The Philippines is an attractive place to do business in. With a high English literacy rate, a growing economy and a robust tech sector, it’s no wonder that as of 2024, Philippines has an employment rate of 95.5% — its highest on record.
If your organization has plans to expand to the Philippines, it needs to be ready for the complexity that goes along with it. One solution to mitigate these potential problems is working with an employer of record Philippines (EOR or PEO Philippines). Having a representative to handle the HR and legal issues with local expertise can be a game changer.
In this guide, we’ll look at everything you need to know about EOR Philippines, and help you take the necessary steps to hire one and get set up for success.
Relevant reading: What Is a Professional Employer Organization (PEO)? Understanding the Pros & Cons
Benefits of Using Employer of Record Philippines
Expanding your business to the Philippines opens up a world of opportunities, but navigating the ins and outs of hiring and compliance in a new country can feel overwhelming. That’s where an Employer of Record (EOR) shines. They become your trusted partner in the Philippines, handling all the legal and HR heavy lifting so you can focus on what you do best—running your business.
Hire local talent
The Philippines has a highly educated and talented workforce, especially in fields like IT, engineering, customer service, and healthcare. With an EOR, you can quickly access this pool of talent and find the perfect member for your team.
Setting up a legal entity in a foreign country can be a major headache (and a drain on your resources). An EOR lets you skip that step entirely, allowing you to hire employees in the Philippines without the hassle of establishing a local presence.
Compliance
Navigating the complex and ever-changing labor laws in the Philippines can feel like a maze. An EOR acts as your guide, ensuring you stay compliant and avoid any legal trouble.
Non-compliance can lead to hefty fines and other headaches. An employer of record Philippines takes on the responsibility of staying up-to-date with local laws, so you can breathe easy knowing you’re in good hands.
Risk mitigation
When you use an EOR, they become the legal employer of your workers in the Philippines. That means they take on the legal and financial responsibilities, reducing your exposure to risks.
An EOR manages employee benefits and ensures you’re meeting all the mandatory social security requirements. This takes a big load off your plate and minimizes potential liabilities.
Cost effective
Starting a company in a new country isn’t cheap. An EOR helps you avoid those hefty setup costs and ongoing expenses.
Managing payroll, benefits, and compliance for international employees can stretch your HR team thin. An EOR takes care of all that, so your team can focus on strategic initiatives and growing your business.
Focus on core business
An employer of record Philippines handles all the nitty-gritty HR tasks, so you can spend more time on what really matters – growing your business and achieving your goals.
With an EOR taking care of the hiring and compliance maze, you can onboard new employees quickly and enter the Philippine market without missing a beat.
How does EOR Philippines work?
Now that we’ve looked at what an EOR is, you’re probably wondering how it all actually works in the Philippines. Let’s break down the typical process:
1. Hiring process
Find your talent: You go about your usual recruitment process—post job ads, interview candidates, and find the perfect fit for your team.
EOR takes over: Once you’ve selected someone, the EOR steps in. They handle all the official hiring paperwork, like generating compliant employment contracts and ensuring any necessary work permits or visas are in place.
You stay in control: You still get to manage the employee’s day-to-day work, provide feedback, and assign tasks, just like any other team member.
2. Employment contract
Local expertise: The EOR makes sure all employment contracts comply with Philippine labor laws and regulations. This includes things like minimum wage, leave entitlements, and termination procedures.
No more legal jargon worries: You don’t need to be an expert in Philippine employment law. The employer of record Philippines ensures all contracts are legally sound and protect both you and your employee.
3. Payroll and benefits
Payroll made easy: The EOR handles all the calculations and processing of payroll, including tax deductions and mandatory contributions like SSS contributions, PhilHealth, and Pag-IBIG.
Benefits management: They can also help you set up and administer employee benefits, ensuring compliance with local requirements and offering attractive packages to your team.
On-time payments: Forget about missed paydays. The EOR ensures your employees receive their salaries on time, every time.
4. Compliance
Labor law expertise: The EOR stays on top of the ever-changing labor laws and regulations in the Philippines, ensuring your company remains compliant and avoids any legal headaches.
Tax and social security: They handle all payroll tax calculations, deductions, and remittances to the relevant authorities, as well as manage your employees’ social security contributions.
Work permits and visas: If you’re hiring foreign workers, the EOR can assist with obtaining the necessary work permits and visas, navigating the complex immigration process on your behalf.
5. HR administration
Onboarding and offboarding: The EOR handles the entire employee lifecycle, from onboarding new hires to managing terminations and exit procedures, in compliance with local laws.
Time and attendance tracking: They can implement systems to track employee attendance, leaves, and absences, ensuring accurate payroll calculations and adherence to company policies.
Employee data management: The EOR maintains secure and up-to-date records of all employee data, including personal details, employment contracts, and performance reviews.
Employee support: They can act as a point of contact for your employees in the Philippines, addressing their queries and concerns regarding payroll, benefits, and other HR matters.
In essence, an EOR takes the complexity out of managing your Philippine workforce. They act as your local HR partner, handling all the administrative, legal, and compliance aspects of employment, allowing you to focus on growing your business and achieving your strategic goals.
Things to Consider When Choosing EOR Philippines
Selecting the right employer of record Philippines is crucial for a smooth and successful global expansion in the Philippines. With several providers vying for your attention, it’s important to be discerning and make an informed decision. Here are five key factors to consider:
Local expertise
In-depth knowledge of Philippine laws: Make sure your EOR has a deep understanding of Philippine labor laws, tax regulations, and compliance requirements. They should be able to navigate the complexities of the local legal landscape and ensure your company stays on the right side of the law.
