| Key Takeaways |
|---|
| 1. Daily minimum wage varies by region from PHP 695 (NCR non-agriculture) with semi-monthly payroll payments required. |
| 2. Progressive income tax ranges from 0% to 35% with no tax on annual income up to PHP 250,000. |
| 3. Mandatory 13th month pay equivalent to one-twelfth of annual basic salary must be paid by December 24th each year. |
| 4. Strict termination procedures require just or authorized cause with written notices and hearings for dismissal cases. |
| 5. Generous parental leave includes 105 days maternity leave and 7 days paternity leave, both fully paid. |
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| Annual Taxable Income (PHP) | Progressive Tax Rate (%) |
|---|---|
| Up to 250,000 | - |
| 250,001–400,000 | 15 |
| 400,001–800,000 | 20 |
| 800,001–2,000,000 | 25 |
| 2,000,001–8,000,000 | 30 |
| Over 8,000,000 | 35 |
Local Taxes
There are no local taxes on employment income in the Philippines.
Contributions made to the Social Security System (SSS) are calculated based on the monthly salary credit of each of its component, namely Regular Social Security (SS), Workers' Investment and Savings Programs (WISP) and Employees' Compensation, which is in turn determined by the employee's monthly compensation, as follows:
| Range of Compensation | Monthly Salary Credit for SSS | Monthly Salary Credit for WISP | Total Monthly Salary Credit |
|---|---|---|---|
| Below 5,250 | 5,000 | - | 5,000 |
| 5,250–5,749.99 | 5,500 | - | 5,500 |
| 5,750–6,249.99 | 6,000 | - | 6,000 |
| 6,250–6,749.99 | 6,500 | - | 6,500 |
| 6,750–7,249.99 | 7,000 | - | 7,000 |
| 7,250–7,749.99 | 7,500 | - | 7,500 |
| 7,750–8,249.99 | 8,000 | - | 8,000 |
| 8,250–8,749.99 | 8,500 | - | 8,500 |
| 8,750–9,249.99 | 9,000 | - | 9,000 |
| 9,250–9,749.99 | 9,500 | - | 9,500 |
| 9,750–10,249.99 | 10,000 | - | 10,000 |
| 10,250–10,749.99 | 10,500 | - | 10,500 |
| 10,750–11,249.99 | 11,000 | - | 11,000 |
| 11,250–11,749.99 | 11,500 | - | 11,500 |
| 11,750–12,249.99 | 12,000 | - | 12,000 |
| 12,250–12,749.99 | 12,500 | - | 12,500 |
| 12,750–13,249.99 | 13,000 | - | 13,000 |
| 13,250–13,749.99 | 13,500 | - | 13,500 |
| 13,750–14,249.99 | 14,000 | - | 14,000 |
| 14,250–14,749.99 | 14,500 | - | 14,500 |
| 14,750–15,249.99 | 15,000 | - | 15,000 |
| 15,250–15,749.99 | 15,500 | - | 15,500 |
| 15,750–16,249.99 | 16,000 | - | 16,000 |
| 16,250–16,749.99 | 16,500 | - | 16,500 |
| 16,750–17,249.99 | 17,000 | - | 17,000 |
| 17,250–17,749.99 | 17,500 | - | 17,500 |
| 17,750–18,249.99 | 18,000 | - | 18,000 |
| 18,250–18,749.99 | 18,500 | - | 18,500 |
| 18,750–19,249.99 | 19,000 | - | 19,000 |
| 19,250–19,749.99 | 19,500 | - | 19,500 |
| 19,750–20,249.99 | 20,000 | - | 20,000 |
| 20,250–20,749.99 | 20,000 | 500 | 20,500 |
| 20,750–21,249.99 | 20,000 | 1,000 | 21,000 |
| 21,250–21,749.99 | 20,000 | 1,500 | 21,500 |
| 21,750–22,249.99 | 20,000 | 2,000 | 22,000 |
| 22,250–22,749.99 | 20,000 | 2,500 | 22,500 |
| 22,750–23,249.99 | 20,000 | 3,000 | 23,000 |
| 23,250–23,749.99 | 20,000 | 3,500 | 23,500 |
| 23,750–24,249.99 | 20,000 | 4,000 | 24,000 |
| 24,250–24,749.99 | 20,000 | 4,500 | 24,500 |
| 24,750–25,249.99 | 20,000 | 5,000 | 25,000 |
| 25,250–25,749.99 | 20,000 | 5,500 | 25,500 |
| 25,750–26,249.99 | 20,000 | 6,000 | 26,000 |
| 26,250–26,749.99 | 20,000 | 6,500 | 26,500 |
| 26,750–27,249.99 | 20,000 | 7,000 | 27,000 |
| 27,250–27,749.99 | 20,000 | 7,500 | 27,500 |
| 27,750–28,249.99 | 20,000 | 8,000 | 28,000 |
| 28,250–28,749.99 | 20,000 | 8,500 | 28,500 |
| 28,750–29,249.99 | 20,000 | 9,000 | 29,000 |
| 29,250–29,749.99 | 20,000 | 9,500 | 29,500 |
| 29,750–30,249.99 | 20,000 | 10,000 | 30,000 |
| 30,250–30,749.99 | 20,000 | 10,500 | 30,500 |
| 30,750–31,249.99 | 20,000 | 11,000 | 31,000 |
| 31,250–31,749.99 | 20,000 | 11,500 | 31,500 |
| 31,750–32,249.99 | 20,000 | 12,000 | 32,000\ |
| 32,250–32,749.99 | 20,000 | 12,500 | 32,500 |
| 32,750–33,249.99 | 20,000 | 13,000 | 33,000 |
| 33,250–33,749.99 | 20,000 | 13,500 | 33,500 |
| 33,750–34,249.99 | 20,000 | 14,000 | 34,000 |
| 34,250–34,749.99 | 20,000 | 14,500 | 34,500 |
| 34,750 and over | 20,000 | 15,000 | 35,000 |
