Employer of Record Philippines: A Playbook for Mid Market Companies

When you're running a 300-person company across five countries and the board asks why you're spending six figures on global employment, you need more than vendor promises. You need a strategy that makes sense today and scales with your ambitions.

The Philippines represents one of the most compelling talent markets for European companies with its 5.5% GDP growth forecast for 2025, but it's also where employment decisions can quickly become expensive mistakes. Whether you're considering your first Manila hire or evaluating when to move 50 contractors to full employment, this playbook gives you the frameworks to make those decisions with confidence.

Key Takeaways

• An employer of record (EOR) in the Philippines acts as the legal employer while you direct the work, handling payroll, compliance, and statutory benefits without requiring a local entity.

• Mid-market companies typically use EOR Philippines for teams of 1-20 people, graduating to local entities when headcount, strategic importance, or cost efficiency demands it.

• European headquarters need to consider data protection, permanent establishment risk, and integration with UK/EU entities when designing their Philippines employment strategy.

• EOR services in the Philippines manage complex requirements like 13th month pay, probationary periods, and statutory contributions that differ significantly from European norms.

• Strategic advisory support can help navigate the transition from contractors to EOR to entities without disrupting your team or creating compliance gaps.

What An Employer Of Record In The Philippines Is And How It Works

An employer of record (EOR) in the Philippines is a third-party company that becomes the legal employer of your staff while you retain full control over their day-to-day work and performance management.

Think of it as a three-way relationship. The EOR handles all legal employment responsibilities, you manage the employee's work and career development, and the employee receives the benefits of formal employment without you needing to establish a Philippine entity.

Here's how the responsibilities typically break down:

Your Company handles:

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Philippines EOR handles:

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Employee handles:

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The EOR becomes responsible for creating locally compliant employment contracts, processing monthly payroll with proper tax withholdings, managing statutory contributions to SSS (Social Security System), PhilHealth, and Pag-IBIG Fund, and ensuring compliance with Philippine labour law.

For your company, this means you can hire a software engineer in Manila or a customer support specialist in Cebu without navigating the complexities of Philippine corporate registration, local banking relationships, or employment law compliance.

The key difference between an EOR and a PEO (Professional Employer Organization) Philippines is that an EOR assumes full legal responsibility as the employer, while a PEO creates a co-employment relationship where both parties share certain responsibilities.

European companies love EOR arrangements because they make it easy to bring Philippine talent into their teams. You get to keep the same employment standards and compliance peace of mind you're used to in the UK, Germany, or Netherlands.

When Mid Market Companies Should Use EOR Philippines Instead Of An Entity

Choosing between EOR and setting up a Philippine entity? It usually boils down to three things: how fast you need to move, how big you plan to grow, and how critical the Philippines is to your strategy.

EOR Philippines typically makes sense when you need to hire quickly, test market demand, or manage a specialist team of 1-20 people. It's particularly valuable for project-based work, urgent hiring needs, or when you're unsure about long-term commitment to the Philippine market.

Consider EOR when you're: • Hiring your first 1-5 employees in the Philippines • Testing a new market or business model • Managing specialist roles that don't require local entity presence • Operating under tight timelines where entity setup would delay critical hires • Maintaining flexibility for potential market exit or strategy changes

The signals to consider graduating to a local entity typically emerge around these thresholds:

Headcount indicators: When your Philippine team reaches 15-25 people, entity economics often become more attractive. The fixed costs of maintaining a local company can be distributed across more employees.

Strategic importance: If the Philippines becomes a core operational hub rather than a support function, local presence often adds credibility with customers, partners, and regulatory bodies.

Cost predictability: While EOR provides operational simplicity, entity ownership can offer more predictable long-term costs, especially for larger teams.

Regulatory requirements: Some sectors or business activities may require local entity presence for licensing, regulatory compliance, or customer requirements.

Teamed helps mid-market companies map out their options. We'll walk you through contractor, EOR, and entity scenarios, showing you what costs and risks look like as you scale up and your strategy evolves.

The key insight many finance leaders miss is that EOR isn't a dead end. When you're ready to switch from EOR to your own entity, a good plan makes all the difference. Your team won't even notice the change, and everyone keeps their jobs while you handle the legal transition behind the scenes.

