How Much Does It Cost to Hire Remote Workers in the Philippines?

Building a team entails many considerations. You must think about who to hire and where to hire. You have to look at skills, expertise, and culture fit. Most importantly, you must work within your company’s budget. 

For these considerations, offshoring offers benefits such as cost efficiency, talent supply, and more.

Offshoring to the Philippines can be a good option for building your team. Filipino remote workers have the technical know-how and the skills you may need. Overall costs for talent working remotely in the Philippines are comparably lower too. For these reasons, a Deloitte survey designated the Philippines as one of the top 10 preferred outsourcing locations.

Learn more about offshoring costs in the Philippines below. You can check what the average remote worker pay is. You can also find the benefits Philippine workers are entitled to. Finally, take note of the legal requirements you need to comply with.

How Do You Hire Remote Workers in the Philippines?

International employers usually hire Philippine remote workers for their business needs. Commonly outsourced roles include full-stack web developer, quality assurance tester, graphic designer, and accountant.

How do you gain Philippine team members? There are five ways to do it.

1. Establishing a Branch or Separate Company

The traditional way of acquiring Filipino team members is to establish a headquarters in the Philippines. You can create a branch of your company. 

Alternatively, you can establish a fully separate company. Either way, the purpose of the entity is to hire Philippine workers for your company’s needs.

2. Outsourcing to a BPO Company

Outsourcing to a BPO (business process outsourcing) company is an accessible way of hiring Filipino team members. You pay these external vendors or third-party service providers to perform internal tasks and functions. 

However, these workers will be considered remote employees of the BPO company in the Philippines. They will be employees of the BPO company they work for.

3. Using an EOR

Compared to a BPO company, an employer of record (EOR) focuses on financial or legal procedures only. An EOR can manage your payroll processes, employee benefits, as well as tax documentation. At the same time, an EOR functions as the legal local employer of Philippine team members.

4. Offshoring with a PEO

A professional employer organization (PEO) is a different entity that offers full HR operations for international employers. A PEO works like a co-employer. It will share in the responsibility of managing and taking care of Filipino team members.

5. Directly Hiring Remote Staff in the Philippines

The last way to take in team members from the Philippines is to do it directly. You can hire contractors from the Philippines and manage them yourself. Contracts may contain any stipulation, terms, or conditions as long as they do not run counter to Philippine laws, morals, good customs, public order, and public policy.

How Much Does Hiring Remote Employees Cost in the Philippines Per Month?

Onshoring and nearshoring are equally viable options for business needs. However, offshoring provides the highest cost efficiency out of the three talent acquisition strategies. In addition, you still gain access to talented and hardworking people, contrary to offshoring myths.

Looking at an offshoring salary calculator, a commonly outsourced position like a middle-level accountant costs around USD 6,667 in the US. Salaries of remote staff in the Philippines for the same position are only approximately USD 2,733 (PHP 156,538). The comparison shows a USD 3,933 savings per month.

What are the Legal Requirements for Hiring Employees in the Philippines?

The primary law governing Philippine-based workers is the Labor Code of the Philippines. It dictates mandatory hours of work, benefits, and leaves.

Minimum wage levels are determined by location instead of by the Labor Code. Currently, the minimum wage of remote workers based in the three major hubs of the Philippines can be seen in the following table.

Additional Pay

Under the Labor Code, employees must work only for a maximum of eight hours. Time spent beyond the eight hours are considered overtime work already. Overtime work entails a 25% additional pay based on remote employee salary costs in the Philippines per hour.

Night shift work must also be paid an additional 10% based on the hourly wage of the employee.

Lastly, workers are entitled to their regular daily wage on an unworked Philippine holiday. If required to work, you must pay them double their daily wage.

Taxes

The National Internal Revenue Code imposes taxes on salaries of Philippine remote workers. Employees who have legal local employers must pay tax rates based on annual salary tranches.

You may refer to the table below.

In contrast, remote Filipino workers registered as self-employed businesses have the option to follow the table above. They can also choose an 8% tax rate instead. This 8% will be applied to gross receipts in excess of PHP 250,000 (USD 434.49) as long as their annual income does not exceed PHP 3,000,000 (USD 52,138.56)

Employer Contributions

Philippine remote workers with legal local employers are also entitled to monthly employer contributions. The first contribution is paid to the Social Security System. Depending on the monthly salary of the worker, employers must contribute anywhere between PHP 390 (USD 6.78) to PHP 2,880 (USD 50.06).

The second contribution goes to the Home Development Mutual Fund (HDMF), a national savings program and affordable shelter financing entity. The employer must monthly contribute PHP 200 (USD 3.48).

The last contribution is for the national health insurance. Employers must contribute anywhere between PHP 500 (USD 8.69) to PHP 5,000 (USD 86.91) per month based on the monthly salary of the employee.

Service Incentive and Special Leaves

At the very least, remote staff in the Philippines are entitled to yearly service incentive leaves of five days with pay under the Labor Code. You can always give more leaves and classify them into vacation and sick leaves.

For remote staff in the Philippines with a legal local employer, they are also entitled to special leaves under special laws.

Under Republic Act No. 8187, married male employees shall have paternal leaves of seven days with pay for the first four deliveries of their wives.

As for mothers, Republic Act No. 11210 gives an expanded maternity leave of 105 days with pay. The law also grants mothers the option to extend their leave for 30 days beyond the 105 days but without pay. This benefit is applicable to every instance of pregnancy.

Lastly, Republic Act No. 11861 gives solo parents a leave of seven days with pay.

Hire Philippine Remote Workers for Cost Efficiency

With the information above, you may calculate the total costs to build a remote team in the Philippines. You get cost efficiency when you match talented Filipino remote workers with low but reasonable salary levels.

If you are not yet convinced of the value of offshoring to the Philippines, read more about the top reasons to build a Filipino workforce. Or else, you can move forward and begin formulating the best offshore strategy for your company.