On the other hand, contributions to the Philippine Health Insurance Corporation (PHIC/PhilHealth) and Home Development Mutual Fund (Pag-IBIG) are calculated based on the employee's monthly compensation up to the following maximums:
| PHIC/PhilHealth | Pag-IBIG | |
|---|---|---|
| Contribution Base | At least PHP 10,000 up to PHP 100,000 | Up to PHP 10,000 |
| Contribution Rates for Locals | Contribution Rates for Expatriates | |
|---|---|---|
| Regular SS | 10% | 10% |
| WISP | 10% | 10% |
| Employee's Compensation | PHP 30 (PHP 10 if the monthly salary credit is PHP 14,500 and below) | PHP 30 (PHP 10 if the monthly salary credit is PHP 14,500 and below) |
| PHIC/PhilHealth | 2.5% | 2.5% |
| Pag-IBIG | 2% | - |
| Contribution Rates for Locals | Contribution Rates for Expatriates | |
|---|---|---|
| Regular SS | 5% | 5% |
| WISP | 5% | 5% |
| PHIC/PhilHealth | 2.5% | 2.5% |
| Pag-IBIG | 2% | - |
Wages shall be paid twice a month at an interval of no more than 16 days. However, if this is not possible due to force majeure, they should be paid as soon as practicable, but no less than once a month.
Minimum Wage
The minimum wage in the National Capital Region (NCR) of the Philippines is as follows:
| Industry | Minimum Wage |
|---|---|
| Agriculture | PHP 658 per day |
| Non-agriculture | PHP 695 per day |
Note: Each region regulates different minimum wages, with some having further variations according to each business sector.
Employers are obligated to pay their employees a 13th month salary by December 24 of each year. The amount paid cannot be less than one-twelfth of the total basic salary earned by the employee during the year.
There is no at-will termination in the Philippines. Employer dismissing an employee must do so with either a just cause or an authorized cause.
| Just Cause** | Authorized Cause^ | |
|---|---|---|
| Economic Reasons | Health Reasons | |
| Serious misconduct or willful disobedience against a lawful order in connection with work | Due to the installation of labor-saving devices | Employee found to be suffering from any disease, and whose continued employment is either prohibited by law or is prejudicial to their and their co-workers' health |
| Gross and habitual neglect of duty | Redundancy | |
| Fraud or willful breach of trust | Retrenchment to prevent losses | |
| Commission of a crime or offense against the employer or any immediate member of their family | The closing of the establishment or undertaking | |
**When dismissing an employee with a just cause, the employer must produce a written notice explaining their intent for termination and give the employee 5 calendar days to prepare a response and defend themselves in an impartial hearing. The employer must then produce another written notice stating their final decision after considering the employee's position.
^When dismissing an employee with an authorized cause, the employer must produce a written notice to both the employee and the Department of Labor and Employment at least a month before the intended date of termination.
In the event of a termination of an employment contract, the terminating party must observe the following notice period:
| Dismissal with just cause | Dismissal with authorized cause | Voluntary resignation | |
|---|---|---|---|
| Notice Period | Not required, provided that the employee is given the opportunity to contest the termination decision and defend themselves in an impartial hearing | 1 month | 1 month |
Employees dismissed with just causes are not entitled to any severance, while those dismissed with authorized causes are entitled to the following separation pay:
| Reasons for termination | Separation pay |
|---|---|
| Due to installation of labor-saving device or redundancy | The higher of a month's pay or a month's pay for each year of service |
| Retrenchment to prevent losses or the closing of the establishment | The higher of a month's pay or half month's pay for each year of service |
| Employee contracted a disease and whose continued employment is detrimental to their, or their co-workers', health |
For the purpose of separation pay calculation, the completion of at least 6 months of service is considered to be a full year.
