Table of Contents

Philippines

Table of Contents

Currency

Philippine Peso (PHP)

Payroll Frequency

Bi-Monthly

Employer Taxes

PHP 45,900

About Philippines

The Philippines is well resourced in timber, gold, copper, nickel, cobalt, petroleum, silver, and salt. 41 percent of its land is for agricultural use and 26 percent is forested. The islands are continually battered by tsunamis, cyclones, volcanoes, landslides, and earthquakes. Politically, the Philippines have faced a number of administrative coups and corruption allegations, as well as terrorist threats from Maoist-inspired groups, ISIS-Philippines terrorists, the Moro groups, and “tension with China over disputed territorial and maritime claims in the South China Sea.”. The country has seen a growth in GDP per capita from an estimated $7900 in 2016 to $8300 in 2017. Services are the biggest economic sector in the Philippines with about 60 percent GDP share, followed by industry at 30 percent and agriculture at 10 percent. In 2017 Philippines came in third, after China and Vietnam, in regional economic growth. However, it dropped 0.2 points from 2016’s 6.9 percent growth rate. Exports increased, and it was able to pass its first tax reforms in 2017, which are estimated to generate an added $1.53 billion.

Employment Relationship

• Permanent Employment

According to the Labor Code of the Philippines, employees hired to perform activities that are usually necessary or desirable for the employer's usual business are considered to be regular or permanent employees. If an employee has worked for more than one year with the same employer and in the same role, whether continuously or intermittently, they are considered to be a regular employee. If an employee is hired for probation and continues to work after probation, they become a regular employee.  The employer must not terminate the services of a regular employee unless it is for just cause.

• Fixed-Term or Specific-Purpose Contracts

A project employee is defined as an employee whose employment is for a specific project or undertaking, the completion or termination date of which has been determined at the time the employee is engaged.  If a fixed-term employee has worked for more than a year for the same employer, they are considered a regular employee. 

• Temporary Employment Contratcs

The Labor Code of the Philippines recognizes temporary workers as casual workers who perform seasonal work. Temporary workers are employed only for one season. Employees can also use temporary staffing agencies to hire temporary workers for specific projects. In this case, two contracts are concluded: one between the employee and the agency and another between the client (employer) and the agency. The agency takes an administrative fee of not less than 10% of the total contract price for providing temporary employees to the employer. All temporary employees are entitled to security of tenure and all the rights and privileges as provided in the Labor Code. The contractor and user employer are jointly responsible for temporary employees' rights. Employers may require the agency to furnish a bond equal to the cost of labor under contract, on the condition that the bond will answer for the wages due the employees should the agency fail to pay the same.  

Probationary Period

Probationary contracts must not exceed 6 months in duration from the date the employee starts work (unless they are covered by an apprenticeship agreement stipulating a longer period).

Working Hours

The labor law of the Philippines states that regular hours of work must not exceed 8 per day. A Compressed Work Week Scheme (CWW) is an arrangement that permits regular work hours to exceed 8 hours but allows a decrease in the number of workdays to less than 6. Employees under 15 years of age must not be allowed to work for more than 20 hours a week or 4 hours a day. Employees between 15 and 18 years of age are permitted to work for 8 hours a day or 40 hours a week. 

Holidays / PTO

• Statutory Holidays

Regular Holidays: New Year’s Day (January 1), Maundy Thursday (date may vary), Good Friday (date may vary), Eidul Fitr (date may vary), Eidul Adha (date may vary), Araw ng Kagi tingan/Bataan and Corregidor Day (Monday nearest April 9). Nationwide Special Holidays: Ninoy Aquino Day (Monday nearest August 21), All Saints Day (November 1), Labor Day (Monday nearest May 1), Independence Day (Monday nearest June 12), National Heroes Day (Last Monday of August), Bonifacio Day (Monday nearest November 30), Christmas Day (December 25), Rizal Day (Monday nearest December 30), Last Day of the Year (December 31).

• Paid Annual Leave

The Philippines' Labor Code provides 5 days of paid mandatory leave to employees who have at least 1 year of service. However, such leave may not be taken by employees who have paid vacation leave of at least 5 days or employees in establishments regularly employing fewer than ten employees. The leave may also not be taken by employees of establishments exempted from granting this benefit by the Secretary of Labor and Employment for reasons related to their viability or financial condition. Employees can also take unpaid vacation leave which is considered a gap in the service.

• Sick Leave

The Philippines' Labor Code does not contain any provisions on sick leave. It only provides 5 days of paid leave to employees with at least 1 year of service. An employee who has paid at least 3 monthly Social Security System (SSS) contributions in the 12-month period immediately preceding the trimester of sickness or injury and who is confined for more than 3 days in a hospital or elsewhere with the approval of the SSS is paid a daily sickness benefit equivalent to 90% of their average daily salary by their employer for each day of confinement. However, this allowance will only start being paid after fully paid sick leave from the employer has been exhausted. This benefit is paid for a maximum of 120 days in a year and 240 days in total for any given period of confinement. Employees must inform their employers of their confinement within 5 days of its commencement. The daily benefits paid by employers are fully reimbursed to them by the Social Security System. A female employee who has performed continuous aggregate service of at least 6 months within the last 12 months is entitled to a special leave benefit of 2 months with full pay based on her gross monthly compensation. This leave is to be used following surgery caused by gynecological disorders.

• Maternity Leave

Maternity leave is addressed through the Social Security System (SSS). Paid leave lasts 105 days. If the mother is a single parent, she is eligible for 120 days of paid maternity leave. Women can avail themselves of an additional leave of 30 days without pay if they provide at least 45 days’ notice to the employer. Maternity leave must begin at least two weeks before childbirth. Paid leave of 60 days is provided in case of miscarriage and emergency termination of pregnancy. 100% of the salary is paid during maternity leave.  Maternity leave with pay is also provided if the childbirth or miscarriage occurs not more than 15 days after employment termination.

• Paternity Leave

The labor laws of the Philippines provide 7 days of paid paternity leave to all married male employees working in the private sector (regardless of employment status) at the birth of their partner's child. The leave is granted for the first four deliveries of the legitimate spouse with whom the male employee is cohabiting. This leave is also granted in case of miscarriage. In addition to this leave, a female employee can allocate up to 7 days of paid leave from her maternity leave to the child's father, whether or not they are married.

Termination of Employment

• Notice Period

According to the Philippines' Labor Code, notice periods vary according to the substantive reason for the dismissal. An employee can only be lawfully dismissed if both the substantive and the procedural requirements for dismissal are met. The dismissal must not only be for a just or authorized cause (or be related to the employee's ill health or failure to pass the probationary period as provided for by law), but the rudimentary requirements of due process must also be observed. In case of dismissal due to redundancy, retrenchment to prevent losses, or the closing/cessation of operation of the establishment, a written notice must be given to employees at least one month in advance. An employee can terminate the employee-employer relationship without just cause by serving a written notice on the employer at least one month in advance.  If an employment relationship is terminated by the completion of a project (or a phase of that project), no prior notice is required.

• Severance Benefits

Employees are entitled to severance pay as follows: Termination due to installation of labor-saving devices or redundancy – at least one month's salary for every year of service    Termination due to retrenchment – at least 1/2 month's salary for every year of service   Termination due to closure or cessation of operations not due to business losses or financial reverses – at least 1/2 month's salary for every year of service  Termination due to disease – at least 1/2 month's salary for every year of service  Termination due to just causes – no severance benefits The minimum severance pay is one month's salary.