--- title: "Philippines Employer Cost Breakdown 2026" description: "Philippines employer costs 2026: SSS 10.5%, PhilHealth 2.5%, Pag-IBIG 2%, plus mandatory 13th month pay. Full line-by-line breakdown." canonical: https://www.teamed.global/country-hiring-guides/philippines/cost-breakdown --- Philippines · Cost breakdown child Served by Teamed vetted partner-entity network in the Philippines # How much does it really cost to *hire in the Philippines* in 2026? Three mandatory social contributions stack before you reach the 13th month. SSS costs employers 10.5% of the monthly salary credit, capped at a PHP 30,000/month ceiling. Add PhilHealth at 2.5% and Pag-IBIG at 2%, then add one full month of base salary for the mandatory 13th month pay. A Philippines hire lands well above the salary line you put in the offer letter. Last reviewed 13 June 2026 · Philippines guide ![A sun-drenched Manila skyline viewed from a glass-fronted office tower, with Makati business district towers glinting at midday.](/images/country-guides/philippines-cost-breakdown.webp) Illustration · Manila, Philippines Answer.cite this A Philippines hire carries four employer costs on top of gross salary. SSS is 10.5% of the monthly salary credit, capped at PHP 30,000/month. PhilHealth is 2.5% of monthly basic salary. Pag-IBIG is 2%. The 13th month pay is mandatory under [Presidential Decree No. 851](https://lawphil.net/statutes/presdecs/pd1975/pd_851_1975.html). It equals 1 month of base salary and must be paid by December. It is not optional. It applies to every rank-and-file employee. Employees get 5 days days of paid Service Incentive Leave after 12 months of service, plus 12 regular public holidays. The result is a total employer cost that consistently runs 115 to 125 percent of gross annual salary for a mid-level professional hire. ![A Filipino payslip spread open on a wooden desk beside a potted orchid and a cup of barako coffee.](/images/country-guides/philippines-cost-breakdown-polaroid-1.webp) Three contributions, one bonus ## The headline: what a Philippines hire actually costs Start with gross monthly salary. SSS contribution applies to the monthly salary credit, which is capped at PHP 30,000/month. PhilHealth and Pag-IBIG apply to the full monthly basic salary with no ceiling recorded in the compliance cache for those lines. The table below uses an illustrative PHP 50,000 monthly gross salary. All totals are computed from verified statutory rates and labelled illustrative. They are not statutory figures. The three social contribution lines plus the 13th month obligation are the load-bearing costs of a Philippines hire. None are negotiable. All apply from the first day of employment. | Line | Illustrative cost on PHP 50,000/month gross | Source | | --- | --- | --- | | Gross monthly salary | PHP 50,000 | Contract | | SSS employer at 10.5% on PHP 30,000 salary credit (cap) | PHP 3,150/month (illustrative) | [SSS contribution table 2026](https://requirementph.com/sss-contribution-table-2026/) | | PhilHealth employer at 2.5% on PHP 50,000 | PHP 1,250/month (illustrative) | [PhilHealth circular 2026](https://greatdayhr.ph/blog/philhealth-contribution-table-2026-philippines/) | | Pag-IBIG employer at 2% on PHP 50,000 | PHP 1,000/month (illustrative) | [Pag-IBIG contribution table 2026](https://requirementph.com/pag-ibig-contribution-table-2026/) | | 13th month pay (mandatory, 1 month of monthly salary, annualised) | PHP 4,167/month (illustrative, PHP 50,000/year) | [Presidential Decree No. 851](https://lawphil.net/statutes/presdecs/pd1975/pd_851_1975.html) | | Service Incentive Leave (5 days days, built into salary once qualifying) | Included in gross salary | Labor Code Art. 95 | | **Illustrative total monthly employer cost** | **PHP 59,567 (illustrative)** | **Approximately 119% of gross (illustrative)** | These figures are illustrative. They are computed from the 10.5%, 2.5%, and 2% statutory rates confirmed for 2026. They are not statutory numbers and will vary with actual salary levels, applicable wage orders, and any benefits above the statutory floor. Add Teamed from $599 per employee per month and the total rises further. Use the [Employer Cost Calculator](https://www.teamed.global/tools/employer-cost) to run your own figures. 1. Start with gross monthly salary Confirm the agreed gross monthly salary. This is the base number all other lines build on. Note whether it is basic salary or total compensation, as SSS, PhilHealth, and the 13th month use basic salary. 2. Calculate three social contributions Apply SSS at the employer rate on the monthly salary credit, capped at the maximum ceiling. Apply PhilHealth and Pag-IBIG on the full basic salary. Each remits to a different government fund on a separate schedule. 3. Reserve for 13th month pay Set aside one month of basic salary per year. You can accrue this monthly and pay by December, or pay in two instalments by agreement. Omitting it from the annual budget is the most common Philippines payroll error. 4. Account for leave and holiday premiums Service Incentive Leave unused at year end converts to cash. Budget the premium pay obligation for any employee who works on a regular public holiday. 