How Employer Of Record Services Philippines Manage Payroll, Tax And Compliance

Philippine payroll is full of surprises for European HR teams. That's where EOR services really shine, taking care of all those unfamiliar details and keeping you compliant.

The monthly payroll cycle typically works like this:

Philippine employment law requires several statutory benefits that differ significantly from European norms:

13th month pay: A mandatory additional month's salary paid in December, calculated as 1/12 of the employee's total basic salary for the year.

SSS contributions: Social Security System payments covering sickness, maternity, disability, retirement, and death benefits.

PhilHealth: National health insurance program with mandatory employer and employee contributions.

Pag-IBIG Fund: Home Development Mutual Fund providing housing loans and savings programs.

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The EOR handles all compliance requirements, including:

• Maintaining compliant employment contracts aligned with Philippine labour law

• Managing working time tracking to ensure compliance with maximum hour requirements

• Processing leave entitlements including service incentive leave and other statutory benefits

• Handling regulatory updates and changes to tax rates or contribution levels

• Providing audit-ready documentation for compliance reviews

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Your European HQ gets clean, consolidated payroll reports that slot right into your UK or EU accounting systems. No need to become an expert in Philippine tax law or employment rules.

Working in a regulated industry? Teamed knows exactly what compliance depth you need. We'll make sure your Philippine operations match the high standards you've set across Europe.

Hiring Employees In The Philippines Through An EOR Step By Step

The hiring process through a Philippines EOR typically follows this sequence:

1. EOR selection and setup (1-2 weeks) Select your EOR provider, agree on commercial terms, and establish the service framework. This includes defining employment models, cost structures, and service level agreements.

2. Offer and contract creation (3-5 days) You extend the job offer based on your standard terms. The EOR converts this into a locally compliant Philippine employment contract that meets statutory requirements while reflecting your agreed terms.

3. Employee onboarding preparation (1 week) Collect required employee documentation including government-issued IDs, TIN (Tax Identification Number), SSS number, PhilHealth number, and Pag-IBIG number. Set up the employee in EOR systems and confirm benefit selections.

4. Employment commencement The employee starts work under the EOR contract. You handle work orientation and performance management, while the EOR manages administrative onboarding and statutory registrations.

5. Ongoing management Day-to-day work direction remains with your team. The EOR handles payroll processing, benefits administration, and compliance monitoring. Any employment changes like salary reviews, promotions, or terminations should be discussed with the EOR before implementation to ensure legal compliance.

Key timeline milestones: • Contract drafting: 2-3 business days after offer acceptance • Document collection and verification: 3-5 business days • First payroll setup: 1 week before first pay date • Full administrative setup: 2 weeks from contract signing

For European scale-ups, this process typically integrates with existing hiring workflows. Your UK or German HR team handles candidate selection and offer negotiation, while the EOR manages the Philippine-specific legal and administrative requirements.

Teamed helps you build a hiring and onboarding playbook that actually scales. Whether you're making your first Philippine hire or your twentieth, you'll have consistent processes that work.

Key Philippines Employment Laws An EOR Helps You Navigate

Philippine employment law contains several requirements that differ significantly from European norms, making local expertise essential for compliance.

Working hours and overtime: The standard work week is 48 hours The standard work week is 48 hours (8 hours per day, 6 days per week), though many companies operate 40-hour weeks. Overtime pay is required at 125% of regular hourly rate for work beyond 8 hours per day.125% of regular hourly rate for work beyond 8 hours per day.

Probationary employment: New employees can be placed on probationary status for up to 6 months, during which termination is easier but must still follow proper procedures and documentation.

13th month pay calculation and timing: This mandatory benefit equals 1/12 of the employee's total basic salary earned during the calendar year, paid no later than December 24th. Unlike European bonus structures, this is a legal requirement, not a discretionary benefit.

Termination and severance protections: Philippine law provides strong employee protections. Termination for cause requires proper documentation and due process. Termination without cause requires advance notice and separation pay equivalent to one month's salary for each year of service.

Statutory leave entitlements: Employees are entitled to service incentive leave (5 days annually after one year of service), plus various special leaves for specific circumstances.

