Labor Laws in the Philippines [Complete Guide for Employers]

The Philippines is making waves as a popular spot for digital nomads to set up shop, thanks to its low cost of living and the warmth and friendliness of its people. 

It's also a popular choice for companies seeking remote employees skilled in roles such as customer support, software development, and virtual assistance. 

However, before hiring a remote Filipino employee, employers must ensure that they're in full compliance with Filipino labor laws. 

Key takeaways: 

• Employees in the Philippines generally fall into one of six employment categories.
• Filipino employees are entitled to several benefits, including paid leave and 13th-month pay.
• There is no at-will employment in the Philippines. All terminations must be for just or authorized cause.

The Labor Code of the Philippines: What You Need to Know

The Labor Code of the Philippines contains a framework of employee rights designed to ensure fair treatment of workers in the private sector. 

This includes setting standards for pay rates, working hours, and paid time off for businesses that employ talent in the Philippines. 

Failure to comply with Filipino employment laws can result in severe consequences, such as hefty fines and even imprisonment.

Who Is covered by the Employment Laws in the Philippines? 

Employment laws apply to all workers in the Philippines, and the Labor Code specifies that it covers all employees, regardless of industry.

Employment in the Philippines

There are six main employment categories in the Philippines:

• Regular employees are employed indefinitely and perform tasks essential to the employer's business. Employees are considered to be at regular status once their probationary period is complete.

• Probationary employees are hired on a trial period, which is usually six months. During this time, employers assess their suitability for regular employment.

• Fixed-term employees are brought on board for a specific duration with a precise end date in their contract.

• Seasonal employees are fixed-term employees who work during a particular time or season who can expect to be reinstated when their services are needed again. Examples include agricultural work or holiday retail positions.

• Project-based employees are hired for a specific project, and their employment concludes once the assigned work is completed.

• Casual employees perform tasks deemed not essential to the employer's core business needs. However, once a casual employee works for a full year, they become a regular employee.

Because at-will employment doesn’t exist in the Philippines, the employer and the worker must have a contractual agreement in place that outlines the worker’s duties and responsibilities.

For a more comprehensive overview of each employment type, be sure to consult the Philippines’ labor code.

Working Hours & Wages

Under Filipino law, the standard workweek is 40 hours. 

The minimum wage is determined by the Regional Tripartite Wages and Productivity Boards (RTWPBs), which sets wage rates based on factors such as industry, location, and cost of living. As of 2025, the minimum wage is PHP (Philippine Pesos) 645 per day.

The labor code also mandates the following:

• Overtime pay: Employees are entitled to overtime pay of at least 25% above their regular wage for any hours worked beyond the standard 40-hour workweek.
• Night shift differential: Employees working between 10 p.m. and 6 a.m. are entitled to a night shift differential of at least 10% of their regular hourly wage.‍
• Rest days: Employees are entitled to a weekly rest period of at least 24 consecutive hours.‍
• 13th-month pay: Employers must pay a 13th-month salary, equivalent to at least 1/12 of an employee's basic salary earned within a calendar year. This payment must be made by December 24th each year.

Health and Safety Standards

The Occupational Safety and Health Law mandates that employers do the following:

• Provide workers with a place of employment free from hazards
• Educate workers on job safety
• Inform employees of any workplace health risks
• Use only approved workplace equipment
• Train employees how to deal with emergencies and accidents
• Comply with all Occupational Safety and Health Standards
• Allow workers and their health and safety representatives to participate in planning and evaluating the company’s health and safety program

Penalties for not abiding by these health and safety standards range from PHP 10,000 to PHP 20,000 per violation.

Service Incentive Leave

The labor law stipulates several paid leave benefits for employees, including Service Incentive Leave (SIL). 

After one year of service, Filipino employees earn five days of SIL, which can be used for vacation, sick leave, or any other reason. 

While many employers offer more generous leave packages, SIL is a baseline to ensure all employees have access to at least a minimum amount of paid time off. Unused sick leave can be converted into cash at the end of the year.

Holiday Leave

The Philippines has two classes of holidays: regular and special non-working holidays. 

Employees enjoy a paid day off for regular holidays. If they do work, they get paid twice their regular pay rate.

If two holidays fall on the same day, employees are entitled to double holiday pay in addition to their regular wages.

The government declares special non-working holidays to commemorate significant events, and they can vary by region. It's up to employers if employees receive a paid day off for these holidays.

Learn more about paid leave laws in the Philippines.

Parental Leave

In the Philippines, expectant mothers are entitled to 105 days of paid maternity leave with the option to request an additional 30 days of unpaid leave. 

Under the Solo Parents Welfare Act, eligible single mothers receive 15 additional paid days of maternity leave.

