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Compensation & Benefits in PhPhilippines.








Country Capital



Philippine peso (₱) (PHP)

Compensation and benefits are important to both employees and employers. By meticulously aligning with statutory requirements and offering a competitive benefits plan, your company not only remains compliant but also becomes more appealing to jobseekers in the Philippines.

Philippines compensation laws

The minimum wage in the Philippines varies by region. A useful metric to take into account is that an individual needs at least PHP 12,810 to make a living throughout the country. Non-managerial employees are entitled to various statutory benefits such as overtime pay (additional 25% of regular wages), rest day or special non-working holiday pay (additional 30% of regular wages), and night differential pay (additional 10% of regular wages for any work rendered between 10 p.m. to 6 a.m. PHT). However, these figures could change if an employee is part of a union or Collective Bargaining Agreement.

Employers are also responsible for giving employees a 13th-month salary. This 13th-month bonus is equal to 1 month’s salary and has to be given to employees before December 24, but most employers will try to give out the 13th-month bonus at the beginning of the month.

Guaranteed benefits in the Philippines

A strong benefits management strategy must include statutory benefits first and foremost. For example, employees must get 5 days of paid time off that can be used for vacation or sick leave. The Philippines has 2 types of holidays — regular and special non-working days. Employees get paid time off for regular holidays and non-paid time off for special non-working days.

Philippines benefits management

An important part of dispersing benefits is also providing supplemental benefits that aren’t required by law but are generally expected by local employees. Offering these additional benefits can also make a big difference in finding key talent to help your company grow. Many employers choose to give housing, transportation and medical allowances, which are tax-deductible if they’re classified as a cost-of-living allowance. Employers can also offer supplementary insurances such as life, disability, and health insurance in addition to the country’s universal healthcare scheme.

Restrictions for benefits and compensation

The biggest restriction to benefits and compensation in the Philippines is that companies cannot hire or pay employees before setting up a subsidiary in the country. From start to finish, the process can take months to complete, potentially delaying operations and causing jobseekers to look for employment opportunities elsewhere.

Philippines competitive benefits planning

As your business grows, you’ll face new countries with different benefits requirements and expectations. With the right strategy in the Philippines, you can build your team with confidence and keep your company competitive in the market.

Philippines employee benefits plans

Benefits plans are valuable to your growing company in a few ways. They can make your open positions stand out in the labor market, encouraging top talent to apply. Your benefits plans can also improve morale and retention rates.

Fringe benefits, or the provisions you offer outside of the requirements of the labor laws, will set your company apart from the competition. Potential offerings include:

  • Housing allowances
  • Transportation stipends
  • Allowances for healthcare
  • Holiday bonuses
  • Education opportunities
  • Meal subsidies

Benefits required by law

Before you consider fringe benefits, you need to meet the provisions required in the labor laws. These requirements include:

  • Public holidays off
  • Paid annual leave
  • Social security contributions
  • Health insurance
  • Home Development Mutual Fund contributions

Designing Philippines employee benefits plans

Designing a benefits plan can feel like a challenge when you’re operating in an unfamiliar area. The goal is to find a balance between your company’s resources and your employees’ needs and expectations. With research and preparation, you can create a benefits plan that supports your success.

1. Assess your resources and goals.

Spending more on benefits than your company can afford will hinder your growth, so assessing your resources is essential. Look into potential revenue and existing expenses to set a budget for your benefits spending.

You can also use this initial stage to identify your goals and how your benefits plan may support them. For instance, if you want to focus on retention, you can offer fringe benefits that other competitors don’t.

2. Study the labor market.

You can only compete with other companies if you understand what they offer. Research businesses similar to yours in size and industry to find which provisions are standard in the market. These standards will also inform employees’ expectations.

This stage is also an excellent time to talk to workers about what they want from employers. You can distribute surveys or conduct interviews to gather this information.

3. Design your benefits plan.

With everything you’ve learned about the local labor market, you can create a well-rounded benefits plan. Allocate your benefits funds to required provisions first and use the remaining resources on priority fringe benefits you discovered in your research.

Average cost of benefits

Businesses offer different benefits based on industry, size, location, and budget. With so many factors affecting the scope of a company’s benefits plans, there’s not an average price you can use to gauge your planning. Creating a budget based on your unique revenue and expenses is the best way to manage costs.

How to calculate benefits

The calculation process will look different depending on the benefits you provide. You can find guidance for calculating required benefits in the labor regulations.

For example, employers and employees must contribute a combined total of 13% to the nation’s social security fund. Employees pay 4.5% of their paychecks, and employers contribute 8.5% on their workers’ behalf.

As of January 2023, the government in the Philippines announced that the social security contribution will increase to 14%. Employers will be required to contribute 9.5% while employees must contribute 4.5%. The total contribution is set to increase once again in 2025 to 15%.

How are employee benefits taxed in the Philippines?

Generally, the law considers fringe benefits taxable. The policy for this taxation exists in 2 categories. Rank-and-file employees pay the standard income tax rate on their fringe benefits, while managerial and supervisory employees pay a 32% fringe benefits tax. Employers are responsible for including these tax deductions in employee paychecks.

There are exceptions to this benefits taxation. The following benefits are not taxable:

  • Benefits exempt under special law
  • Contributions to retirement, hospitalization, and insurance
  • Fringe benefits required within a trade
  • Benefits granted for the convenience of the employer
  • De minimis benefits defined by the Secretary of Finance

Employee health benefits

The country has universal health coverage through the Philippine Health Insurance Corporation, or PhilHealth. Employers are required to contribute to this national insurance scheme by deducting a percentage from employees’ paychecks and paying a share on their behalf.

There are healthcare organizations that take private insurance schemes. However, employers are not obligated to provide these schemes, but may choose to offer them as a supplemental benefit to appear more competitive in the labor market.

Partner with G-P to build your everywhere workforce.

As your partner in global expansion, G-P will handle payroll and compliance, so you can focus on growing your team and scaling your business. Our market-leading Global Growth Platform™ is powered by the first fully customizable suite of global employment products and backed by the industry’s largest team of in-country HR and legal experts to streamline payroll management and help you offer competitive, compliant local benefits.

Learn more about our platform and request a proposal today.


THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). G-P does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect G-P’s product delivery in any given jurisdiction. G-P makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.

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