Key differences from European employment law:

• Probationary periods are longer (6 months vs typical 3-6 months in Europe)

• 13th month pay is mandatory, not discretionary

• Termination procedures are more complex and require specific documentation

• Statutory contributions cover different benefits than European social security systems

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When managing compliance directly versus through an EOR, the differences are significant:

Contract creation: Direct hire requires local legal expertise, while EOR provides this through their legal team.

Payroll calculations: Direct hire needs a Philippine payroll system, while EOR automates this process.

Government filings: Direct hire requires manual submission, while EOR manages all filings on your behalf.

Law updates: Direct hire means you must monitor changes yourself, while EOR provides compliance updates automatically.

Your EOR handles the tricky part: making sure employment contracts tick all the local boxes while still fitting your global standards and company policies.

In financial services, healthcare, or defence? Teamed knows your sector inside out. We'll make sure your Philippine operations meet every compliance standard your industry demands.

Costs And Pricing Models For EOR Services In Philippines

EOR pricing in the Philippines typically follows one of three models, each with different cost implications for mid-market companies.

Fixed fee per employee: Most common model, ranging from £350-£600 ($450-$750) per employee per month. This provides cost predictability but may be expensive for lower-salary roles., which needs context considering Metro Manila's minimum wage is ₱695 per day. This provides cost predictability but may be expensive for lower-salary roles.

Percentage of salary: Typically 8-15% of gross monthly salary. This scales with compensation levels but can create budget uncertainty as salaries increase.

Bundled packages: Comprehensive packages including payroll, HR support, benefits administration, and compliance management, often with volume discounts for larger teams.

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Total cost components typically include:

• EOR service fees (the provider's margin)

• Employee gross salary and statutory employer contributions

• Mandatory benefits (SSS, PhilHealth, Pag-IBIG contributions)

• Optional benefits (health insurance, life insurance, additional leave)

• Setup and offboarding charges (usually one-time fees)

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For European CFOs consolidating costs across 180+ countries, request quotes with GBP or EUR breakdowns to enable accurate budget planning and board reporting.

When evaluating total cost of ownership, consider:

• Internal time saved on compliance and administration

• Avoided costs of establishing and maintaining a Philippine entity

• Risk reduction value from professional compliance management

• Flexibility value for scaling up or down without entity constraints

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Questions to ask providers about pricing:

Watch out for prices that seem too good to be true. They usually mean someone's cutting corners on compliance, support, or reliability. In regulated sectors, one compliance failure costs way more than you'll ever save with a cheap provider.

Employer Of Record Philippines Compared With Contractors And PEO Philippines

Understanding the trade-offs between contractor, EOR, and PEO models helps you choose the right approach for different roles and business needs.

Independent contractors work best for project-based, specialist, or short-term needs where you need specific expertise without long-term employment commitment. However, misclassification risk increases when contractor relationships begin to resemble employment (regular hours, ongoing work, integration with your team).

EOR Philippines provides the legal clarity of formal employment while maintaining operational flexibility. The EOR assumes full legal responsibility as the employer, reducing your compliance risk while giving employees the security and benefits of formal employment.

PEO Philippines creates a co-employment relationship where both you and the PEO share certain employer responsibilities. This can provide more control but also means shared liability and more complex compliance management.

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Here's how these models compare:

Contractors offer maximum flexibility, lower costs, and specialist access. However, they come with misclassification risk, limited control, and no employee benefits.

EOR provides full compliance, employee benefits, and operational simplicity. The trade-offs include higher costs than contractors and less control than having your own entity.

PEO offers shared control and cost efficiency at scale. However, it involves shared liability, complex compliance, and limited provider options.

When to use contractors: Short-term projects (under 6 months), highly specialised skills, irregular work patterns, or when you need maximum flexibility to scale up and down quickly.

When to formalise via EOR: Ongoing work relationships, core team members, roles requiring training and development, or when misclassification risk becomes material.

For European tech firms with mixed contractor and EOR arrangements in the Philippines, Teamed can help evaluate and rebalance your employment mix as headcount grows, including guidance on when and how to convert contractors to employees without disrupting your operations.

Here's what matters: pick the option that fits your global employment strategy. Don't get swayed by slick sales pitches or short-term savings that could cost you later.

Employer Of Record Philippines Versus Setting Up A Local Company

The choice between EOR and establishing a Philippine entity depends on your timeline, control requirements, and long-term strategic plans.

