The 13th month pay is the most common compliance miss for first-time Philippines employers. It’s mandatory for all rank-and-file employees, equals one full month’s basic salary, and must be paid by December 24 every year — regardless of whether you budgeted for it. Miss the deadline and you’re in violation of Presidential Decree 851. Your EOR tracks this accrual monthly so it doesn’t blindside you in December.
Philippines Employment at a Glance
| Detail | Value |
|---|---|
| Currency | Philippine Peso (PHP) |
| Official languages | Filipino (Tagalog), English |
| Employment law | Labor Code of the Philippines |
| Payroll frequency | Semi-monthly (bi-monthly) |
| Social security | SSS, PhilHealth, Pag-IBIG (HDMF) |
| Tax authority | Bureau of Internal Revenue (BIR) |
| Minimum wage | ₱610/day (Metro Manila, 2024) |
| Standard working hours | 8 hours/day, 6 days/week (48 hours) |
| Annual leave | 5 days Service Incentive Leave (SIL) by law |
| Public holidays | 12 regular + 9 special non-working days |
Mandatory Statutory Contributions
SSS (Social Security System)
SSS is the primary social security scheme for private sector workers.
- Employer contribution: 9.5% of monthly salary credit
- Employee contribution: 4.5% of monthly salary credit
- Maximum monthly salary credit: ₱30,000
PhilHealth (Philippine Health Insurance Corporation)
- Total premium: 5% of monthly salary
- Employer share: 2.5%
- Employee share: 2.5%
- Maximum monthly contribution: Based on ₱100,000 salary ceiling
Pag-IBIG / HDMF (Home Development Mutual Fund)
- Employer contribution: 2% of monthly compensation
- Employee contribution: 2% of monthly compensation
- Maximum monthly contribution: Based on ₱10,000 salary ceiling for mandatory contributions
Your EOR registers employees with all three agencies and remits contributions monthly.
13th Month Pay — Non-Negotiable
One month’s basic salary, paid by December 24, every year. No exceptions.
13th Month Pay = Total Basic Salary Earned in the Year ÷ 12
Applies to all rank-and-file employees who have worked at least one month during the calendar year. Employees hired partway through the year receive a prorated amount. Your EOR tracks accrual throughout the year and disburses automatically before the deadline.
Philippines Payroll: Semi-Monthly Cycle
Philippines payroll runs twice a month — typically on the 15th and the last day of the month. This is different from most Asian countries that run monthly payroll. Your EOR must be configured for this cycle. Verify this before onboarding.
Night Differential Pay
Employees working between 10 PM and 6 AM are entitled to a night differential of at least 10% of their regular hourly rate for every hour worked in that window. For BPO and offshore teams covering US or European time zones, this adds up. Build it into your cost model before quoting a package.
How Long Does EOR Onboarding Take in the Philippines?
- Standard employee onboarding: 2–3 business days
- SSS registration (new employee): 1–2 days
- PhilHealth and Pag-IBIG registration: 1–2 days
Top EOR Providers for the Philippines
- Deel — Strong Philippines coverage, semi-monthly payroll, fast onboarding
- Multiplier — Competitive pricing, good BPO/tech hiring experience
- Remote — Solid platform, good for IP-sensitive roles
- Rippling — Works well for teams using Rippling for the full HR stack
- Papaya Global — Enterprise option with strong reporting
Frequently Asked Questions About EOR in the Philippines
I need to terminate a Philippine employee — what’s the process? The Labor Code distinguishes between just cause (employee misconduct) and authorized cause (redundancy, retrenchment, business closure). Both require written notices — a first notice giving the employee a chance to respond, and a second notice of decision. Authorized causes require 30 days’ advance notice to both the employee and DOLE. Skipping the process results in back pay and potentially a reinstatement order. Your EOR must manage this from the start.
Does the 13th month apply to contractors? No — it applies to rank-and-file employees only. But misclassifying employees as independent contractors is a serious DOLE exposure. The agency actively investigates labour-only contracting and will reclassify arrangements that look like employment. If your contractor works fixed hours, follows your directives, and uses your tools, DOLE will likely see an employment relationship.
Our team covers US time zones (10 PM–6 AM Manila). What does the night differential add to payroll cost? 10% on top of every regular hourly rate for those hours. On a full-time employee at ₱50,000/month working entirely within the 10 PM–6 AM window, that’s an extra ₱5,000/month minimum. Combined with SSS (9.5%), PhilHealth (2.5%), and Pag-IBIG (2%), your employer cost runs well above base salary.
Can a foreign company hire Philippines employees directly without an EOR? Not practically. You need a locally registered entity — ROHQ, RHQ, branch, or subsidiary — registered with the SEC, BOI, or PEZA. That process takes months. EOR is the faster path for most companies.
How are public holidays paid in the Philippines? Regular holidays: double pay if worked; full day’s pay even if the employee does not work. Special non-working days: an additional 30% of daily rate if worked; no pay if not worked (unless the contract provides otherwise). Your EOR calculates both correctly in payroll.
What’s the difference between a probationary and regular employee? Probationary employment lasts up to 6 months. During this period, an employee can be terminated for failure to meet reasonable performance standards — but those standards must be communicated in writing at the time of hiring. After 6 months, employment becomes regular and full Labor Code protections apply. Do not extend probation past 6 months; doing so makes the employee regular by operation of law.
