Philippines Employment Law Basics for Employers

Last updated: November 2026

Philippine employment law is protective of employees: there is no at-will employment, probation is limited to six months, and a 13th-month salary is mandatory. Employers must also pay contributions to SSS, PhilHealth and Pag-IBIG.

Contracts and Probation

Employees may be hired on regular, probationary or fixed-term terms. Probation may last up to six months. An employee who continues working after probation becomes a regular employee. Employees have security of tenure; there is no at-will employment.

Minimum Wage

Minimum wages are set by region and apply according to workplace location. The Metro Manila non-agricultural minimum is PHP 755 per day since 26 September 2026 under Wage Order No. NCR-28. Other regions set lower rates. Wage orders change, so check the current workplace rate. An employment contract cannot pay below the applicable minimum.

13th-Month Pay

Presidential Decree No. 851 requires a 13th-month salary of at least 1/12 of basic salary earned during the calendar year, due by December 24. Employees who joined or left during the year receive a pro rata amount if they worked at least one month.

Leave and Holidays

  • Service Incentive Leave: 5 paid days after one year of service.
  • Maternity leave: 105 days with full pay under RA 11210, plus 15 additional days for solo parents.
  • Paternity leave: 7 days.
  • Solo-parent parental leave: 7 days after six months of service.
  • Special leave for gynecological surgery: two months under the Magna Carta of Women for employees with at least six months of service.
  • Work on a regular holiday: 200% of the daily rate.
  • Work on a special non-working day: 130% of the daily rate.

Working Hours and Overtime

The normal working day is eight hours. Ordinary-day overtime is paid at a premium of at least 125% of the hourly rate. Higher premiums apply on rest days and holidays. Managerial employees are generally exempt from overtime rules.

Termination and Separation Pay

Dismissal requires a just cause or an authorized cause, with due process. Authorized-cause termination requires 30 days' written notice to both the employee and DOLE.

Separation pay is generally one month's pay per year of service for redundancy and labor-saving devices, and one-half month per year for retrenchment or closure. Final pay must be released within 30 days of separation. Mutual separation by agreement is also possible.

Statutory Contributions

ItemEmployerEmployeeBasis
SSS10% plus a small Employees’ Compensation contribution5%Monthly salary credit between PHP 5,000 and PHP 35,000.
PhilHealth2.5%2.5%5% split equally; income floor PHP 10,000 and ceiling PHP 100,000.
Pag-IBIG2%2%Compensation up to PHP 10,000, maximum PHP 200 each.
Income taxWithholds income taxProgressive rates from 0% to 35%Withheld by the employer.

Payroll and Records

Salaries are usually paid twice a month, on the 15th and the last day of the month. Provide itemized payslips and keep payroll records.

Sources

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This page is a general overview and not legal advice. Employment rules and rates change.