Entity establishment involves registering with the Securities and Exchange Commission, opening local bank accounts, engaging local legal and accounting advisors, and building payroll and HR infrastructure. This typically takes 3-6 months and requires ongoing management attention.

EOR arrangements allow you to hire and operate immediately without upfront entity work, making them ideal for testing markets, urgent hiring needs, or maintaining flexibility for potential strategy changes.

The key differences between EOR Philippines and a local entity include:

Speed to hire: EOR enables hiring in 1-2 weeks, while local entity establishment takes 3-6 months.

Upfront costs: EOR requires minimal setup fees, whereas a local entity costs £15,000-£30,000 or more upfront.

Ongoing control: EOR limits you to work direction, while a local entity provides full operational control.

Cost efficiency: EOR has higher per-employee costs, but local entities offer lower costs at scale (20+ employees).

Flexibility: EOR makes it easy to scale or exit, while local entities involve significant exit complexity.

Compliance: With EOR, the provider assumes responsibility; with a local entity, compliance is your responsibility.

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Trade-offs to consider:

EOR provides speed and simplicity but at higher per-employee costs and with less operational control. You can hire immediately and maintain flexibility, but you're dependent on the EOR for all employment-related decisions.

Owned entities offer control and potential cost efficiency at scale but require significant upfront investment and ongoing management attention. You gain full operational control but assume all compliance and regulatory responsibilities.

Important risk consideration: Permanent establishment (PE) risk isn't eliminated by using an EOR. PE is determined by where strategic decisions are made and revenue is generated, not just employment arrangements. European headquarters should seek specialist tax advice on group structure and decision-making protocols.

Questions to ask before creating a Philippine entity:

Teamed helps you nail the timing when switching from EOR to your own entity. We'll plan a smooth handover that keeps your team intact while getting your legal and cost structure just right.

Designing A Philippines EOR Strategy For Companies With More Than 50 Employees

Once you hit 50 employees globally, winging it with Philippine hiring won't cut it anymore. You need a real strategy, not just hiring people as you go.

Strategic integration considerations:

Align your Philippine roles with your global job architecture. Ensure compensation bands reflect local market rates while maintaining internal equity with your European teams. Design benefit packages that meet local expectations while supporting your global culture and values.

Headcount planning framework:

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Employment model roadmap:

Phase 1 (1-5 employees): Start with contractors for specialist roles or EOR for core team members. Focus on proving market fit and building operational knowledge.

Phase 2 (5-15 employees): Standardise on EOR for employment relationships. Develop local management capabilities and cross-timezone collaboration processes.

Phase 3 (15-25 employees): Evaluate entity establishment based on cost efficiency, strategic importance, and regulatory requirements. Plan transition timing and execution.

Phase 4 (25+ employees): Execute transition to local entity if strategic and financial analysis supports it. Maintain EOR relationships for flexibility in hiring and scaling.

Document decision points for board review:

For regulated industries (financial services, healthcare, defence), involve Legal and Compliance early in strategy development. Sector-specific requirements may influence employment model selection and transition timing.

With experience across 180+ countries, Teamed brings you insights from every market. We'll help you build a Philippines strategy that actually works with your global employment plans.

Coordinating Employer Of Record In The Philippines With UK And Europe Entities

Getting Philippine EOR to work smoothly with your European entities takes some juggling. Your HR, Finance, and Legal teams all need to be on the same page.

HR coordination:

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Data flow management:

Personal and payroll data flows between your Philippine EOR, European headquarters, and HRIS systems require robust data protection measures. Ensure your EOR agreement includes appropriate data processing agreements (DPAs) and implements Standard Contractual Clauses or other approved transfer mechanisms for GDPR compliance.

Financial integration:

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Tax and corporate structure:

While EOR arrangements reduce employment-related risks, permanent establishment and corporate tax considerations remain important. The location of strategic decisions, revenue generation, and business development activities can create tax obligations regardless of employment structure.

Coordination responsibilities:

For employment contracts, EU entities handle template approval, the Philippines EOR manages local compliance, and both share policy alignment responsibilities.

For payroll processing, EU entities manage group consolidation, the Philippines EOR handles local execution, and both coordinate on reporting standards.

