Employer of Record in the Philippines: The 2026 Compliance Guide
Hire in the Philippines without registering a company. What an EOR legally carries, what a hire really costs, how it compares with contractors and your own entity — and what to check before you sign.
Starlight HR
The EOR carries
- The employment contract
- Payroll and payslips
- SSS, PhilHealth and Pag-IBIG
- Withholding tax and BIR Form 2316
- 13th month pay and leave
- Terminations and due process
You keep
- Who you hire
- Their pay and targets
- Day-to-day direction of the work
- Performance and promotion
- Funding payroll each cycle
An Employer of Record in the Philippines lets a foreign company hire staff here without registering a company of its own. Most firms reach the same fork: incorporate, engage contractors, or use an EOR.
Each path has a different legal basis, a different compliance load, and a different cost when it is done wrong. This guide shows what an EOR covers under Philippine law, what it really costs, and how to choose — on the facts, not a sales page.
What an Employer of Record is
An EOR becomes the legal employer of your Philippine staff. It signs the contract, runs payroll, remits contributions and carries the employer obligations under the Labor Code.
You keep the work itself — what gets done, how, and to what standard. The EOR's role is the employment relationship, not the job.
Why this matters: if a "contractor" is directed, scheduled and supervised like an employee, Philippine labour authorities can treat the relationship as employment, whatever the contract says. An EOR puts it on the right footing from day one.
Is an EOR legal in the Philippines?
Yes.
The employee holds a genuine Philippine employment contract, receives every statutory benefit, and is covered by Philippine labour protections. What changes is whose name is on the contract — not whether the employment is real.
There is no separate EOR statute. Arrangements like this are measured against the Labor Code and DOLE(opens in a new tab) Department Order No. 174, s. 2017, which bans labor-only contracting outright.
DO 174 red flag 1
No substantial capital or investment
…while the workers perform activities directly related to the client's main business.
DO 174 red flag 2
No control over the work
…where the contractor does not exercise the right to control how the work is performed.
If an arrangement is found to be labor-only contracting, the company receiving the workers is treated as their direct employer, with every liability that follows. That is why the way a provider is structured and documented matters as much as its price.
What an EOR is legally responsible for
A compliant EOR arrangement covers, at minimum:
Government contributions
Employer and employee shares to SSS, PhilHealth and Pag-IBIG, remitted on the mandated schedule.
Withholding tax
Monthly withholding on compensation, year-end annualisation, and BIR Form 2316 for every employee.
Statutory benefits
13th month pay under PD 851 by 24 December, service incentive leave, and every leave the law mandates.
Itemised payslips
Gross pay, statutory deductions and net pay — not a lump-sum transfer.
Contract and due process
A Philippine employment contract, regularisation after probation, and lawful separation if it comes to that.
HMO cover, internet allowances and bonuses are extras some providers bundle in — not legal requirements. When one quote looks cheaper, check which of the statutory items it leaves out.
What it really costs to employ someone
Salary is not the whole number. Employer contributions and the 13th month accrual sit on top, whichever structure you use. Here is a ₱40,000 monthly salary, worked out with our own calculator.
Monthly, all in
₱48,063
+20.2% on salary
- Salary₱40,000
- SSS — employer share₱3,500
- PhilHealth — employer share₱1,000
- Pag-IBIG — employer share₱200
- Employees' Compensation₱30
- 13th month pay (accrued)₱3,333
Employer side only, at the 2026 schedules: SSS 10% of a salary credit capped at ₱35,000, PhilHealth 2.5% between a ₱10,000 floor and ₱100,000 ceiling, Pag-IBIG 2% on up to ₱10,000, Employees' Compensation, and 13th month pay accrued monthly. Rates are set by SSS(opens in a new tab) and the other agencies and revised periodically. The EOR's service fee is separate.
Your salary, your headcount.
Get the exact monthly figure in under a minute.
EOR vs contractor vs local entity
| Employer of Record | Independent contractor | Local entity | |
|---|---|---|---|
| Setup time | About one to two weeks | Days | Weeks to months |
| Legal employer | The EOR | No employment relationship | Your own entity |
| Statutory benefits | Yes, in full | No, if genuinely independent | Yes, in full |
| Misclassification risk | Low, if properly structured | High if the role is really employment | Low |
| Cost shape | Per-employee fee on top of statutory costs | Lowest, for genuine project work | Higher upfront, lower per head at scale |
| Best fit | Ongoing roles, no entity yet | Defined, deliverable-based projects | A long-term, larger team |
Choose an EOR when
you need people working soon, have no entity, and the roles are ongoing.
Choose a contractor when
the work is a defined project, with no fixed hours and no supervision.
Choose an entity when
you are building a large, permanent team and want local contracts and assets.
The honest read: an EOR and an entity carry the same statutory obligations. The difference is who is legally responsible for meeting them. Weighing the two? EOR vs company registration compares them in depth.
Leave, probation and termination
These come with the hire, whoever the employer is. Budget for them before the offer goes out.
5days
Service incentive leave
After a year of service
105days
Maternity leave
RA 11210
7days
Paternity leave
RA 8187
7days
Solo parent leave
For qualified solo parents
+25%
Overtime premium
Beyond eight hours
+10%
Night differential
Work between 10pm and 6am
Probation is six months at most. An employee still working after that becomes regular, with full security of tenure. Set the standards for regularisation in writing on day one.
