Outsource Philippine Payroll to RecruitGo.
Running payroll in the Philippines means remitting to four separate government agencies, each with its own contribution tables, filing portals, deadlines, and penalty structures. This guide covers what each component costs, how it works, and where companies get it wrong.
How Philippine Payroll Works
Philippine payroll requires employers to register with and remit contributions to four government agencies: the Bureau of Internal Revenue (BIR) for withholding tax, the Social Security System (SSS) for social insurance, PhilHealth for national health insurance, and the Home Development Mutual Fund (Pag-IBIG) for housing savings.
The standard pay frequency is semi-monthly (15th and end of month). Each payroll run requires calculating the correct SSS bracket, applying PhilHealth and Pag-IBIG rates against their respective ceilings, and withholding the right amount of income tax using the cumulative average method or the graduated table under the TRAIN Law.
Annual obligations include 13th month pay (due by December 24), BIR year-end tax annualization, and issuance of BIR Form 2316 (Certificate of Compensation Payment/Tax Withheld) to every employee by February 28.
With RecruitGo: We handle registration with all four agencies, compute contributions each pay period, remit on time, file all BIR returns, and distribute 13th month pay — so you never touch a government portal. See how we handle compliance →
SSS, PhilHealth & Pag-IBIG Contributions
SSS Contribution Table (Selected Brackets)
SSS contributions are based on Monthly Salary Credit (MSC) brackets under RA 11199. The total contribution rate is 15% of MSC, split roughly 10.3% employer and 4.7% employee (including the Employees' Compensation component).
| Compensation Range (PHP) | MSC (PHP) | ER (PHP) | EE (PHP) | Total (PHP) |
|---|---|---|---|---|
| Below 5,250 | 5,000 | 510 | 250 | 760 |
| 9,750 – 10,249 | 10,000 | 1,010 | 500 | 1,510 |
| 14,750 – 15,249 | 15,000 | 1,530 | 750 | 2,280 |
| 19,750 – 20,249 | 20,000 | 2,030 | 1,000 | 3,030 |
| 24,750 – 25,249 | 25,000 | 2,530 | 1,250 | 3,780 |
| 29,750 – 30,249 | 30,000 | 3,030 | 1,500 | 4,530 |
| 34,750+ | 35,000 | 3,530 | 1,750 | 5,280 |
PhilHealth
PhilHealth uses a flat 5% premium rate on basic monthly salary, split equally between employer (2.5%) and employee (2.5%). The salary floor is PHP 10,000 and the ceiling is PHP 100,000 — meaning the maximum monthly contribution is PHP 5,000 (PHP 2,500 per side).
Pag-IBIG (HDMF)
Both employer and employee contribute 2% each of monthly compensation, capped at PHP 10,000. This means the maximum contribution is PHP 200 per side (PHP 400 total) per month.
Income Tax Under the TRAIN Law
The Philippines uses a graduated income tax table for compensation income. Under the TRAIN Law (RA 10963), employees earning up to PHP 250,000 annually are exempt from income tax.
| Annual Taxable Income | Tax Rate |
|---|---|
| Up to PHP 250,000 | 0% |
| PHP 250,001 – 400,000 | 15% of excess over 250K |
| PHP 400,001 – 800,000 | PHP 22,500 + 20% of excess over 400K |
| PHP 800,001 – 2,000,000 | PHP 102,500 + 25% of excess over 800K |
| PHP 2,000,001 – 8,000,000 | PHP 402,500 + 30% of excess over 2M |
| Over PHP 8,000,000 | PHP 2,202,500 + 35% of excess over 8M |
De minimis benefits (rice subsidy up to PHP 2,000/mo, clothing allowance up to PHP 6,000/yr, etc.) are tax-exempt. The combined total of 13th month pay, bonuses, and other benefits is tax-exempt up to PHP 90,000 per year — any excess is added to taxable income.