For benefits design, EU entities establish the global framework, the Philippines EOR implements locally, and both collaborate on cost management.

For performance management, EU entities set global standards, the Philippines EOR provides local support, and both work together on cultural adaptation.

European headquarters typically maintain responsibility for strategic decisions, career development, and company culture, while the Philippine EOR handles local compliance, payroll execution, and statutory requirements.

Teamed knows how to coordinate operations across multiple countries. We'll help your Philippine team work seamlessly with London, Berlin, or Amsterdam HQ, keeping everyone compliant and confident no matter where they're based.

How European Mid Market Companies Use EOR Solutions Philippines To Scale

European mid-market companies use Philippines EOR for a simple reason: it gets them great talent fast while keeping things flexible and compliant.

Common scaling patterns:

Customer support centres: Manila and Cebu provide excellent English-language customer support capabilities with cultural alignment to European business practices. Companies often start with 5-10 support specialists and scale to 20+ as demand grows.

Engineering pods: Philippine developers and engineers can extend European development teams across time zones, providing near-24-hour development cycles. This works particularly well for maintenance, testing, and feature development work.

Back office operations: Finance, HR, and administrative functions can be efficiently delivered from the Philippines while maintaining oversight and control from European headquarters.

Speed advantages: EOR arrangements allow rapid scaling without the 3-6 month delay of entity establishment. This is particularly valuable when you have limited legal and HR capacity to manage international expansion complexity.

Regulated sector considerations:

Financial services companies tap into Philippine talent while keeping their compliance locked down with solid documentation and audit trails. Healthcare tech firms get local expertise and still meet European data regulations. Defence and security companies find the technical talent they need without compromising on security clearances or IP protection.

Advisory value for leadership:

Most mid-market companies don't have international employment experts on staff. The right EOR provider gives you the strategic backup you need to confidently answer tough questions from boards and investors about risks, costs, and expansion plans.

Role of AI in regulatory monitoring:

The best EOR providers use AI to track regulatory changes across countries, catching compliance updates fast. But when it comes to big decisions about employment models, risk, and expansion timing, you still need human advisors, not algorithms.

Teamed's experience advising European mid-market businesses includes helping London fintech companies establish Philippine development teams, supporting Berlin health-tech firms in building customer success operations, and guiding Amsterdam logistics companies in creating back-office capabilities.

Want to succeed? Treat your Philippines team as part of your European business, not some distant offshore operation.

Choosing The Right Philippines Employer Of Record For A 200 To 2,000 Person Company

Mid-market companies need more than an EOR that just processes payroll. You need one that provides real strategic guidance and helps you scale.

Beyond self-service capabilities:

At your size, a basic platform won't cut it. Find providers who actually advise you on choosing employment models, understand your industry's regulations, and have your back during tough situations like terminations, compliance issues, or audits.

Evaluation criteria for mid-market needs:

Philippine legal and HR depth: Ensure the provider has in-country legal expertise, not just operational capabilities. Test their knowledge of complex scenarios like collective bargaining, labour disputes, or regulatory investigations.

Contract and document quality: Review sample employment contracts and service agreements for legal sophistication and alignment with your risk tolerance. Poorly drafted contracts create compliance and operational risks.

Support responsiveness: Test complex scenarios during the evaluation process. How quickly can they respond to urgent questions? Do you get routed to specialists or generalists? Is support available across your European time zones?

Multi-country coordination: If you operate across multiple countries, evaluate the provider's ability to coordinate employment strategies and reporting across your entire footprint.

Pricing transparency: Know exactly what you're paying for. Setup fees, monthly charges, extra services, everything should be crystal clear. Hidden fees and confusing pricing will mess up your budgets and planning.

Quality evaluation framework:

Legal expertise matters because complex situations require specialist knowledge. Ask providers: "Can you provide references for handling labour disputes?"

Industry experience is crucial since regulated sectors have specific requirements. Ask: "What experience do you have in our industry?"

Scalability is important because your needs will evolve as you grow. Ask: "How do you support transitions from EOR to entity?"

Technology integration drives efficiency through system connectivity. Ask: "How does your platform integrate with our HRIS?"

Compliance monitoring is essential as regulatory changes affect your operations. Ask: "How do you monitor and communicate law changes?"

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