Employer/employee relations are principally governed by the Labor Code of the Philippines.
The Labor Code provides protection to labor and prescribes rules on such issues as wages, labor standards, health and safety, post-employment benefits, notice periods, and conciliation and arbitration procedures for the solution of labor/management problems. The Labor Code also makes unfair labor practice a criminal offense and provides that the rights of workers and trade unions are not to be repressed. The Constitution and the Labor Code generally grant workers and employees the right to form or join a labor organization or union of their own choice for the purpose of collective bargaining. The Philippine trade union movement is composed of several unions and federations with different ideological leanings. Unions are scattered in various places of work throughout the country and are either independent or affiliated with federations or trade union centers.


Skilled and semi-skilled workers may be paid on an hourly, daily, weekly or monthly basis.
A presidential decree made compulsory the annual payment of “13th month” pay to “rank and file” employees not later than 24th December every year provided the employee has worked for at least one (1) month during the calendar period. The 13th month pay is 1/12 of the annual salary received from the same employer. A general practice has developed that the 13th month salary is paid in two installments to be timed with school enrolment (May) and Christmas time in addition to any bonuses or profit-sharing privileges granted during the year.

HR & Labor

Hours worked An employee may be required to work for a maximum period of eight hours a day or 48 hours a week at the regular rate of pay. Employees are entitled to a minimum of one rest day per week.
Subject to compliance with certain conditions, the employer may compress the work days from six days (from Monday to Saturday) to five days (from Monday to Friday) and even to four days (from Monday to Thursday). Female employees are discouraged from being employed between 10pm and 6am, although companies can apply for an exemption from this restriction. The employment of children below age 15 is not allowed unless the child works directly under the sole responsibility of his/her parents or legal guardian and where only members of his/ her family are employed. Also, it is required that his/her employment neither endangers his/her life, safety, health, and morals, nor impairs his/her normal development provided further that the child is provided with the prescribed education. A work permit from the DOLE must be secured before engaging the child to work.


To enter the Philippines, a foreign national is required to present a passport valid for at least six months from the date of entry.
A visitor who is a national of a country with which the Philippines has a reciprocity agreement may enter the Philippines visa-free for an initial period of 30 days provided he/she has a valid plane ticket for onward travel from the Philippines. Other visitors will need to obtain an entry visa 108 Doing Business and Investing in the Philippines 2015 (such as business or tourist visa) before travelling to the Philippines. Visitors may file an application to extend their 30 days visa-free entry status or entry visa while they are in the Philippines. Generally, foreign personnel who intend to work in the Philippines for more than six months are required to secure an Alien Employment Permit (AEP) from the DOLE and working visa from the Bureau of Immigration (BI) before they can legally start working. The working visa is issued only after the AEP has been secured. AEP and working visa are valid for the term of employment/work in the Philippines. Renewals should be sought before the end of the period. Foreign personnel who will work in the Philippines for six months or less will only be required to secure a Special Work Permit (SWP) from the BI before they can legally start working. The SWP is initially valid for three months and renewable for another three months. The processing of SWP applications by the BI is from two to four working days.


Employee social security benefits include access to sickness and maternity leave benefits, retirement and disability benefits, and death benefits.
Employee benefits also include access to salary, education, and housing loans. A salary loan at the minimum is an amount equivalent to a month’s salary granted by the SSS to a qualified employee at a stated rate of interest. Outbound expatriates are entitled to some social security benefits upon departing the Philippines. However, because the benefits are not large by international standards, the amounts involved are generally not worth pursuing.

Minimum wage

Employees must be paid at least the statutory minimum wage.

Minimum wage rates vary by region, and whether the employee is an agricultural or nonagricultural worker.

Salaries of managerial and professional employees vary widely according to the employee’s type of work, function, and position; and the employer’s status, industry classification, union status, and location.

Pension fund

Pension trusts
Contributions to pension trusts maintained for employees are deductible. Contributions covering the cost of pension payments during a taxable year are deductible in full in that year. The deduction for contributions in excess of that amount must be apportioned in equal parts over a period of ten consecutive years beginning with the year in which the transfer or payment is made.

Employee pension trusts established under conditions laid down by law are exempt from income tax.

Termination procedure

Termination of employment
An employer may terminate the services of an employee for just cause, such as serious misconduct or gross and habitual neglect of duties. Applying the two notices and hearing rule, the dismissed employee should be notified initially of the ground for termination, specifying the particular act or omission constituting the ground. The employee is then entitled to be heard and present his defense. Thereafter, if there is still a valid ground for the dismissal, the notice of termination must be given to the employee. Employees dismissed for just cause are not entitled to any separation pay.

If an employee is illegally dismissed, suspended, or laid off, the DOLE may, after due process, order the reinstatement with back wages of the employee, or require the payment of termination pay, other benefits and remedies that it considers equitable under the circumstances.

Employees may also be terminated for other causes authorized under the Labor
Code, such as the installation of laborsaving devices or redundancy. The employee must be given one month’s notice of termination, and the DOLE must also be advised. The employee will be entitled to
separation pay equal to the greater of one month’s pay or one-half month’s pay for every year of service depending on the reason for termination.

Employees may also be separated in certain circumstances for ill health. The employee will be entitled to separation pay equal to one month’s pay or one-half month’s pay for every year of service, whichever is higher.

Sick Days

Two weeks paid sick leave per year.

Vacation Days

Most labor agreements contain provisions for the accumulation of paid vacation and their commutation (i.e., exchange of comparable pay for vacations not taken), normally within two years from the date of employment.

The President may also declare additional days to be non-working days.

An employee with at least one year of service is entitled to an annual paid service incentive leave of at least five days.
However, the prevailing practice is to
provide two weeks paid vacation leave

Paid off holidays

Statutory holidays granted with full pay to monthly paid employees are listed below:

(The following are designated as regular holidays and nationwide special days, unless otherwise modified by law, order, or proclamation.)

•New Year’s Day - 1 January
•Maundy Thursday - Movable date
•Good Friday - Movable date
•Eidul Fitr - Movable date
•Araw ng Kagitingan (Bataan and Corregidor Day) - 9 April
•Labor Day - 1 May
•Independence Day - 12 June
•Ninoy Aquino Day - 21 August
•National Heroes Day - Last Monday of August
•Eid’l Adha - Movable date
•All Saints Day - 1 November
•Bonifacio Day - 30 November
•Christmas Day - 25 December
•Rizal Day - 30 December
•Last day of the year - 31 December

Additional benefits/information

Fringe benefits
Many large establishments voluntarily provide paid sick, vacation and holiday leaves, private pension plans, subsidized meals, rice and transportation allowances, and group hospitalization and group life insurance benefits.

In some establishments, executives and other high-ranking employees are provided with housing and car plans. Expatriate executives usually enjoy greater fringe benefits than their local counterparts


A domestic or a resident foreign corporation is required to file income tax returns on a quarterly basis. Within 60 days from the close of each of the first three quarters in its taxable year, the corporation must file in duplicate a return summarizing its gross income and deductions for the year to date. A final annual income tax return must be filed on or before the 15th day of the fourth month following the close of the tax year.

The place where a return must be filed is also prescribed. Filing a return in the wrong location may attract a penalty of 25% of the tax due, even though the return might have been filed and the tax paid on the due date.

Social Security

The SSS was created to provide private employees and their families with protection against disability, sickness, old age, and death. The Government Service Insurance System (GSIS) is an
equivalent system for government employees.

(See Appendix XI on Page 224 for Social Security System contributions)