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Hiring remote workers in the Philippines is an attractive proposition for many businesses, opening up access to a well-educated pool of talent that delivers real business results, often at a fraction of the cost of domestic equivalents.
The Philippines, located in Southeast Asia and home to nearly 110 million people, boasts a rapidly growing economy, high levels of English fluency, and a diverse, skilled workforce. The nation has an established track record of providing business services and remote workers to companies based in the United States, the United Kingdom, Australia, Canada, and more.
There are many reasons to look into hiring in the Philippines. While cost is an important consideration, prospective employers often focus solely on salaries, ignoring other costs they will incur. Salaries in the Philippines do tend to be significantly lower than those in Western countries, but it’s important that prospective employers include all employment costs in their calculations.
- Salary & Benefits
- Administrative Costs
By considering all of these costs, you can build an accurate understanding of how much it will cost your business to hire remote workers in the Philippines. Let’s take a closer look at each of the different types of cost, and explore how much businesses should budget for each.
What’s The Best Way to Hire Remote Workers in the Philippines?
It’s relatively straightforward to hire a temporary freelancer in the Philippines, but if your business needs fully-fledged employees who’ll be committed to your business over the long term, it’s important that you hire full-time employees.
There are two main ways to recruit and employ remote workers in the Philippines: by working with either an Employer of Record (EOR) or a Business Process Outsourcing (BPO) firm.
An EOR enables you to directly hire, manage, and work with your own employees. The EOR is a local organization that handles payroll, social security, contracts, and other administrative requirements on the behalf of international clients.
Employer of record (EOR) in the Philippines
Many EORs ––including Emerhub––have a network of vetted, top-tier talent accessible to those who work with them. With an EOR, you also have the ability to recruit your own employees: people who have been referred to you, or that you found on a platform like LinkedIn. This enables companies to ensure they retain high hiring standards, without worrying about the administrative burden of hiring international workers.
Business process outsourcing (BPO) in the Philippines
When you use a BPO, you’re typically outsourcing large portions of your business to an external company – such as a call center. You’ll have no control over the employees the BPO hires, and you won’t train, manage, or work directly with these remote workers. Any recruitment costs are built into the BPO’s pricing structure.
Of the two ways to recruit and manage employees, EORs are generally accepted to offer the most optimal solution. Companies have much more control over the employees they want to hire, access to proven talent, and ultimately, receive a higher quality of work.
For many employers, the combination of low salaries and skilled labor is one of the factors that makes the Philippines such an attractive destination to hire remote workers.
Much like everywhere else in the world, the salaries of remote workers in the Philippines are in line with the skills and experiences that these workers bring to the table. Highly-skilled, in-demand workers like software engineers and data scientists command higher salaries than those in entry-level positions like customer service agents.
The Philippines Institute for Development classes a monthly salary of between $1,000 USD and
$1,700 USD as providing a middle-class income for a family of five. Entry-level remote positions typically start at a rate of $5 USD per hour, while more experienced remote professionals can command salaries of $25 USD per hour or more.
There are additional benefits that employers are required to provide by law. These include:
- 13th Month Pay – a one-time payment, payable in December, equivalent to 1/12th of the employee’s annual salary.
- Annual Leave – a minimum of five days annually, although many companies offer more.
- Maternity Leave – 100% pay for 105 days.
- Paternity Leave – 7 days with pay for married employees
- Social Security Employer Share – from $10.3 USD up to the amount of $63.10 USD
Additionally, many employers provide employees with a stipend for private health insurance, which is typically paid up-front at the beginning of the year. This is especially true for jobs and industries where hiring qualified employees are highly competitive and is seen as an attractive benefit.
You are required to pay employees in the Philippines on a bi-weekly basis.
Taxes for Hiring Remote Workers in the Philippines
Whether you set up a company in the Philippines, or use an EOR to hire employees, your business is required to pay certain employment taxes. Here is an overview of the different types of taxes you are liable for:
- Social Security – employers contribute 9.5% of each employee’s monthly salary to the Social Security System (SSS), which supports sick or disabled employees, as well as retired citizens.
- Payroll tax – 1.16 – 1.19% per month, deducted from the gross salary of the employee.
- HDMF & PhilHealth – employers also make small contributions to the Home Development Mutual Fund (HDMF), which provides citizens access to loans and housing, as well as PhilHealth – the public health system.
The final area to consider when evaluating the cost of hiring a remote employee in the Philippines are the administrative costs associated with hiring employees in a different country.
There are several considerations here, but perhaps the most important are the costs associated with paying the employee’s salary. While salaries may be negotiated and agreed upon in US Dollars, they are almost always paid in Philippine Pesos. This opens employers up to various bank charges and FX fees – unless they choose to partner with an EOR.
EORs handle all of the administrative costs associated with hiring remote employees in the Philippines, helping international companies to navigate complex administrative requirements mandated by the Philippines government. That includes managing payroll, withholding taxes, and satisfying all reporting requirements.
At Emerhub, we’ve helped companies from all over the world hire talented remote team members from Southeast Asia since 2011. Our team has deep expertise in recruiting and managing employees from the Philippines for companies in all kinds of industries. With Emerhub, you could have your first remote employee in the Philippines in a matter of days.
Interested in learning more? Contact us today and one of our consultants will reach out to you to get things started.
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