5. Run withholding tax and file monthly Withhold income tax from each semi-monthly payroll run using the TRAIN Law brackets. File and remit via BIR Form 1601-C by the deadline each month. ## Three contribution lines: SSS, PhilHealth, and Pag-IBIG Every employer in the Philippines pays into three separate funds each month. SSS covers social security and disability. PhilHealth covers health insurance. Pag-IBIG covers a housing provident fund. Each fund has its own rate, its own ceiling, and its own remittance deadline. The three together add 10.5% plus 2.5% plus 2% to the cost of every hire, before the 13th month obligation. ### SSS: the largest contribution SSS employer contributions are 10.5% of the monthly salary credit. The salary credit is capped at PHP 30,000/month. For every employee earning above that ceiling, the employer pays the same fixed SSS amount regardless of actual salary. This means the SSS burden is proportionally lower for higher-paid hires. SSS · Contribution Table 2026 The employer SSS rate is **10.5%** of the monthly salary credit. The monthly salary credit ceiling is **PHP 30,000/month**. Contributions above this ceiling do not increase. The employee side is 4.5%. Total combined SSS is 15% of monthly salary credit up to the ceiling. Source: [SSS Contribution Table 2026 (citing official SSS schedule, Republic Act No. 11199)](https://requirementph.com/sss-contribution-table-2026/) ### PhilHealth: health insurance PhilHealth employer contributions are 2.5% of the employee's monthly basic salary. The employee pays an equal 2.5%. The combined rate is 5% of basic salary. Unlike SSS, the PhilHealth rate applies to the full salary and is not subject to the SSS ceiling. The rate is set by PhilHealth circular under [Republic Act No. 11223](https://greatdayhr.ph/blog/philhealth-contribution-table-2026-philippines/). ### Pag-IBIG: housing fund Pag-IBIG (HDMF) employer contributions are 2% of monthly salary for employees earning above PHP 1,500. The employee matches at 2%. The fund provides housing loan access to employees. The obligation is set under [Republic Act No. 9679](https://requirementph.com/pag-ibig-contribution-table-2026/). | Fund | Employer rate | Employee rate | Ceiling | | --- | --- | --- | --- | | SSS | 10.5% | 4.5% | PHP 30,000/month salary credit | | PhilHealth | 2.5% | 2.5% | No ceiling in cache | | Pag-IBIG | 2% | 2% | No ceiling in cache | ## 13th month pay: mandatory extra salary The 13th month pay is not a bonus. It is a legal obligation under Presidential Decree No. 851. Every rank-and-file employee must receive 1 month of base salary, paid by December of each year. It applies regardless of how the employee is paid. It applies from the first year. There is no qualifying period and no opt-out. The 13th month pay equals 1 month of base salary. It must be paid by December 24 each year. Employers may choose to pay it in two instalments (June and December) by agreement. The 13th month pay is computed on basic salary only. It does not include overtime pay, allowances, or other monetary benefits. For a PHP 50,000/month basic salary, the annual obligation is PHP 50,000 (illustrative, computed from the 1 month of salary rule). ### Tax treatment The 13th month pay is tax-exempt up to a combined ceiling for 13th month pay and other bonuses. That ceiling figure was not confirmed by a tier-1 source in the compliance cache and is omitted here. The principle is confirmed: 13th month pay carries preferential tax treatment up to the statutory threshold. Verify the current exempt amount with the BIR before payroll processing. ### Why this matters for budgeting If you quote a monthly gross and budget twelve months of salary cost, your annual forecast is short by 1 month of that monthly figure. This is the single most common Philippines payroll budgeting error for first-time hirers. Factor the 13th month into your annual cost from the first offer letter. ## Leave and public holidays: the cost most buyers miss Every employee with at least 12 months of service gets 5 days days of paid Service Incentive Leave. This is the statutory minimum. Most employers in professional sectors offer far more. The Philippines has 12 regular public holidays and 8 special non-working days. Holiday pay rules are different for each type. The 5 days Service Incentive Leave days apply after 12 months months of service under [Labor Code Article 95](https://laborlaw.ph/service-incentive-leave/). Employees may use them for sick leave, vacation, or personal emergencies. Unused SIL must be converted to cash at the end of the year if the employee did not use them. This is a real cost line that falls in December alongside the 13th month payment. ### Regular public holidays Employees who work on a regular public holiday are paid double their daily rate. The 12 regular public holidays for 2026 are set by [Proclamation No. 1006](https://pco.gov.ph/news_releases/pbbm-issues-proclamation-declaring-regular-holidays-special-non-working-days-for-2026/). ### Special non-working days There are 8 special non-working days in 2026. Employees who do not work on a special non-working day receive no additional pay (no work, no pay rule applies). Employees who do work receive a premium above the regular daily rate. Budget the public holiday premium cost for any hire who may work on these days. ### Maternity and paternity leave Maternity