Employment and labor laws vary from country to country. This guide is intended to provide the most up to date information available. We will update this guide as needed when changes are made to the laws.
Employment Contracts
Employers are legally required to provide formal written contracts for all employees that include salary/wage, termination terms, job title, etc. The contracts must be written in Filipino and use the Philippine Peso currency (PHP).
Working Hours
A standard work day is 8 hours, across 5 or 6 days per week.
Overtime
Hours in excess of the regular workweek are considered overtime and are regulated by the employment contract or collective agreements. In general, overtime is paid at the rate of 125% of the regular pay. On regular holidays, double salary must be given. On special holidays, a minimum of 30% additional pay must be given. There is no limit to overtime hours.
Senior managers are excluded from overtime pay.
Public Holidays
If a regular holiday falls on a Sunday in the Philippines, the holiday will be observed on the following Monday.
‘Regular Holidays’ are non-working paid days off. ‘Special Holidays’ are non-working unpaid days off, however, if someone works on this day salary must be paid. Work on regular holidays is subject to an additional 100% holiday rate for the first 8 hours and an additional 260% of hourly rate on overtime work after 8 hours.
For work on a Special Non-Working holiday which falls on a weekend, work on this day is subject to 150% overtime rate for the first 8 hours and an additional 195% of hourly rate on overtime work after 8 hours.
Some religious holidays are determined by the lunar cycle and will show as ‘Tentative’ until they are confirmed nearer the date of the holiday.
- Jan 1 – Monday: New Year’s Day (Regular Holiday)
- Feb 9 – Friday: Chinese New Year (Special Non-working Holiday)
- Feb 10 – Saturday: Chinese New Year (Special Non-working Holiday)
- Mar 28 – Thursday: Maundy Thursday (Regular Holiday)
- Mar 29 – Friday: Good Friday (Regular Holiday)
- Mar 30 – Saturday: Black Saturday (Special Non-working Holiday)
- Apr 9 – Tuesday: Day Of Valor (Regular Holiday)
- Apr 10 – Saturday: Eid Al-Fitr (Tentative Regular Holiday)
- May 1 – Wednesday: Labour Day (Regular Holiday)
- Jun 12 – Wednesday: Independence Day (Regular Holiday)
- Jun 16 – Sunday: Eid Al-Adha (Tentative Regular Holiday)
- Aug 21 – Wednesday: Ninoy Aquino Day (Special Non-working Holiday)
- Aug 26 – Monday: National Heroes Day (Regular Holiday)
- Nov 1 – Friday: All Saints Day (Special Non-working Holiday)
- Nov 2 – Saturday: All Soul’s Day (Special Non-working Holiday)
- Nov 30 – Saturday: Andres Bonifacio Day (Regular Holiday)
- Dec 8 – Sunday: Feast of the Immaculate Conception of Mary (Special Non-working Holiday)
- Dec 24 – Tuesday: Eve of Christmas Day (Special Non-working Holiday)
- Dec 25 – Wednesday: Christmas Day (Regular Holiday)
- Dec 30 – Monday: Jose Rizal Day (Regular Holiday)
- Dec 31 – Tuesday: Last Day of the Year (Special Non-working Holiday)
Annual Leave (vacation)
Paid leave is a minimum of 5 working days per year after the completion of 1 year of employment.
If leave is not taken within the year, the employer can pay out unused leave.
Sick Days
There is no legal requirement to provide paid or unpaid sick leave. Workers can use their annual leave days to cover sickness. Many employers will create their own sickness policy above the statutory requirement.
Employees who have made contributions to the Social Security System (SSS) for a minimum of 3 months within the preceding 12 months can claim the equivalent to 90% of their average daily salary in the scenario that they are hospitalized for more than 3 days. Employers will make the initial payment once the employee has used all the paid sick leave allowance and will then be reimbursed by the Social Security System.
Maternity and Paternity
Special Leave for Women
Females employees who have at least six months of continuous service are entitled to 2 months leave with full pay for treatment/surgery of gynecological disorders. A medical certification is required for eligibility.
Maternity Leave
Female employees who have completed at least one year of service are entitled to 105 calendar days maternity leave. For single mothers, the entitlement is increased to 120 calendar days leave. If the worker has made at least three monthly contributions to the Social Security System in the 12-month period immediately preceding her childbirth or miscarriage, they will be paid a daily maternity leave benefit equivalent to 100% of the average daily salary. The employer will make the full payment and will be reimbursed by the Social Security System up to a cap of PHP 70,000.