Retiring employees who have served the employer for at least 5 years are entitled to receive a retirement benefit equivalent to at least half month's salary for each year of service unless the employer is otherwise exempted from this obligation.
Probationary period in the Philippines is subject to a maximum duration of 6 months. In any case, those on probation may be dismissed for failing to qualify as a regular employee in accordance with the criteria made known to them at the point of employment.
Standard working hours are subject to a maximum of 8 hours per day.
Employers are obligated to give employees at least 60 minutes of break time for regular meals in between working hours. Any break period that is less than 20 minutes shall be credited as compensable work hours.
Overtime can be worked in cases of emergencies or with the employee's consent, provided that the employee is paid at 125% of their regular wage.
Employees are entitled to at least 24 hours of consecutive rest per week, the days of which shall be determined according to any existing collective bargaining agreements or by an agreement between the contracting parties.
Employees may be required to work on their rest days in cases of emergencies, provided that the employee is paid at 130% of their regular wage. If the employee's rest day falls on a special holiday, any work performed that day shall be paid at 150% of their regular wage.
Furthermore, those who work more than 8 hours on these days are entitled to an additional compensation equivalent to 30% of their compensatory pay for the day.
Public holidays in the Philippines are split into paid regular holidays and unpaid special holidays, as follows:
| Regular Holidays | Special Holidays | ||
|---|---|---|---|
| Holiday | Date | Holiday | Date |
| New Year's Day | January 1 | Chinese New Year | January 29 |
| Eid'l Fitr | April 1 | Black Saturday | April 19 |
| Araw ng Kagitingan | April 9 | Ninoy Aquino Day | August 21 |
| Maundy Thursday | April 17 | All Saints' Day Eve | October 31 |
| Good Friday | April 18 | All Saints' Day | November 1 |
| Labor Day | May 1 | Feast of the Immaculate Conception of Mary | December 8 |
| Eid'l Adha | June 6 | Christmas Eve | December 24 |
| Independence Day | June 12 | Last Day of the Year | December 31 |
| National Heroes Day | August 25 | ||
| Bonifacio Day | November 30 | ||
| Christmas Day | December 25 | ||
| Rizal Day | December 30 | ||
Employees are entitled to be paid their regular wage during regular holidays, except for those working in retail and service establishments regularly employing less than 10 employees.
Employees required to work regular holidays are paid at 200% of their regular wage, and those required to work on special holidays are paid the same rate as if they are working on their rest day.
Employees with at least a year of service in establishments with 10 or more employees are entitled to 5 days of paid service incentive leave, which can be taken as paid sick leave or vacation.
There is no statutory sick leave in the Philippines. However, those who are hospitalized for more than 3 days may be entitled to receive 90% of their average daily salary credit from their employer if they have made at least 3 months' contributions to the SSS in the last 12-month period. The employer can then have the amount paid out as sickness benefit be reimbursed by the SSS.
Female employees are entitled to 105 consecutive days of fully paid maternity leave, with at least 60 days being taken as post-natal leave. Employees can extend their leave without pay for another 30 days by sending in a written notice at least 45 days before the end of their initial maternity leave period.
Single mothers, as defined in the Solo Parents' Welfare Act, are entitled to an additional 15 days of paid maternity leave.
In the event of a miscarriage or emergency termination, the employee shall be entitled to 60 days of fully paid maternity leave.
The payment for maternity leave shall be advanced by the employer within 30 days of receiving the notice of maternity leave from the employee. This payment shall be calculated based on the employee's average monthly salary credit, and the SSS will reimburse the amount for employees who have made 3 months' contributions in the last 12-month period.
Note: If the amount the employee can receive for maternity pay is less than the employee's full pay, the employer shall cover the difference.
Married male employees are entitled to 7 days of fully paid paternity leave after the delivery of their child, provided that they have notified their employers of their spouses' pregnancy and the expected delivery date before taking their leave.
In any case, it is important to know that paternity leave pay is only granted for the first 4 deliveries of the employee's legitimate spouse they are cohabiting with.
Single parents covered by the Solo Parents' Welfare Act may be entitled to 7 days of paid parental leave per year. To qualify for this leave, the employee must have rendered at least one year of service and present a Solo Parent Identification Card, which is obtainable from the local DSWD office.
| Leave | Paid/Unpaid | Duration | Note |
|---|---|---|---|
| Leave for Gynecological Surgeries | Paid | 2 months | For female employees suffering from gynecological disorders requiring surgery, provided that they have rendered at least 6 months of service in the last 12 months prior to the surgery. |
| Leave for Victims of Violence Against Women and Children | Paid | 10 days | For victims, as defined under Republic Act No. 9262, to attend medical and legal concerns. This leave can be extended when required by a protection order issued by the court. |
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