Cost of Hiring Remote Employees in the Philippines 

Perhaps one of the most compelling reasons many global companies are hiring Filipino remote workers is cost. Salaries for Filipino employees, even skilled professionals, tend to be significantly lower than those in the U.S., UK, Australia, or Europe. Entry-level salaries can be as low as $262 to $800 per month and mid-level skilled roles earning around $524 to $1,200. This is thanks to the country’s low cost of living and favourable exchange rate for Western currencies. 

But how much does it cost to hire a remote worker in the Philippines? In this guide, we will cover average salary levels for Filipino employees, mandatory contributions and tax obligations, and statutory premiums and bonuses. 

Average Salary Levels in the Philippines

The average salary for employees can vary by experience level, skill, industry, and location. Here is an example of different salary ranges based on experience level:

Another factor that can affect average salary is your employee’s location. For example, salaries are highest in Metro Manila due to concentration of multinational corporations and skilled labor demand. Meanwhile, other cities like Cebu and Davao offer 25-30% lower salaries. Industry also plays a big role, with tech and finance sectors paying on the higher end of these ranges.

To get a better idea of average salaries for Filipinos, you can use RecruitGo’s salary calculator to find the estimated cost. 

Payroll Components for Employees in the Philippines

Under the Labor Code of the Philippines, employees must receive at least the minimum wage together with mandated components. This includes social security calculations, withholding income tax, and mandated premiums such as night differential and overtime. 

“A fair day’s wage for a fair day’s work,” principle is deeply embedded in the country’s labor constitution to ensure employees receive compensation that’s directly proportional to the amount of work performed.

Social Security Contributions

Part of a Filipino employee’s payroll are social contributions to health insurance, pension, and housing. Both you and your employees are required to contribute to these social security funds with the following percentages:

Withholding Income Tax for Employees

As the employer, you are the withholding agent responsible for deducting income tax from salaries, wages, bonuses, and other taxable compensation for your employees. Every month, you must remit collected income taxes to the Bureau of Internal Revenue (BIR). 

The Philippines follows a progressive tax system based on employee annual income. This means that each salary range falls under a specific tax bracket rate:

Income tax is computed based on net taxable income, which is gross taxable salary minus mandatory social security contributions (SSS, PhilHealth, Pag-IBIG). For a monthly taxable income of PHP 26,860, tax is calculated as 0 + 15% of excess over PHP 20,833, which equals about PHP 904 withholding tax monthly.

Statutory Bonuses, Overtime, and Night Differentials

Part of the hiring cost are statutory bonuses, overtime, and night differentials. These benefits are essential parts of employee compensation to ensure fair treatment and financial recognition for extra hours and additional work periods. As an employer, you must comply with these requirements under Philippine labor laws to avoid penalties and employee claims.

13th Month Pay

13th Month Pay is the only mandatory statutory bonus by law under Presidential Decree No. 851. Every 24th of December, you must pay employees an additional one-twelfth (1/12) of their basic salary earned within the calendar year.  Other bonuses (such as Christmas or mid-year bonuses) are generally discretionary unless stipulated by contract, collective bargaining agreement, or established company practice. The 13th month pay is also exempt from income tax up to PHP90,000 under the TRAIN Law.

Overtime Pay

Overtime is any work considered beyond the normal 8-hour work day. Under the Philippine Labor Code, employees performing overtime must be compensated with the following rates:

• Overtime on regular days: 125%
• Overtime on rest days or holidays: 130%

Night Differential

Employees in the Philippines working from 10:00PM to 6:00AM are entitled to night differential pay which is legally mandated by Article 86 of the Labor Code. They are entitled to at least 10% extra of their regular hourly wage for each hour worked within this period. This is particularly important especially if your Filipino employees are working in US or EU timezones. If night work overlaps with holidays or overtime, the rate premiums stack accordingly.

Total Cost Breakdown for Hiring Employees in the Philippines

How does this all translate into actual numbers? Let’s say you want to hire an entry-level virtual assistant in the Philippines with a PHP 25,000 monthly salary (~USD 430). This breakdown does not include optional benefits or office overhead for equipment or internet. Here is how much you would need to pay monthly and annually: 

Hiring with an EOR

Companies like RecruitGo can help manage legal compliance, payroll, taxes, and HR tasks to streamline costs. With our EOR, you can hire Filipino employees quickly without the time, cost, and complexity of establishing a local company.

RecruitGo charges a monthly service fee of 10% of the employee’s total gross payroll, capped at USD 250 per employee. This model aligns with the employee’s salary scale, avoiding high flat fees.

Using the example above, here is the total cost of hiring a Filipino employee with RecruitGo: 

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