Mothers can also choose to take an additional 30 days of maternity leave without pay.
Workers should inform their employer of pregnancy and expected due date at least 30 days before the intended date of leave. A medical certificate should also be provided to support the leave application.
Paternity Leave
Fathers who are married to the mother are entitled to paid paternity leave of 7 calendar days from the child’s date of birth. Payment is made by the employer and reimbursed by the Social Security System.
Additionally, the mother can choose to allocate up to 7 days of her paid maternity leave benefit to the child’s father, regardless of whether they are married or not.
Paternal Leave
Solo parents with at least 1 year of service are entitled to 7 working days per year paid parental leave to care for children under the age of 18.
Domestic Violence Leave
A female employee who falls victim of domestic violence is entitled to paid leaves of up to 10 days paid leave to attend medical and legal concerns.
Employee Severance and Terminations
Termination Process
Terminating employment is possible for ‘just’ or ‘authorized’ causes as set out in the Labour Law and providing the correct legal procedure is followed. The burden is on the employer to prove the lawfulness of the employee’s dismissal in the proper forum.
‘Just’ causes include serious misconduct, willful disobedience, gross and habitual neglect of duties, fraud or willful breach of trust and commission of a crime.
‘Authorized’ causes are of two types – business reasons and health (diseases of a long term nature). The business reasons are installation of labor-saving devices, redundancy, retrenchment and closure or cessation of operation.
Where dismissal is based on a ‘just’ cause, the employer must give the employee two written notices and a hearing or opportunity to be heard before terminating the employment. Where dismissal is based on ‘authorized’ causes the employer must give the employee and the Department of Labour and Employment written notices 30 days prior to the effectivity of the separation.
The BIR 2316 form (Withholding Tax reporting of the employee) is a compulsory tax form that must be completed upon termination before final payment is released to the worker. Requirements for other documents, such as Quitclaim and resignation letters, can vary according to the specific policies and set up.
Notice Period
A minimum of 30 days’ notice period is required by law, to be provided in writing.
Severance Pay
Severance pay is applicable if the employer initiated the termination for ‘authorized’ causes and is equal to 1 months’ pay for every year of employment.
Probation Period
The probation period in the Philippines for definite employees is 6 months. Once the probation period is completed the employment contract becomes permanent.
Payroll Cycle
The payroll cycle in the Philippines is generally monthly, paid on the last working day of the month.
13th Salary
A 13th salary must be paid on or before 24th December and is equivalent to one month’s pay (aguinaldo). Employers may choose to pay half in June and half in December.
The National Minimum Wage in the Philippines is set per sector/industry, as below.
- 375 PHP for Non-Agriculture
- 375 PHP for retail/service employing 11 employees or more
- 345 PHP for retail/service employing less than 11 employees
- 345 PHP for Agriculture and Cottage & Handicraft
Contributions
Employer Payroll Contributions
VISA
Any foreigners coming to work in the Philippines are required by the Bureau of Immigration (BI) to secure a work visa.
Different work visas/permits are available depending on the individual circumstances, skills, and work type. The following documentation must be referenced/completed/returned to the government agencies to fulfill this application.
For a Work Visa, the below documents need to be completed:
- 9(g) Pre-Arranged Employee Commercial Visa
- 9(g) Pre-Arranged Employee Non-Commercial Visa
- Special Non-Immigrant Visa or 47(A)(2)
- Special Non-Immigrant Visa under EO 226, as amended by RA 8756 (ROHQ)
For a Work Permits:
- Special Work Permit (SWP)
- Provisional Work Permit (PWP)
- Alien Employment Permit (AEP)
Remote Work
The Telecommuting Act that which applies to all employers and employees in the private sector that implement a telecommuting program.
The terms and conditions of telecommuting shall not be less than the minimum labor standards, or less than any applicable company policy or practice, individual contract, or collective bargaining agreement.
Telecommuting employees should be treated fairly and afforded the same treatment as employees who work at the regular workplace.
Any facilities or equipment or supplies that are necessary for the completion of work, are considered ordinary and necessary costs for the employer.
The employer should report the implementation of telecommuting arrangements to the DOLE (Department of Labor and Employment ).
VAT
The standard rate of VAT in the Philippines is 12%.