Payroll in the Philippines is the process of calculating, managing, and disbursing salaries and wages to employees. It is an important part of organizational operations because it ensures financial accuracy and regulatory compliance. While payroll itself may not be the primary focus of company formation in the Philippines, it’s an essential component of running a business with employees. As part of our services, we offer assistance with payroll management for accurate and timely compensation for your employees.
Calculating payroll in Philippines
The process of calculating payroll in the Philippines begins by determining the employee’s gross pay, which includes their basic salary and any additional earnings. The employers also have the obligation to cover other various payroll taxes, such as contributions to social security, health insurance, and the Home Development Mutual Fund (Pag-IBIG Fund).
There is also the statutory requirement that employers must include in their calculations the 13th-month pay. This mandatory bonus is equivalent to one-twelfth of an employee’s annual salary and must be included when calculating the payroll in the Philippines. Moreover, employers are required to contribute to the Employees’ Compensation Program (EC) to provide benefits for work-related injuries or disabilities suffered by their employees.
If you just opened a company in the Philippines and hired employees, we can help you with payroll services.
Minimum wage in Philippines
Employers must ensure that they comply with minimum wage laws when determining the salaries and wages of their employees. Payroll in Philippines involves calculating employee compensation, including ensuring that all employees are paid at least the minimum wage.
As of February 2024, the minimum wage in Philippines is the following:
- For the agriculture sector, it varies between 533 PHP/day – 573 PHP/day;
- For the non-agriculture sector, it varies between 570 PHP/day – 610 PHP/day.
Please note the minimum wage varies based on region and may suffer modifications in the future. Our partner accountants in Philippines can give you more details and updates on the minimum wage.
A typical payroll cycle in the Philippines is monthly, with employees being paid on the last working day of the month.
We offer assistance with managing your employees when you start a business in Philippines.
Overtime in Philippines
Overtime is a key aspect of payroll in the Philippines. Employers must accurately track and record overtime hours worked by employees and calculate the corresponding overtime pay according to the applicable rates. A standard workday in the Philippines generally consists of 8 hours, and employees may work either 5 or 6 days per week. Hours worked over the regular workweek are considered overtime.
Overtime is generally paid at a rate of 125% of the regular pay. On regular holidays, employees are entitled to double their regular salary. On special holidays, employees must receive a minimum of 30% additional pay. Our payroll services in Philippines will take into account the overtime hours.
There is no specific limit to the number of overtime hours an employee can work. Senior managers do not receive overtime pay.
Once you begin the process of company registration in Philippines, it is important to respect the labor laws and regulations if you hire employees.
Statistics about employment in Philippines
Employment in the Philippines appears to be relatively strong. The country has a high employment rate and a moderate level of unemployment, as per the latest statistics provided by the Philippine Statistics Authority for the year 2022:
- The employment rate stood at 94.6%;
- The underemployment rate was 14.2%;
- The unemployment rate was 5.4%;
- The percentage of the population that is economically active or engaged in the labor market (the labor force participation rate) was 64.7%.
If you need payroll services in Philippines, you can contact our team. We can also assist you if you wish to immigrate to Philippines.