Philippines Time Zone (UTC +8.00)

Undoubtedly, payroll is a critical process for any organization. The pay cycle in Philippines refers to the period for which an organization pays its employees, which can vary depending on the pay frequency the organization chooses to adopt.

Salaries are usually paid bi-monthly on the 15th and the 30th of every month. Organizations also choose to follow a monthly pay frequency.

13th month salary is mandatory in Philippines and is equal to 1/12th of the employee's salary during the same calendar year.

Minimum wage requirements vary across the Philippines. The rate an employer has to pay depends upon the region of the country in which their employee is based.

In the capital city of Manila, employees are entitled to a minimum wage of 537 PHP per day. But in a poorer, more rural region like Ilocos, the minimum wage falls to 243PHP per day. The average wage in the Philippines is around 44,600PHP per month.

Effective July 1, 2024, in the National Capital Region, the minimum daily wage rate for the non-agricultural sector/industry stands at 645 PHP per day.

On regular days, all hours worked above the standard 8 hours a day must be compensated by providing a daily salary plus a minimum of 25% additional pay. On Special holidays, all hours worked above the standard 8 hours a day must be compensated by providing the daily salary plus a minimum of 30% additional pay.

On legal holidays, all hours worked above the standard 8 hours a day must be compensated by providing double the daily salary.

Persons who work in supervisory or managerial roles are specifically excluded from the overtime pay.

Employment records required to be kept and maintained by employers shall be preserved for at least three (3) years from the date of the last entry in the records.

For tax-related purposes, however, records must be preserved for a period of ten (10) years reckoned from the day following the deadline for filing a return. Recruitment record - 6 Years, Attendance records - 2 Years, Annual leave record - 2 Years, Employee bank records - duration of employment and no longer than necessary, pension and social security records - 10 years, Leavers (Termination and dismissal ) records - 6 Years, Redundancy record - 6 Years.

Gender equality in workplace
With effect from March 7, 2023, In the labor advice, the DOLE recommended all businesses apply  various  laws, policies, and initiatives to support the advancement of gender equality and should consider workplace diversity.
This is in support of the 2023 National Women's Month Celebration, which should be the subject of "WE for Gender Equality and Inclusive Society." It also recognized the basic concept of equality  between  men  and  women  as  well  as  the  significant role that women play in the development of nations.

Annual establishment report on wages for 2022
Each  private  enterprise  must  submit  an  annual  report  detailing  the   confirmed details of its labor component by May 31, 2023. 
Register, log-in, and submit an Annual Establishment Report on Wages, as of 31 December 2022, through the online portal.

Philippines Labor Code provides various prohibitions against discrimination, including discrimination based on gender, age, and disability.

Also, a JobStart graduate is given preference under the law in the hiring of workers by employers participating in the JobStart Philippines program, which was established under the JobStart Philippines Act (Republic Act No. 10869). This law aims to shorten a youth’s school-to-work transition by enhancing the knowledge and skills jobseekers acquire in formal education or technical training so they can become more responsive to the demands of the labor market.

Following are the mandatory documents for employer records:

• Birth Certificate
• Certificate of employment (If applicable)
• Transcript of record/Curriculum Vitae i.e. CV
• Photocopies of valid IDs with signature (Local name - Philippine identification card PhilID)
• Marriage certificate/ contract with registry number (if applicable)
• Driving Licence (for identification purposes)
• Social Security ID (if applicable)
• Philippine Health Insurance Corporation (PhilHealth) ID (if applicable)
• Home Development Mutual Fund (Pag-IBIG) ID (if applicable)
• BIR Tax Identification Card (if applicable)

Required documents for foreign employees:

• Alien Employment Permit
• Employee Visa (9G)
• Passport with Valid Visa
• Bureau of Quarantine Medical Clearance Certificate This certificate collected for Covid 19 Vaccination purpose.

The maximum length of probationary employees shall be six (6) months and is counted from the date an employee started working. When the employment is not terminated after the six-month probationary period, it shall then be considered regular employment.

• Jan. 1 and Jan. 2: New Year's Day
• Jan. 23: Republic Day
• Feb. 24 and Feb. 25: People Power Anniversary
• Apr. 6: Maundy Thursday
• Apr. 7: Good Friday 
• Apr. 8: Black Saturday
• Apr. 10: Day of Valor 
• Apr. 21: Eid-ul-Fitr
• May 1: Labor Day
• Jun. 12: Independence Day
• Jun. 29: Eid al Adha
• Aug. 21: Ninoy Aquino Day
• Aug. 28: National Heroes Day
• Sep. 3: Yamashita Surrender Day
• Sep. 8: Feast of the Nativity of Mary
• Nov. 1: All Saints Day
• Nov. 2: All Souls Day
• Nov. 27: Bonifacio Day
• Dec. 25: Christmas Day
• Dec. 30: Rizal Day
• Dec. 31: New Year's Eve

Special non-working days 
According to the Department of  Labor  and  Employment,  employees  are  paid  30% more than their daily rate  and  30%  more  than  their  overtime  rate  for  work completed on specific non-working days.
January 9 - Feast of Black Nazarene for the city of Manila 
February 24 - Anniversary of the EDSA People Power  Revolution
February 27 - 84th founding day for the city of General Santos 
March 2: Province  of  La  Union  Anniversary 
March 3: Araw ng Dabaw day 
April 4: Cityhood anniversary for the city of Antipolo 

Paid time off from work during periods of temporary illness and period to recuperate.

