TL;DR (Summary Box)
An Employer of Record (EOR) in the Philippines helps foreign and local businesses legally hire, pay, and manage employees without setting up a local entity. The process involves choosing a trusted provider, signing a service agreement, and letting the EOR handle compliance, payroll, and HR administration. It’s the fastest, most compliant, and cost-effective way to expand or hire talent in the Philippines.
Quick Summary
Working with an Employer of Record (EOR) allows companies—especially startups and foreign businesses—to hire Filipino employees legally while avoiding the hassle of registering a local company. An EOR handles HR, payroll, and government compliance (BIR, DOLE, SSS, PhilHealth, Pag-IBIG), letting you focus on growth and productivity.
What Is an Employer of Record (EOR)?
An Employer of Record is a third-party organization that legally employs workers on your behalf. This means your business can manage daily operations and performance, but the EOR handles all the administrative and legal aspects of employment.
For businesses exploring expansion in the Philippines, an EOR provides a compliant, efficient, and affordable way to hire employees—especially if you don’t have a local entity yet.
In short:
- You control the work.
- The EOR handles compliance.
This setup is perfect for foreign companies, startups, or SMEs testing the local market.
Why Work with an Employer of Record in the Philippines?
1. Avoid the hassle of business registration
Setting up a local entity can take weeks (or months) and involve multiple agencies like the SEC, BIR, and DOLE. An EOR lets you hire legally within days—no company registration needed.
2. Ensure compliance with Philippine labor laws
An EOR understands local regulations, helping you stay compliant with:
- Department of Labor and Employment (DOLE)
- Bureau of Internal Revenue (BIR)
- Social Security System (SSS)
- PhilHealth
- Pag-IBIG Fund
3. Save on administrative costs
Instead of hiring HR staff or payroll managers, the EOR handles everything—from employment contracts to benefits—so you can focus on operations.
4. Flexibility for short- or long-term hires
Need project-based staff or remote support? EOR services offer flexible hiring options that fit your business model.
Step-by-Step Guide to Working with an Employer of Record in the Philippines
Many companies want to know how to work with an Employer of Record Philippines effectively. Here’s a simple, step-by-step guide:
Step 1: Identify Your Hiring Needs
Start by clarifying your business objectives:
- How many employees do you need?
- Are they full-time, part-time, or project-based?
- What roles or skills are required?
This helps your EOR tailor the right compliance and contract setup.
Step 2: Choose a Trusted Employer of Record Provider
Select a reputable provider experienced in the Philippine labor market. Consider:
- Experience and track record
- Client testimonials or case studies
- Transparency in pricing
- Range of services (payroll, HR, tax, benefits, etc.)
- Local compliance expertise
💡 Tip: Look for providers specializing in Employer of Record services for SMEs and foreign companies to ensure flexibility and affordability.
Step 3: Review the Service Agreement
The EOR will present a service contract outlining:
- The employment structure
- Roles and responsibilities
- Government compliance details
- Payment terms and service fees
Review this carefully to ensure clarity on costs, obligations, and termination terms.
Step 4: Employee Onboarding and Documentation
Once the agreement is signed, the EOR collects all necessary documents from both employer and employee, such as:
- Business registration or client details
- Job descriptions and compensation terms
- Employee identification and tax details
- SSS, PhilHealth, and Pag-IBIG numbers
The EOR then drafts a compliant employment contract that follows Philippine labor standards.
Step 5: Payroll, Taxes, and Benefits Management
The EOR handles everything related to compensation and compliance:
- Monthly payroll processing
- Withholding taxes and BIR filings
- SSS, PhilHealth, and Pag-IBIG remittances
- 13th-month pay and leave credits
This ensures your employees are paid accurately and on time—without you dealing with the paperwork.
Step 6: Ongoing HR and Legal Support
A good EOR doesn’t stop after onboarding. They provide:
- Regular HR support and employee relations management
- Legal updates on labor laws
- Contract renewals and offboarding assistance
This means your business stays compliant and updated as laws evolve.
Benefits of Using an Employer of Record (EOR)
Working with an EOR brings multiple advantages for businesses of all sizes:
1. Speed and Simplicity
Hire in days instead of months. No need for local incorporation.
2. Full Legal Compliance
Stay compliant with DOLE, BIR, and labor laws without legal headaches.
3. Cost Efficiency
EOR solutions are often cheaper than setting up an entity or maintaining an internal HR department.
4. Access to Filipino Talent
Hire local professionals for technical, creative, or administrative roles.
5. Reduced Risk
Avoid potential legal issues or penalties associated with improper hiring.
How Much Does an Employer of Record Cost in the Philippines?
The cost of EOR services varies depending on:
- Number of employees
- Scope of HR, payroll, and compliance services
- Salary levels and employment type
On average, EOR fees range from 8% to 15% of the employee’s monthly salary—but when compared to setup and compliance costs of a new entity, it’s far more cost-effective.
Common Mistakes to Avoid When Working with an EOR
- Skipping due diligence – Always verify your provider’s credibility.
- Not understanding your contract – Ensure clarity on taxes, benefits, and liabilities.
- Overlooking data security – Confirm your EOR complies with data protection laws.
- Ignoring employee experience – Choose an EOR that supports both employer and employee needs.
When Should You Use an EOR?
Consider an Employer of Record if:
- You’re a foreign company hiring in the Philippines.
- You want to test the market before establishing a branch.
- You’re a startup with limited HR or legal resources.
- You plan to hire remote teams legally and compliantly.
FAQs About Working with an Employer of Record in the Philippines
Q1. What is an Employer of Record (EOR) and how does it work in the Philippines?
An EOR is a third-party company that legally employs workers on your behalf, managing compliance, payroll, and benefits under Philippine laws.
Q2. Why should businesses use an Employer of Record instead of hiring directly?
An EOR simplifies hiring, ensures compliance, and eliminates the need for local business registration.
Q3. What factors should I consider when choosing the best Employer of Record?
Look at experience, transparency, compliance expertise, and client feedback.
Q4. How can an Employer of Record help with HR and compliance in the Philippines?
EORs handle employee contracts, payroll, benefits, and labor compliance for you.
Q5. Are Employer of Record services cost-effective for SMEs and startups?
Yes—EORs provide affordable outsourcing solutions that reduce overhead costs.
Q6. What industries benefit most from Employer of Record solutions?
IT, BPO, startups, e-commerce, and professional services companies often benefit most.
Q7. How does an Employer of Record reduce risks for foreign companies in the Philippines?
EORs ensure full legal compliance, reducing risks of fines, penalties, and tax issues.
Q8. What’s the difference between an Employer of Record and a staffing agency?
A staffing agency finds talent, while an EOR becomes the legal employer handling compliance and HR administration.
Q9. Can an Employer of Record manage payroll, taxes, and government compliance?
Yes—EORs take care of all payroll, BIR filings, and statutory contributions.
Q10. How do I compare Employer of Record providers to find the right fit?
Compare based on service range, reputation, cost transparency, and response time.
Key Takeaway
Partnering with a trusted Employer of Record in the Philippines makes hiring, compliance, and HR management seamless—especially for foreign companies and SMEs that want to expand without the heavy paperwork. It’s the simplest and safest way to grow your team legally.
Ready to Work with an EOR?
Suppose you’re ready to hire in the Philippines without the hassle of setting up a local entity. Partner with an experienced EOR provider. They’ll handle the compliance—you focus on scaling your business.
