Philippines

Contract Types

Contracts can be indefinite or fixed term as well as seasonal, casual and for remote working. Contracts can be in English or Filipino.

Probation           

The probation period can be a maximum of 6 months. Employers should clearly communicate the standards expected at the beginning of employment.

Working Hours

Working hours are 8 hours per day, 5 days a week. Employees are entitled to a 1 hour break during the day.

Overtime           

Overtime is paid at 125%. On regular holidays and weekends pay is 200% for the first 8 hours and 260% thereafter. On “special holidays” when employees are not entitled to pay employees are entitled to 130% for the first 8 hours and 169% thereafter. Management are exempt from overtime.

Other Financial

A 13th month salary is due paid on or before 24 December. Some employers pay half in June and half in December.

Other   

Salary does not need to be stated in local currency.

Tax rates valid for 2025

Corporation Tax              

25%

Consumption Tax

12%

Employers’ Contributions

c.13.5% – 14.5%

Employees’ Contributions

c.8.5% – 9.5%

Income Tax Rates           

0-250,000: 0%

250,000 – 400,000: 15%

400,000 – 800,000: 20%

800,000 – 2,000,000:  25%

2,000,000 – 8,000,000: 30%

Over 800,000: 35%

Notice  

30 days’ notice is required by law. Notice should always be given in writing.

A final payment must include normal pay up to the termination date, prorated untaken vacation pay, 13th salary and any bonuses.

Terminations

There are 2 types of termination in the Philippines – for just cause which includes reasons such as gross misconduct or fraud, and for authorised cause which is redundancy, health reasons (long term sickness) or retrenchment. In the case of a termination for just cause, 2 written warnings should be given and there should be a hearing allowing the employee to explain before termination with no severance. For authorised causes the termination should be reported to the Department of Labour and Employment and severance should be paid.

 Severance Pay

This is payable for authorised causes and amounts to 1 month’s salary for each year of service.

During Probation            

A contract can be terminated during probation without a specific reason and with no severance. Notice should be given as per the contract. If termination is for poor performance then it is essential that the expected standards were communicated clearly at the outset.

Annual Leave 2025

National Public Holidays: 21

New Year’s Day – 1st January     

Day Given in Lieu: No

*Lunar New Year – 29th January               

Day Given in Lieu: No

Eid al Fitr! – 31st March

Day Given in Lieu: No

The Day of Valour – 9th April

Day Given in Lieu: No

Maundy Thursday! – 17th April

Day Given in Lieu: NA

Good Friday! – 18th April

Day Given in Lieu: NA

*Black Saturday – 19th April

Day Given in Lieu: No

Labour Day / May Day – 1st May

Day Given in Lieu: No

Eid al Adha! – 7th – 8th June      

Day Given in Lieu: No

Independence Day – 12th June 

Day Given in Lieu: No

*Ninoy Aquino Day – 21st August

Day Given in Lieu: No

National Heroes Day – 25th August

Day Given in Lieu: No

*All Saints’ Day – 1st November

Day Given in Lieu: No

Bonifacio Day – 30th November               

Day Given in Lieu: No

*Immaculate Conception – 8th December

Day Given in Lieu: No

*Christmas Eve – 24th December

Day Given in Lieu: No

Christmas Day – 25th December              

Day Given in Lieu: No

Rizal Day – 30th December

Day Given in Lieu: No

*New Year’s Eve – 31st December

Day Given in Lieu: No

Comment           

*Special non-working days – holidays are unpaid, and employees are not required to work but receive a special rate if they do so (130% for normal hours, 169% for overtime).

! Holiday moves each year with the lunar calendar

Many employers will give a day off in lieu when a holiday falls at the weekend. Special working days are also designated by the government when employees are expected to work. 

Annual Leave

Paid legal entitlement (working days) Employees are entitled to 5 working days’ leave which can also be used for sickness, after 1 year of service.  However, many employers offer up to 15 days’ leave plus the same in sick leave.

Sick       

There is no legal requirement to provide sick leave. Employees who have made social security contribution during 3 of the preceding 12 months can claim sick pay of 90% of salary from the government after 3 days of hospitalisation. Many employers will have more generous sick leave policies.

Maternity          

New mothers with 1 year’s service are entitled to 105 calendar days of maternity leave. This rises to 120 days for single mothers. 100% of salary is paid by the government via the employer (up to a capped amount). A further 30 days of unpaid leave is also available. In the case of a miscarriage the leave entitlement is 60 days.

Maternity leave should be applied for at least 30 days in advance.

Paternity            

Married fathers are entitled to 7 calendar days of paternity leave. A further 7 days may be transferred from the mother’s allowance to the father (regardless of the relationship). Paternity leave is paid by the government.

Parental              

Single parents are entitled to 7 working days per year until the child is 8.

Other   

10 days of paid leave is available for female employees who are the victims of domestic violence. Women who undergo surgery for gynaecological disorders are entitled to 2 months of paid leave so long as they have 6 months of service in the previous 12.

Medical Insurance          

This is sometimes provided to employees and their families to provide faster access to a greater choice of facilities. It will usually include dental and optical cover.

Life Insurance

Life insurance is a common benefit in the Philippines with 12 to 24 months’ salary commonly offered or a lump sum amount of PHP 500,000 to PHP 1,000,000. Accidental death and disability is another common benefit.

Other

In addition to allowances to cover items such as phone and home office, meal vouchers, gym membership and transport allowances are sometimes given.  As mentioned, many companies offer vacation and sick leave in excess of the statutory minimum.