Philippine employees are legally entitled to 5 days of paid ‘service incentive leave, which can be used for vacation or sick leave. However, we typically see good employers offering 15 days of paid vacation and 15 days of paid sick leave for most professional-level positions in the Philippines. There are no rulings for carryover, and that aspect of the vacation policy is left to the discretion of the employer.

A pregnant employee is entitled to paid leave for 105 days, with an option to extend for an additional 30 days without pay. If the pregnant employee is a solo parent, the leave can be extended for an additional 15 days with full payment. Women who suffer a miscarriage or have an emergency termination can take up to 60 days of maternity leave with full payment. The Leave shall be taken as a single, uninterrupted period at the time of the child’s birth.

Seven days of full pay to all married male employees in the private and public sectors for the first four deliveries of the legitimate spouse with whom they are cohabiting.

Single parents are allowed to avail of additional leave of 7 working days per year with full pay and benefits.

• Jury Duty Leave or Voting Leave
• Bereavement Leave

The Labor Code of the Philippines mandates 30 day notice period for the employer. The notice period may be longer than 30 days as it is explicitly indicated in the employment contract and the period is reasonable due to the requirement of the position. The Philippines, states that an employee may terminate without just cause the employee-employer relationship by serving a written notice on the employer at least one (1) month in advance. The law further states that the employer upon whom no such notice was served may hold the employee liable for damages. Nevertheless, not all employees require advance notice of 30 days before the end of employment. The following grounds under Art. 285 of the Labor Code are considered just causes allowing the employee to terminate immediately:

• serious misconduct or willful disobedience connected to work-related duties;
• gross and habitual neglect of work duties;
• fraud or willful breach of trust;
• commission of a crime or offense against the employer, an immediate member of the employer's family or employer representatives and similar types of behavior.

Under the Labor Code, separation pay is required only in cases of layoffs, business closure, or termination because of a disease.

Employees terminated because of redundancy are entitled to one month's pay for every year of service. If an employer is restructuring to prevent losses or is closing a business, terminated employees are entitled to one month's pay or one-half month's pay for every year of service, whichever is higher. If an employer terminates an employee for reason of disease, the employee is entitled to one month's pay or one-half month's pay for every year of service, whichever is higher.

Employees must have a valid passport and obtain work visa 9(G), a non immigrant visa for pre-arranged employees, to work in the Philippines. A request letter from the employer is required for this visa in addition to a certified copy of the employee's contract of employment stating exact salary to be received for the next year.

An Alien Employment Permit (AEP) must also be obtained from the Department of Labor and Employment (DOLE). Foreign nationals can apply for an AEP at a Philippine Embassy or Consulate. Local employers who wish to hire the services of a foreigner can apply on behalf of the foreign national at the nearest Regional Office of the DOLE. Foreign nationals who are already in the Philippines can apply for an AEP through their prospective employers with the nearest Regional Office of the DOLE. An AEP will be valid for a time period that depends on the nature of the position occupied by the foreign employee; whether elective, technical, advisory or supervisory.

ACR I-Card annual report 
With effect from January 1, 2023, foreign nationals must report directly to participating immigration authorities  by March 1, 2023.
The Philippine authorities only allow representatives to report on behalf of foreign nationals for the 2023 Annual Report under certain circumstances.
Those who do not report by March 1, 2023 may be subject to fines or other penalties.

According to Data Privacy Law, Background checks are legally permissible in the Philippines and may be required by an employer prior to entering into a contract. However, if an employee who has attained the status of a regular employee fails a background check, he or she may be disciplined by the employer only upon complete compliance with the employee's rights to substantive and procedural due process.

Background checks are typically done prior to entering into the contract when the applicant becomes a candidate for hire.

In the Philippines, background checks are performed either by the company’s human resource team or a third-party agency. The following are basic details you should be looking for when checking your candidates’ applications:

• Educational background – the official transcript of records, diploma, certificates
• Employment history – date of employment, the reason for leaving, salary received, job title
• Professional eligibility – license number, date, and place of issue
• Character references – relationship to applicant, the recommendation for the applicant
• Criminal liabilities – local clearances, court orders, or summons if any
• Personal data – complete name, address, contact number, taxpayer information
• Drug screening – drug test results, drug clearance, history of drug use/abuse if any