The Essentials for Payroll in the Philippines
14 July 2025
The APAC Payroll Essentials guidebook by Forvis Mazars aids business owners in navigating payroll management across the Asia-Pacific region. It provides a guide on Payroll in the Philippines, and gives key insights into local regulations, workplace norms, registrations, visas, contracts, compensation, benefits, social security, taxes, and termination—providing essential tools for effective and compliant payroll operations to provide insight to businesses of all sizes.
This practical guide on payroll in the Philippines aims to help businesses navigate regulatory requirements in managing payroll for their workers in the Philippines.
Background for Business in the Philippines and workplace norms
General information
- Currency: Philippine Peso (PHP)
- Tax year: Generally from 1 January to 31 December
- Working hours:
- 5 days per week.
- Daily: Up to 8 hours, with flexible arrangements
possible
- Payroll cycle: Semi-monthly
Key governing laws affecting Payroll in the Philippines
Mandatory payroll registrations in the Philippines
Employers must submit their payroll registration with the following entities:
- Bureau of Internal Revenue (BIR): For tax deduction and compliance (TIN).
- Social Security System (SSS): For social security contributions.
- Philippine Health Insurance Corporation (PhilHealth): For health insurance.
- Home Development Mutual Fund (Pag-IBIG Fund): For housing fund contributions.
Work visa requirements in the Philippines
Types of work visas in the Philippines
9(g) Pre-arranged Employment Work Visa:
- For foreign nationals working in the Philippines.
- Requires a valid employment contract and relevant qualifications.
Ease of obtaining
To complete the Work visa Requirements in the Philippines, businesses must provide both documentation and maintain compliance, both are strict in their implementations; Note that Work Visa Requirements in the Philippines will vary from region depending on local authorities.
Payroll guidelines for Employment contracts and policies
Contracts
Written contracts are highly recommended and often required.
Must comply with the Labour Code of the Philippines and local regulations.
Employee handbook
Useful for outlining company policies, benefits, and compliance with regional laws.
Employment commencement for Payroll in the Philippines
Probation period
Typically 6 months; widely practiced and regulated.
Payslip requirements
Itemised payslips must include details of earnings, tax deductions, and statutory contributions.
Compensation, wages, and allowances for Payroll in the Philippines
Minimum Wage Philippines 2025
- Set by the Regional Tripartite Wages and Productivity Board; varies by region.
- Example: As of 2025, the minimum wage in the Manila metropolitan area is higher than in many other regions
- Learn more about daily minimum wage rates
Overtime Pay Rate
- Governed by the Labour Code.
- Generally, 1.25x hourly wage for regular overtime, 1.3x for rest days and special non-working holidays, and 2x for regular or legal holidays.
Common allowances and taxability
- Taxable: Allowances for housing, travel or transportation, and communication.
- Non-taxable/De Minimis: Allowances for rice, uniform, medical, and laundry (up to certain limits), etc.
Payment frequency
At least once every two weeks or twice a month, with paydays not more than 16 days apart.
Employee benefits and leave entitlements in the Philippines
Statutory benefits
- SSS: Employer contributes 10%, and employee contributes 5% of monthly salary.
- PhilHealth: Employer contributes 2.5 %, and employee contributes 2.5% of monthly salary.
- Pag-IBIG: Employer and employee each contribute 2% of PHP 10,000 or PHP 200.
Statutory leave entitlements
- Statutory leave: Minimum of 5 days/year (Service Incentive Leave), but most companies provide above this requirement.
- Sick leave: Not mandated, but often provided by employers.
- Maternity leave: 105 days paid leave.
- Paternity leave: 7 days, plus up to another 7 days allocated from the mother’s maternity leave.
Public holidays
The Philippines observes several regular holidays (e.g., New Year, Independence Day, Christmas) and several special non-working days determined annually by proclamation. Holidays in the Philippines for 2025
Employee Retirement and SSS Rates in the Philippines
SSS
- Employee: Contributes 5% of salary.
- Employer: Contributes 10% of salary.
- Mandatory for all employees.
Retirement scheme
- SSS Pension: Main retirement savings scheme.
- Voluntary additional contributions possible.
Work injury compensation
- Employers must have work injury compensation insurance for eligible employees.
- Governed by the Employees’ Compensation Commission (ECC).
- Employer is liable to compensate employees for workplace injuries, accidents, or occupational diseases.
- Compensation depends on the nature of injury and salary.
Tax Rates in the Philippines
Personal Income Tax (PIT)
Progressive rates:
| Taxable income (Annual) | Tax rate |
| Not over PHP 250,000 | 0% |
| Over PHP 250,00 but not over 400,000 | 15% of the excess over PHP 250,000 |
| Over PHP 400,000 but not over 800,000 | PHP 22,500 + 20% of the excess over PHP400,000 |
| Over PHP 800,000 but not over 2,000,000 | PHP 102,500 + 25% of the excess over PHP800,000 |
| Over PHP 2,000,000 but not over 8,000,000 | PHP 402,500 + 30% of the excess over PHP 2,000,000 |
| Over PHP 8,000,000 | PHP 2,202,500 + 35% of the excess over PHP 8,000,000 |
Employer obligations
PIT deductions must be remitted to the BIR by the 10-15th of the following month.
Employment Termination Requirements in the Philippines
When a business in the Philippines decides to terminate an employee, they need to fulfil the following guidelines to remain complain with the mandates of the law regarding Payroll in the Philippines:
Notice period
Generally, 30 days’ advance notice, subject to employment contract’s terms and conditions.
Severance pay
This is for authorised causes like redundancy, retrenchment, installation of labour-saving devices, closing or cessation of business, and disease. Severance pay is computed at one half-month or one month’s salary for every year of service, whichever is higher. Employment for six months or more but less than one year is considered equivalent to one year of service for the purpose of computing severance pay.
Offboarding requirements
Includes final settlement of salaries and benefits, and issuance of Certificate of Tax Withheld (BIR form 2316).
Forvis Mazars Payroll Services in the Philippines
Keeping up with regulation changes to Payroll in the Philippines, while also ensuring precise computations and timely releasing can be challenging. Our payroll services are designed to meet the requirements of companies that are seeking accurate, on-time, and secure service payroll outsourcing services. Whether your headcount in the Philippines is one or one thousand, our team can provide tailored solutions that maintain confidentiality and protect employee data. We are present in over 100 countries, enabling you to scale with efficiency internationally.
To contact us, you can click the link HERE or click on the box below this page.
Forvis Mazars Philippines contact