Payroll and Benefits Guide Philippines
Last updated: Mar 03, 2026
Contribution
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Employer Payroll Contributions
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10.00%
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Social Security System (SSS), applied on income between 5,000 to 35,000 PHP monthly. |
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2.50%
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Philippine Health Insurance Corporation (PHIC), applied on a monthly basic salary as:
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1.00%/2.00%
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Home Development Mutual Fund (HDMF) (Pag-ibig), applied on a monthly compensation of 1,500 PHP and below/Over 1,500 PHP
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13.50%/14.50%
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Total Employment Cost
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Employee Payroll Contributions
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|
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5.00%
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Social Security System, applied on income between 5,000 to 35,000 PHP monthly
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2.50%
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Philippine Health Insurance Corporation (PHIC), applied on a monthly basic salary as:
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| 1.00%/2.00% |
Home Development Mutual Fund (HDMF) (Pag-ibig), applied on a monthly compensation of 1,500 PHP and below/Over 1,500 PHP
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Up to 8.50%/9.50%
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Total Employee Cost
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Employee Income Tax
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|
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0.0%
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up to 250,000 PHP
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15.0%
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250,000 – 400,000 PHP
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20%
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400,000 – 800,000 PHP
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25%
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800,000 – 2,000,000 PHP
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30%
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2,000,000 – 8,000,000 PHP
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35%
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8,000,000 PHP and over
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Employer taxes
Employee taxes
Minimum Wage
General
The National Minimum Wage in the Philippines is set per sector/industry up to:
645 PHP per day for Non-Agriculture.
608 PHP per day for Agricultural workers.
MINIMUM WAGE (PER MONTH)
Payroll
Payroll Cycle
The payroll cycle in the Philippines is generally semi-monthly. Wages shall be paid at least once every two weeks or twice a month at intervals not exceeding sixteen days.
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.
Authority Payments
| Authority Payment | Dates | Methods |
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BAR |
On the 10th |
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Social security |
By the company ID but usually done on the 10th as well |
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Philippines health |
By the company ID but usually done on the 10th as well |
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HDMN |
On the 10th |
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Private health care |
Payments depend on the provider and are based on the insurance plan. if there is an employee share its deducted in the payroll. Payment are prepaid by the company to the provider on an annual basis. |
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Retirement plan |
Annually |
payments made by the employer once a year. |
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13th salary |
Annually; usually paid in December before Christmas |
Working Hours
General
A standard work day is 8 hours, 40-48 hours per week, across 5 or 6 days per week.
Overtime
| Aspect | Regulation Details | Notes |
| Maximum Ordinary Hours | 8 hours per day. This typically results in a 48-hour workweek (6 days). | Overtime is any work performed beyond 8 hours a day. |
| Maximum Overtime Cap | There is no statutory maximum limit on the number of overtime hours an adult employee may work. | Overtime can only be required in specific emergency cases (e.g., national emergency, imminent danger, urgent repairs). |
| Undertime/Offset | Undertime work cannot be offset by overtime work on another day. | The law prevents an employer from using overtime to compensate for hours missed. |
| Exemptions | Managerial employees (those with authority to hire/fire or set policies) and Field Personnel (with irregular hours) are generally exempt from statutory overtime pay. |
Mandatory Overtime Pay Rates (Cumulative System)
Overtime pay is a mandatory additional compensation on top of the employee’s regular hourly rate. The total rate is calculated by first establishing the base pay for the type of day, and then adding the specific overtime premium (minimum $\mathbf{30\%}$ of the already-premium base rate).
| Day/Condition | Base Pay Multiplier (First 8 Hours) | Overtime Premium Multiplier (Hours > 8) | Total Hourly Rate for OT |
| Ordinary Workday | 100% (Regular Rate) | +25% of the regular hourly rate. | 125% |
| Rest Day or Special Holiday | 130% (Regular Rate + 30% Premium) | +30% of the 130% base rate. | 169% (1.3 $\times$ 1.3) |
| Regular Holiday | 200% (Double Pay) | +30% of the 200% base rate. | 260% (2.0 $\times$ 1.3) |
| Regular Holiday + Rest Day | 260% (200% Holiday + 30% Rest Day on base) | +30% of the 260% base rate. | 338% (2.6 $\times$ 1.3) |
Other Mandatory Premiums (Cumulative Stacking)
These premiums are separate from the overtime pay but are stacked when calculating the final rate if the conditions overlap.
| Premium Type | Time Period | Statutory Minimum Rate | Notes |
| Night Shift Differential (NSD) | 10:00 PM to 6:00 AM | +10% of the regular hourly wage. | This is applied to the current base hourly rate (which is already multiplied by the Rest Day/Holiday premium) before the 30% overtime premium is added. |
| Example Calculation | Night Shift OT on Ordinary Day | 137.5% | The formula is $(\text{Hourly Rate} \times 1.10 \text{ NSD}) \times 1.25 \text{ OT} = 137.5\%$. |
Leave
Annual Leave (vacation)
Paid leave is a minimum of 5 working days per year after the completion of 1 year of employment.