Cultural awareness: A successful EOR should also have a strong grasp of Filipino workplace culture and communication styles. This will help them bridge any cultural gaps and facilitate smooth interactions between you and your employees.
Compliance track record
Look for an EOR with a proven track record of compliance in the Philippines. Ask for references from other companies they’ve worked with and research their reputation in the industry.
Make sure to choose an EOR that is transparent about their compliance procedures and can provide evidence of their adherence to local laws and regulations.
Service offerings
Beyond basic payroll and tax services, a good EOR should offer a comprehensive suite of HR solutions, including onboarding, benefits administration, employee data management, and even local support for your employees.
Your business needs are unique. Look for an EOR that can tailor their services to your specific requirements and scale with your company as it grows.
Technology platform
An intuitive and easy-to-use platform can simplify payroll and HR management for both you and your employees. The EOR’s system should integrate seamlessly with your existing HR and payroll software to ensure smooth data flow and avoid manual errors.
Choose an EOR that prioritizes data security and has robust measures in place to protect sensitive employee information.
References and testimonials
Don’t hesitate to ask potential EOR providers for references or testimonials from their existing clients. This will give you valuable insights into their service quality, reliability, and customer satisfaction.
Read online reviews and ratings from other businesses that have used the EOR’s services. This can help you gauge their reputation and identify any potential red flags.
By carefully evaluating these five key factors, you can choose an EOR partner that empowers your business to expand seamlessly into the Philippines. Remember, a good EOR is more than just a service provider; they’re your strategic ally in navigating the complexities of global hiring and ensuring your company’s success in a new market.
Challenges and Risks for Philippines Employer of Record
While an EOR can be a game-changer for global expansion, it’s important to be aware of some potential challenges and risks you might encounter when operating in the Philippines:
Complex Philippines employment law
Ever-changing regulations: Philippine labor laws are intricate and subject to frequent updates. It’s crucial to partner with an EOR with deep expertise in local regulations to ensure ongoing compliance.
Cultural nuances: Understanding Filipino workplace culture and expectations is essential for effective employee management. Your EOR should be able to bridge any cultural gaps and facilitate smooth communication between you and your employees.
Employer of record Philippines selection
Finding the right fit: Not all EORs are created equal. It’s crucial to choose a reputable provider with a strong track record, transparent pricing, and excellent customer service.
Due diligence: Conduct thorough research, read reviews, and ask for references before selecting an EOR. Ensure they have experience working with companies in your industry and can handle your specific needs.
Protecting employee data
Data privacy laws: The Philippines has strict data privacy laws, and any mishandling of employee information can lead to severe penalties. Your EOR must have robust data security measures in place and comply with all relevant regulations.
Data transfer: If you’re transferring employee data outside the Philippines, ensure it’s done securely and in compliance with data protection laws.
Frequently Asked Questions for Employer of Record Philippines
1. What is an EOR?
Think of an EOR as your local HR partner in the Philippines. They handle all the legal and administrative aspects of employing staff, like payroll, taxes, benefits, and compliance, even though you’re the one calling the shots on the day-to-day work. It’s a great way to hire talent in the Philippines without having to set up your own legal entity there.
2. How long does it take to hire an employee through an employer of record Philippines?
This can vary depending on the specific EOR provider and the complexity of the role. However, in general, the process can be completed within a few weeks. The EOR will handle all the necessary paperwork and onboarding, making it much faster than setting up your own entity.
3. What are the costs associated with using an employer of record Philippines?
EORs typically charge a monthly fee per employee, which covers their services like payroll, benefits administration, and compliance. The exact cost can vary depending on the provider, the employee’s salary, and the specific benefits package you choose. It’s crucial to get a clear breakdown of fees upfront so there are no surprises.
4. Can I terminate an employee through EOR Philippines?
Yes, you can. However, termination procedures must comply with Philippine labor laws, which can be quite complex. The EOR will guide you through the process, ensuring you follow all the necessary steps and minimize any legal risks.
5. Does an employer of record Philippines provide benefits to employees?
Absolutely! A good EOR will help you design and administer a competitive benefits package that complies with local laws and meets your employees’ expectations. This can include health insurance, retirement plans, paid time off, and other perks.
6. Can an employer of record Philippines help with visa and work permit applications?
Yes, they can. If you’re hiring foreign nationals, the EOR can assist with the entire visa and work permit application process, ensuring everything is handled correctly and efficiently.
Maximize Your Business Potential with Employer of Record Philippines
An employer of record Philippines can be a valuable asset for businesses looking to expand into the Philippines market. By partnering with a reliable and reputable EOR, you can streamline your HR processes, mitigate risks, access global top talents, reduce costs, and enhance your company’s reputation in the Philippines.
Omni makes it easy to support employees across multiple countries, time zones, and currencies.
Our centralized document management solution makes gathering the necessary data required to apply for employment visas and other country-specific initiatives seamlessly and timely. With customized workflows and automated reminders, HR can help empower employees to manage the deadlines and documentation requirements for applications. And centralized documents and real-time data makes it easy for employees to access salary information and produce reports and documents necessary for verification.
Omni offers a comprehensive payroll solution tailored to Philippines’ specific requirements. With features like support for Philippine pesos and automated tax calculations, Omni can help HR teams simplify their payroll processing and ensure compliance with ease. Not only that, with secure document storage and straightforward data input, you can quickly access and submit essential information required for working in the Philippines.
Our dedicated local team of experts provides personalized support and ensures your business remains compliant with Philippine’s labor laws. Book a demo with our team to learn more about how Omni can help maximize your business potential.