Just causes
Misconduct, neglect, fraud, breach of trust
No separation pay, but due process still applies: written notice, a chance to be heard, and a written decision.
Authorised causes
Redundancy, retrenchment, closure
Written notice to the employee and DOLE at least a month ahead, plus separation pay:
- Redundancy1 month per year
- Retrenchment or closure½ month per year
Six months or more counts as a full year.
Resigning employees owe you 30 days' notice. Under an EOR, the provider runs the process and carries the exposure; you are consulted because it is your team.
Because the EOR becomes the legal employer, its compliance record stops being its problem and becomes part of yours.
What to verify before you sign
A registered Philippine entity of its own
Not a reseller sitting on someone else's registration — a layer you cannot audit.
Proof of remittances, not a promise
Actual SSS, PhilHealth, Pag-IBIG and BIR remittance records. A provider with nothing to show is a red flag.
How the arrangement answers DO 174
Ask how they structure and document the relationship against the labor-only contracting test.
Data handling under the Data Privacy Act
Especially if the role touches client data, finance systems or intellectual property.
What happens when you leave or incorporate
Clear terms for moving the employee to another provider or to your own entity.
Employee records are personal data. The provider holding them answers to the National Privacy Commission(opens in a new tab) under the Data Privacy Act — ask how they handle it before any payroll data moves.
Onboarding timeline and moving to your own entity
1–3 business days
Contract prepared
Your terms in a compliant Philippine contract.
3–10 business days
Registered and enrolled
SSS, PhilHealth, Pag-IBIG and the BIR, plus payroll set-up.
1–2 weeks
Payroll-ready
The employee is working and paid on your schedule.
Finding the candidate runs on its own clock. If you have not found them yet, our recruitment service sources and vets, and you choose.
You are not locked in
Start with an EOR
Hire your first people in weeks.
Incorporate when it pays
Once the team and revenue justify it.
Move the team across
No gap in service, no re-papering.
That works best when one firm handles both the EOR now and the company set-up later, so the compliance groundwork carries forward. Year-end tax filings for the team run through the BIR(opens in a new tab) either way.
Starlight Employer of Record
Hire in the Philippines without the entity.
We become the legal employer. You keep the person, the work and every decision about it. One hire or a whole team.
Compliant contracts
A Philippine employment contract on your terms.
Payroll and every remittance
SSS, PhilHealth, Pag-IBIG and BIR, monthly and at year-end.
Year-end filings
BIR Form 2316 and the alphalist, done for you.
Benefits administered
13th month, leave, and HMO if you offer it.
Terminations handled
We carry the process and the exposure, with our counsel.
A named contact for both sides
For you, and for the employee.
0917 631 8876— Mondays to Fridays, from our Makati office.
Frequently asked questions
Is an Employer of Record legal in the Philippines?
Yes. There is no separate EOR statute, so the arrangement is measured against the Labor Code and DOLE Department Order No. 174, which prohibits labor-only contracting. A properly structured EOR gives the employee a genuine Philippine employment contract with full statutory benefits and labour protections. What matters is how the arrangement is set up and documented, which is why the provider's own standing is worth checking.
Can a foreign company hire employees in the Philippines without a local entity?
Yes, through an Employer of Record. Your hires are employed through the EOR's existing Philippine entity, so they can work for you lawfully without you registering a company. Hiring them directly as employees without any entity is not workable, and treating them as contractors when they work like employees risks misclassification.
How much does it cost to employ someone through an EOR in the Philippines?
Two parts. First the statutory cost, which you pay in any structure: employer SSS, PhilHealth, Pag-IBIG and Employees' Compensation plus the 13th month accrual, which typically adds around 13% to 22% to salary. A ₱40,000 monthly salary comes to about ₱48,063 a month all in. Second, the EOR's own service fee per employee, which Starlight quotes against your roles and headcount.
What is the difference between an EOR and a PEO?
A PEO shares employer duties with you and generally assumes you already have a registered local entity, so liability stays partly yours. An EOR is the employer outright and needs no entity from you.
What benefits must an employer provide in the Philippines?
At minimum: SSS, PhilHealth and Pag-IBIG coverage, 13th month pay by 24 December, five days of service incentive leave after a year of service, 105 days of maternity leave, 7 days of paternity leave, solo parent leave for qualified employees, and premium pay for overtime, night work and holidays. HMO cover, allowances and bonuses are optional extras.
How long does it take to onboard an employee through an EOR?
Usually one to two weeks once the candidate is chosen: one to three business days to prepare the contract, three to ten business days for government registrations and payroll set-up. Finding the candidate is a separate timeline.
Can EOR employees be moved to our own entity later?
Yes. Many companies start with an EOR and incorporate once the team justifies it. The staff can then be transferred to direct employment with the new entity, which is smoothest when the same firm handles both the EOR and the incorporation.
Who handles terminations under an EOR?
The EOR, as the legal employer, carries the process and the exposure. Philippine law requires a just or authorised cause and due process. Authorised causes such as redundancy require written notice to the employee and DOLE at least a month ahead, and separation pay of one month per year of service for redundancy, or half a month per year for retrenchment or closure.
What is labor-only contracting?
An arrangement DOLE Department Order No. 174 prohibits, where a contractor supplies workers without substantial capital or investment, or without exercising control over their work. If it is found, the company receiving the workers is treated as their direct employer, with the liabilities that follow.
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