PTO carryover
In the Philippines, statutory leave (e.g., Service Incentive Leave) does not automatically carry over by law, but unused leave cannot be forfeited.
Note:
- Proclosz allows a mandatory payment of PTO per year is 5 days – PTO is allowed , provided it is defined under company policy. DOLE allows employers to set the rules on accrual and carryover for leaves beyond the statutory minimum.
Public Holidays
If a regular holiday falls on a Sunday in the Philippines, the holiday will be observed on the following Monday. If a regular holiday falls on Sunday the holiday will moved to 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 are subject to additional 100% holiday rate for first 8 hours and additional 260% of hourly rate on overtime work after 8 hours.
For work on Special Non-Working holiday which falls on a weekend, work on this day is subject to 150% overtime rate for first 8 hours and 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.
In addition to the listed National holidays, there could be extra local holidays that workers will be entitled to take off depending on where they are living.
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 1 January 2026 | Thursday | New Year’s Day | Standard holiday |
| 17 February 2026 | Tuesday | Chinese New Year | Special Non-Working Holiday |
| 25 February 2026 | Wednesday | EDSA People Power Revolution Anniversary | Special Working Day. |
| 2 April 2026 | Thursday | Maundy Thursday | Standard holiday |
| 3 April 2026 | Friday | Good Friday | Standard holiday |
| 9 April 2026 | Thursday | Day of Valor (Araw ng Kagitingan) | Standard holiday |
| 1 May 2026 | Friday | Labor Day | Standard holiday |
| 12 June 2026 | Friday | Independence Day | Standard holiday |
| 31 August 2026 | Monday | National Heroes Day | Standard holiday |
| 30 November 2026 | Monday | Bonifacio Day | Standard holiday |
| 25 December 2026 | Friday | Christmas Day | Standard holiday |
| 30 December 2026 | Wednesday | Rizal Day | Standard holiday |
| TBD 2026 | TBD | Eid’l Fitr | |
| TBD 2026 | TBD | Eid’l Adha |
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.
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.
Parental 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.
Service Incentive Leave (SIL)
Employees who have rendered at least one year of service are entitled to 5 days of paid leave per year, which can be used for personal reasons, vacation or sick leave. Unused SIL can be converted to cash at the end of the year.
PAID MATERNITY LEAVE (DAYS)
Termination
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. A minimum of 14 days should be given to the worker to answer the written notice/warning letter with an explanation on the allegations and include the schedule of when and where the hearing will take place. In the notice, the company must list all the grounds and what improvements the company is expecting from the employee. The company can issue another letter after 60 days if there has been no improvement from the employee. The notice letters should be signed by the employee.
Where dismissal is based on ‘authorized’ causes the employer must report the list of separated employees in the Department of Labor and Employment (DOLE) website.
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.
It is possible to also use a Mutual Termination Agreement when separating a worker.
| Salary payment interval / date | Final payment on termination | Bank account/payment-method requirement |
|---|---|---|
| Wages must be paid at least once every two weeks or twice a month, and the interval between payments must not exceed 16 calendar days. (“Wages shall be paid at intervals not exceeding sixteen (16) days.”) | Upon termination (whether by resignation, termination, or end of contract) the employer must pay all unpaid wages, accrued leave conversions, pro-rated 13th month pay and any applicable separation pay. Guidance indicates that final pay should be released within 30 calendar days from date of separation unless a more favorable company/contractual term applies. | Wages must be paid in legal tender (Philippine pesos) and cannot be paid using things like vouchers or tokens. Payment via bank‐account may be permitted if agreed, but the law does not mandate that all wage payments must go solely into a bank account in all cases. |
Notice Period
A minimum of 30 days’ notice period is required by law, to be provided in writing.
It is possible for the Employer to pay in lieu of notice.
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. If service is less than 1 year but more than 6 months, it will be treated as 1 year of service.
Probation Period
Employees on probation will be undergo a probationary period typically starting from a period of 30 days and not exceeding 180 calendar days. Once the employee has reached an employment of 6 months, the employee is considered a “regular employee” even without such formal documentation.
Setting Up a Business
Setting up a legal entity
the business registration process is done online on The Philippine Business Hub (PBH). Thru integration with the government agencies, a single account can be used for Business Registration.
There is a designated office or agency which will handle the registration depending on the type of business applied for.
The agency responsible for processing the business application (SEC, DTI, or CDA) will review the information provided in the Unified Application Form. A unique business name must be used. Registration fees are necessary to process the documents.
After the agency allowed the application and verified the payment, the company registration number will be issues to the business which is needed for tax registration, employee registration, and business license and permit.
Registration as an employer
in order to register as an employer in the Philippines, a new company should:
- Register with the Social Security System (SSS)
- Register with the Philippine Health Insurance Corporation (PHIC or PhilHealth), there is an exception for private sector employers, who registered with the SSS prior to 1st July 1999, they are considered automatically registered.
