures.
- Expert support: Rely on our knowledgeable support to answer all of your questions about hiring with us.
Transform your hiring process and focus on growing your business.
Author Bio: Ruffy Galang
CEO and Co-Founder, Remote Employee