13th Month Pay (PD 851)
Under Presidential Decree No. 851, all employers are required to pay a 13th month bonus equivalent to one-twelfth (1/12) of the employee's total basic salary earned during the calendar year. This must be paid on or before December 24.
For employees who have worked less than a full year, the 13th month pay is pro-rated based on the number of months worked. The computation is: total basic salary earned during the year divided by 12.
Tax treatment: The 13th month pay, together with other bonuses and benefits, is tax-exempt up to PHP 90,000 per calendar year. Any amount exceeding PHP 90,000 is added to the employee's taxable compensation income.
Sample Payroll — PHP 50,000/month
Here is a breakdown of the total cost for an employee earning PHP 50,000 gross monthly salary.
| Component | Employer (PHP) | Employee (PHP) |
|---|---|---|
| Gross salary | 50,000 | 50,000 |
| SSS | 3,530 | 1,750 |
| PhilHealth | 1,250 | 1,250 |
| Pag-IBIG | 200 | 200 |
| Withholding tax | — | 3,558 |
| 13th month provision | 4,167 | — |
| Total | ~59,147 | 43,242 |
* Total employer cost is approximately 118% of gross salary. Employee take-home is PHP 43,242 after SSS, PhilHealth, Pag-IBIG, and withholding tax deductions. Tax computed using the graduated table for annual taxable income of approximately PHP 540,000. Actual amounts may vary based on individual circumstances and applicable de minimis exemptions.
Use our interactive calculator to compute net pay and employer cost for any gross salary.
Deadlines & Compliance Requirements
Monthly Filing Deadlines
| Agency | Deadline | Filing Required |
|---|---|---|
| SSS | 10th–15th of the following month | Monthly contribution report + payment |
| PhilHealth | 15th of the following month | RF-1 remittance form + payment |
| Pag-IBIG | 15th of the following month | Contribution remittance + payment |
| BIR (WHT) | 10th of the following month | BIR Form 1601-C (monthly withholding) |
Annual Obligations
| Obligation | Deadline | Details |
|---|---|---|
| 13th month pay | December 24 | PD 851 — basic salary / 12 |
| BIR annualization | January 31 | Year-end income tax adjustment per employee |
| BIR Form 2316 | February 28 | Certificate of compensation payment/tax withheld |
| BIR Form 1604-C | January 31 | Annual information return of income taxes withheld |
| SSS annual report | January 31 | Annual collection list report |
Common Payroll Mistakes
How RecruitGo Handles Philippine Payroll
We take over every payroll obligation so you can focus on managing your team.
Frequently Asked Questions
For a PHP 50,000/month employee, total employer cost is approximately PHP 59,147 — roughly 118% of gross. This includes SSS (ER share), PhilHealth (ER share), Pag-IBIG (ER share), and 13th month pay provision.
SSS contributions are based on Monthly Salary Credit (MSC) brackets, not exact salary. Your salary falls into a bracket, and the contribution is fixed for that bracket. Under RA 11199, the MSC ceiling is PHP 35,000 with scheduled increases through 2025.
SSS charges 2% per month on late contributions. BIR imposes a 25% surcharge plus 12% annual interest on late withholding tax remittances, with potential criminal liability for repeated non-compliance.
Foreign employees with valid work permits (AEP from DOLE + 9(g) visa) are subject to the same withholding tax rules. SSS, PhilHealth, and Pag-IBIG coverage depends on bilateral agreements and visa type — many foreign workers are exempt from SSS but still subject to PhilHealth.
The EOR page covers the full employment relationship — contracts, benefits, termination, compliance. This payroll page focuses specifically on the mechanics of computing and remitting contributions, withholding tax, and 13th month pay.
Yes, if you have a registered entity in the Philippines (SEC-registered corporation or branch office) with TIN, SSS, PhilHealth, and Pag-IBIG employer numbers. You will need a payroll specialist familiar with all four agencies' portals and deadlines.
The Labor Code requires employees to be paid at least once every two weeks or twice a month at intervals not exceeding sixteen days. Most companies pay semi-monthly (15th and end of month).