- Register with the Bureau of Internal Revenue (BIR)
New Employee Registration
The company needs to provide the following information for new starters: –
- Gather together the basic details, including full name, address, gender, salary, start date, number of dependents, marital status, who claims the dependent children.
- Provide employees with Taxpayer Identification Numbers (TIN), Social Security System (SSS) number, Philippine Health Insurance Corporation (PHIC) number & Home Development Mutual Fund (HDMF) number. To obtain a Tax Identification Number (TIN) the employee themselves must make an application for registration (BIR Form 1902) and provide a copy of the birth certificate.
- Submit the following forms to the respective statutory authorities for newly hired employees:
- To the SSS; SS Form R-1A or Employment Report – employer updates;
- To the PHIC; PhilHealth Form PMRF or PhilHealth Member Registration Form – used when registering with any membership program and when amending member data; PhilHealth Form ER2 or Report of Employee-Members – employer updates;
- To the HDMF; HDMF M2-2A or Member Change of Information – for change of employer/company.
- To the Bureau of Internal Revenue (BIR); BIR Form 1902 or Application for Registration. And BIR Form 2305 or Certificate of Update of Exemption and of Employer’s and Employee’s Information.
Submit certificate of income from previous employer (BIR Form 2316 or Employer’s Certificate of Compensation Payment / Tax Withheld) for all new hires employed within the same tax year to BIR; and Submit Quarterly Employee Listing of Minimum Wage Earners to Regional/Provincial Department of Labor and Employment or to the Regional Tripartite Wages and Productivity Board (RTWPB), National Wages and Productivity Commission (NWPC).
Immigration
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’s circumstances, skills, and work type. The following documentation must be referenced, completed, and returned to the government agencies to fulfill this application.
For a work visa, the following 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 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%.
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Payroll and Benefits Guide
in Philippines
What’s covered in this guide:
- Employer/employee contributions
- Minimum wage
- Working hours
- Visa requirements
And more...
Public Holidays Calendar
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 1 January 2026 | Thursday | New Year’s Day | Standard holiday |
| 17 February 2026 | Tuesday | Chinese New Year | Special Non-Working Holiday |
| 25 February 2026 | Wednesday | EDSA People Power Revolution Anniversary | Special Working Day. |
| 2 April 2026 | Thursday | Maundy Thursday | Standard holiday |
| 3 April 2026 | Friday | Good Friday | Standard holiday |
| 9 April 2026 | Thursday | Day of Valor (Araw ng Kagitingan) | Standard holiday |
| 1 May 2026 | Friday | Labor Day | Standard holiday |
| 12 June 2026 | Friday | Independence Day | Standard holiday |
| 31 August 2026 | Monday | National Heroes Day | Standard holiday |
| 30 November 2026 | Monday | Bonifacio Day | Standard holiday |
| 25 December 2026 | Friday | Christmas Day | Standard holiday |
| 30 December 2026 | Wednesday | Rizal Day | Standard holiday |
| TBD 2026 | TBD | Eid’l Fitr | |
| TBD 2026 | TBD | Eid’l Adha |
What does the law say about employment contracts? Are they required?
Hi, good question. In the Philippines, there are no provisions in the law regarding the necessity to provide a written contract to prove that a person is employed at a specific company. That being said, we highly recommend written employment contracts as to avoid any conflict.
How long does a employee has to be in a company to have the February pay out?
Please specify which payout you are referring to. There are 13 and 14 salaries but these are paid in June and December.
Is salary sacrifice possible in the Philippines? (for additional benefits for example)
Technically there is no reason salary sacrifice can’t be done but it will depend on the company set up or policy.
ok thank you
I have question regarding the Employment Income Tax, are the amount stated in range, i.e. upto ₱250,000, in monthly income? Or are these in Annual? Thanks
Numbers are based on annual income.
Hello, I would like to ask if how to calculate the sick leave credits for those employees who were regularized in the middle of December?
Hi, you can find all the information in this page.
Hello,
For foreigners working as expatriates in the Philippines, can you let me know if there is a social contributions ceilling per year for the employee and the employer?
Thank you
Local workers contribute to Social Security, Health and HDMF; Expats only contribute to Social Security and Health. The ceilings will be the same for both, Up to 9.50%+225 PHP.
Payroll in the Philippines follows a monthly cycle, depending on the employer and the sector. Employers must pay salaries once every two weeks at intervals of not more than 16 days. Can employer choose to pay salaries once a month instead every two weeks
The Labor Code of the Philippines does indeed state that wages should be paid at least once every two weeks or twice a month, unless the employer has specifically chosen to pay on a monthly basis. The employee must be aware of the payment cycle and agreed on it with a contract as long as the employer gives the salary on or before the payout date. This ensures that employees receive their compensation in a timely manner and aligns with Labor regulations.