As global hiring becomes the norm in 2025, more companies are looking beyond their home countries to build skilled and cost-effective teams. The Philippines has emerged as one of the most preferred destinations for global hiring, thanks to its strong English proficiency, remote work culture, and large professional talent pool.

However, hiring employees in the Philippines is not as simple as sending an offer letter. Local labor laws, tax rules, and compliance requirements can be difficult to manage, especially for companies without a local presence. This is where an Employer of Record, commonly known as an EOR, becomes an important solution.

This guide explains what an Employer of Record in the Philippines is, how it works, and why global businesses are using this model in 2025.

What Is an Employer of Record (EOR)?

An Employer of Record is a local organization that legally hires employees on behalf of a foreign company. While the employee works for your business on a day-to-day basis, the EOR is the legal employer in the Philippines.

The EOR takes care of:

• Local employment contracts
  
• Payroll processing
  
• Taxes and statutory contributions
  
• Mandatory employee benefits
  
• Compliance with Philippine labor laws
  

At the same time, your company keeps full control over the employee’s work, responsibilities, and performance.

This structure allows global businesses to hire in the Philippines without setting up a local entity.

Why Global Businesses Use an EOR in the Philippines

Many international companies want to hire in the Philippines but hesitate due to legal and operational challenges.

Setting up a local company requires:

• Business registration and capital investment
  
• Tax and payroll setup
  
• Ongoing compliance filings
  
• Legal and accounting support
  

For companies hiring small to mid-sized teams, this process can be slow, expensive, and hard to reverse.

An EOR removes these barriers by offering a ready-to-use legal framework that allows companies to hire quickly and compliantly.

How an Employer of Record Works in Practice

The EOR process is designed to be simple and efficient.

1. You choose the talent
   Your company sources, interviews, and selects the candidate.
   
2. The EOR hires the employee locally
   A Philippine-compliant employment contract is issued in the employee’s name.
   
3. Payroll and benefits are managed
   The EOR handles salary payments, income tax, SSS, PhilHealth, Pag-IBIG, and statutory leave.
   
4. You manage daily operations
   Work schedules, tasks, performance reviews, and team communication remain under your control.
   
5. Ongoing compliance support
   Any changes in labor laws, contract updates, or employee exits are handled according to local rules.
   

This setup ensures both the employer and the employee remain protected under Philippine law.

Key Labor and Compliance Areas Covered by an EOR

Hiring employees in the Philippines involves several legal requirements. An Employer of Record ensures compliance across areas such as:

• Employment contracts aligned with local labor standards
  
• Payroll taxes and monthly remittances
  
• Statutory benefits, including SSS, PhilHealth, and Pag-IBIG
  
• Leave entitlements, such as service incentive leave and holidays
  
• Termination processes, which must follow due process
  

Without proper handling, mistakes in any of these areas can lead to penalties or disputes.

EOR vs Independent Contractors

Some companies consider hiring independent contractors instead of using an EOR. While this may seem easier, it carries risks.

In the Philippines, a worker is often considered an employee if they:

• Work full time for one company
  
• Follow fixed schedules and instructions
  
• Perform core business functions
  
• Use company tools and systems
  

Misclassifying employees as contractors can result in unpaid benefits, back taxes, and legal claims. In 2025, enforcement around worker classification continues to increase, making the EOR model a safer option for long-term hiring.

Cost Considerations for Using an EOR

An Employer of Record usually charges a monthly fee per employee. This fee covers payroll processing, compliance, benefits administration, and legal employment support.

While this adds a service cost, it often remains more affordable than:

• Setting up and maintaining a local entity
  
• Hiring legal and payroll teams locally
  
• Managing compliance risks independently
  

For businesses hiring under 20 to 30 employees, the EOR model is often the most cost-effective and flexible choice.

Why the Philippines Is Ideal for the EOR Model

The Philippines is well suited for the Employer of Record approach because:

• Labor laws are well defined and documented
  
• Remote work is widely accepted
  
• Many professionals already work with global companies
  
• The workforce is experienced with international teams
  

These factors make it easier for global businesses to integrate Filipino employees into their operations.

Choosing the Right Employer of Record in the Philippines

Not all EOR providers offer the same level of service. Global businesses should look for:

• Strong knowledge of Philippine labor laws
  
• Transparent pricing and payroll processes
  
• Proper handling of benefits and leave
  
• Experience supporting international employers
  

Some providers, such as Remotify, focus on helping global companies hire in the Philippines through compliant and locally managed employment structures. This type of focused approach helps businesses avoid legal confusion while keeping hiring simple.

Final Thoughts

In 2025, an Employer of Record in the Philippines is not just a workaround. It is a practical hiring model used by global businesses to scale teams safely and legally.

By using an EOR, companies can:

• Hire faster
  
• Stay compliant with local labor laws
  
• Reduce legal and operational risk
  
• Focus on growth instead of administration
  

For global businesses planning to hire in the Philippines, understanding how the EOR model works is an important step toward building a stable and compliant remote workforce.