Payroll in Philippines

Payroll in the Philippines ensures employees are paid correctly and in compliance with local regulations. Our accountants in the Philippines offer payroll services to both local and foreign companies.

What is payroll in the Philippines?

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.

Can companies outsource payroll services in the Philippines?

Businesses in the Philippines can hire an external provider to manage their payroll instead of handling everything in-house.

Our specialists in the Philippines can:

• calculate employee salaries;
• process tax deductions;
• prepare mandatory contribution reports;
• maintain payroll records.

How is payroll calculated in the 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.

Employers also have the obligation to cover 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 the total basic salary earned by the employee within the calendar year, payable by 24 December, 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.

What documents are required for payroll processing in the Philippines?

The documents and details needed for payroll include:

• employment contracts;
• employee details;
• attendance records;
• payroll records;
• tax and contribution records.

Employers must also keep records of working hours and proof of statutory contribution payments, as required by the Philippines labor regulations.

What is the minimum wage in the Philippines?

Employers must ensure that they comply with minimum wage laws when determining the salaries and wages of their employees.

Payroll in the Philippines involves calculating employee compensation, including ensuring that all employees are paid at least the minimum wage.

As of 26 September 2026 (Wage Order NCR-28), the minimum wage in Metro Manila (NCR) is as follows:

• for the agriculture sector, it is 718 PHP/day (also applicable to retail/service establishments with up to 15 workers and manufacturers with fewer than 10 workers);
• for the non-agriculture sector, it is 755 PHP/day; lower rates apply in the other regions.

Please note the minimum wage varies based on region and may suffer modifications in the future. Our partner accountants in the 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.

What are the mandatory payroll deductions in the Philippines?

Employers in the Philippines must deduct certain taxes and contributions from their employees’ salaries.

These include:

• Social Security System (SSS): contributions that cover benefits such as retirement, sickness, maternity and disability;
• PhilHealth: health insurance contributions paid by both employers and employees;
• Pag-IBIG Fund: mandatory contributions to a savings and housing loan program;
• withholding income tax: deducted from employees’ taxable salaries and paid to the Bureau of Internal Revenue (BIR).

How is overtime paid in the 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.

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.

There is no specific limit to the number of overtime hours an employee can work. Senior managers do not receive overtime pay.

What are the penalties for payroll non-compliance in the Philippines?

Employers can face fines, interest charges or even legal action if they fail to follow payroll regulations.

Here are some examples:

• 2% monthly penalty on overdue contributions until they settle the outstanding amount;
• surcharges and interest on unpaid taxes, with possible legal action;
• employers who fail to register employees or remit their contributions may face fines or imprisonment.

Why hire a payroll provider in the Philippines?

Foreign companies operating in the Philippines often find it easier to outsource their payroll to a local accounting firm rather than managing it themselves.

Here are a few reasons why this makes sense:

• our local accountants know the ins and outs of the Philippines payroll rules, taxes and mandatory contributions;
• outsourcing can often be more cost-effective than hiring and maintaining a full in-house team;
• our accountants help you meet every deadline so you do not have to worry about fines for non-compliance.

If you need payroll services in the Philippines, you can contact our team.