In the event of miscarriage, employees are eligible for 60 days of paid leave.

To qualify for paid maternity leave, female employees must have worked for their employer for at least a year, including six months continuously before the due date. 

Male employees receive seven days of paid paternity leave. Mothers also have the option to transfer seven days of their maternity leave to the father, for a total of 14 paid days off. Paternity leave is only available to married employees, and only for their first four children.

Single parents with at least one year of service can take seven days of paid leave annually to manage parental obligations.

Health Insurance

All Filipino citizens can access free healthcare through the Philippine Health Insurance Corporation, commonly known as PhilHealth. This government-run program is funded through both local and national subsidies.

PhilHealth offers a wide range of healthcare services, from coverage for major medical expenses and surgeries to maternity benefits and beyond. 

As of 2025, contributing members pay 5% of their annual income into PhilHealth, with the cost split equally between the employee and employer.

Termination

At-will employment doesn't exist in the Philippines. This means employers cannot terminate an employee without a valid and legal reason that’s outlined in the Labor Code of the Philippines.

Known as just cause, these reasons include:

• Serious misconduct, such as theft, fraud, or violence in the workplace
• Willful disobedience by repeatedly refusing to follow reasonable and lawful orders from the employer 
• Fraud or breach of trust that damages the employer's interests
• Gross and habitual neglect by consistently failing to perform job responsibilities and duties

In addition to just cause, there are also authorized causes for termination, such as redundancy due to business restructuring or closure, retrenchment, or illness. Employers must provide financial proof in order to terminate employees due to retrenchment.

Notice periods vary depending on the type of termination.

If the employer has just cause, they must provide the reason for dismissal along with evidence to support it and allow the employee five days to respond to the notice in writing. If the employee challenges their dismissal, the employer must conduct a hearing. If the employer still wants to terminate the employee, they must then submit a second and final notice of termination.

If the employer doesn’t have just cause for the termination, they must send notice at least 30 days before the date of termination, along with the reason for the dismissal. They must also file a copy of that notice with the employee’s regional office of the Department of Labor and Employment (DOLE).

Learn more about terminating international employees.

Severance 

Employees terminated for authorized cause are entitled to separation pay equivalent to half a month's salary for each year of service.

However, employees terminated due to misconduct, fraud, crime, or neglect of duty don’t receive severance pay.

Trade Union Rights for Filipino Employees

The 1987 Philippine Constitution protects employees’ rights to organize and engage in collective bargaining to protect workers’ interests, including wages, service incentive leave, working conditions, terminations, and more.

Under the Labor Code, these agreements remain in effect for five years and include a 60-day window after expiration during which they cannot be challenged or renegotiated.

Filipino Independent Contractors

Companies find it advantageous to hire contractors in the Philippines for many reasons. In some cases, it might be because businesses aren’t required to provide those workers with the same benefits as full-time employees.

However, it’s important not to classify a worker who is technically an employee as an independent contractor. This constitutes fraud since you’re not providing benefits or paying employment taxes.

Misclassification of a contractor can result in fines, as well as having to pay back taxes to the government and issue payments to employees for the benefits you didn’t provide.

Learn more about employee misclassification.

Penalties for Not Following Filipino Labor Laws

Employers that fail to meet the Philippines’ labor requirements can face civil liabilities, including paying back wages and unpaid benefits.

They can also face criminal penalties under Article 288 of the Labor Code, resulting in hefty fines or even imprisonment.

How to Stay Compliant with Labor Laws in the Philippines 

Clearly, it’s important to maintain compliance with all of the country’s labor laws, so here are some tips to help you stay within the law.

• Stay on top of legal changes: Employment laws can change at any time, so it’s essential to stay up-to-date with any changes. The DOLE regularly issues guidelines and advisories that may impact labor compliance.

• Regularly reassess employees’ classifications: As we just explained, employee misclassification can mean hefty penalties, so you’ll want to double (or even triple) check that any independent contractors you hire actually meet all the necessary classification requirements. Regularly assess workers’ status, especially if their roles or job descriptions change.

• Partner with an Employer of Record (EOR): An EOR not only ensures that you’re compliant with the country’s labor laws, but it also manages employee contracts, payroll, and benefits administration.

Hire in the Philippines with RemoFirst

The Philippines boasts a highly skilled workforce, but navigating the complexities of local labor regulations can be daunting for global employers that wish to hire remote Filipino talent.

Teaming up with an EOR like RemoFirst simplifies the process. We’ll take care of all legal employment requirements, including employment contracts, payroll management, taxes, employee benefits, and compliance with Filipino labor laws, such as paid leave.

Book a demo to see how we can streamline your hiring process and ensure compliance in 185+ countries.