leave is 105 days for live childbirth under [Republic Act No. 11210](https://lawphil.net/statutes/repacts/ra2019/ra_11210_2019.html). Paternity leave is 7 days for the first four deliveries of the legitimate spouse under [Republic Act No. 8187](https://lawphil.net/statutes/repacts/ra1996/ra_8187_1996.html). Both are paid at full basic salary for the employee. The SSS reimburses maternity benefit up to a ceiling based on the salary credit; the employer advances the full amount and claims reimbursement from SSS. ## Income tax and payroll obligations Employees earning up to PHP 250,000 annually pay no income tax. Above that, rates rise from 15% to 35% under the TRAIN Law. Payroll runs semi-monthly. The law requires wages at least twice a month at intervals of no more than sixteen days. The TRAIN Law ([Republic Act No. 10963](https://lawphil.net/statutes/repacts/ra2017/ra_10963_2017.html)) sets the income tax brackets in force for 2026. The employer withholds tax from each payroll run and remits via BIR Form 1601-C by the 15th of the following month (eFPS filers). | Annual taxable income band (PHP) | Rate on excess | | --- | --- | | Up to 250,000 | 0% | | 250,001 to 400,000 | 15% of excess over PHP 250,000 | | 400,001 to 800,000 | 20% of excess over PHP 400,000 | | 800,001 to 2,000,000 | 25% of excess over PHP 800,000 | | 2,000,001 to 8,000,000 | 30% of excess over PHP 2,000,000 | | Above 8,000,001 | 35% of excess over PHP 8,000,000 | Tax is withheld by the employer on each semi-monthly payroll run. The payroll cycle is set by [Labor Code Article 103](https://laborlaw.ph/wages/): wages at least 24 times per year. Annual tax is reconciled via BIR Form 2316 and the employer's annual information return. ## How Teamed handles Philippines employment costs for you Teamed becomes your legal [employer of record](/lp/employer-of-record) in the Philippines for [**from $599 per employee per month**](/pricing), with **zero FX mark-up** in any currency. SSS, PhilHealth, Pag-IBIG, 13th month pay, and full Philippines compliance run on **one platform**. **Real HR and legal experts** handle your Philippines hires from the first offer letter through every BIR filing, SSS remittance, and 13th month payment. **An actual person**, not a chatbot or a pooled queue. There is **no setup fee** and **no exit fee**. Every employer cost **passes through at cost, itemised** on every invoice. You see the SSS line, the PhilHealth line, the Pag-IBIG line, and the 13th month reserve. Nothing is hidden inside the management fee. EOR payroll, contractor onboarding, and entity setup all live on **one platform**. A Philippines contractor who converts to direct employment keeps their record. That same employee can **graduate** from EOR to your own Philippines entity without switching systems. EOR is the right structure for a first Philippines hire, **until it isn't**. Teamed does not lock you in. Start from the Philippines hiring overview or run the [Employer Cost Calculator](https://www.teamed.global/tools/employer-cost) to see the full picture. ## Frequently asked questions What does it cost to hire someone in the Philippines in 2026? A Philippines hire typically costs 115 to 125 percent of gross annual salary once social contributions and the 13th month pay are included. The employer pays SSS at 10.5% of the monthly salary credit (capped at PHP 30,000/month), PhilHealth at 2.5%, and Pag-IBIG at 2%, plus 1 month of base salary for mandatory 13th month pay. Is the 13th month pay mandatory in the Philippines? Yes. The 13th month pay equals 1 month of base salary and must be paid to all rank-and-file employees by December 24 each year, under Presidential Decree No. 851. It applies from the first year and there is no opt-out. Employers may pay in two instalments by agreement. What is the SSS employer contribution rate in the Philippines in 2026? The SSS employer contribution rate is 10.5% of the monthly salary credit under Republic Act No. 11199. The monthly salary credit is capped at PHP 30,000/month, so contributions do not increase above that ceiling regardless of actual salary. What statutory leave must a Philippines employer provide? Every employee with at least 12 months of service is entitled to 5 days days of paid Service Incentive Leave under Labor Code Article 95. The Philippines also has 12 regular public holidays in 2026. Employees must be paid a premium for working on regular public holidays. Maternity leave is 105 days for live childbirth and paternity leave is 7 days. How does the Philippines income tax work for employers? Employers withhold income tax from each payroll run using the TRAIN Law brackets. Income up to PHP 250,000 annually is tax-free. Rates then rise from 15% to a top marginal rate of 35% on income above PHP 8,000,000. The employer remits withheld tax via BIR Form 1601-C by the 15th of the following month for electronic filers. Teamed Legal Operations The first surprise for most companies hiring in the Philippines is not the SSS rate. It is the 13th month. A PHP 50,000 monthly salary means PHP 50,000 more in December, on top of the December payroll. We see it missed on the first budget every time. Build it into the monthly cost from day one. A note from Tom Price-Daniel SSS at 10.5%, PhilHealth at 2.5%, Pag-IBIG at 2%, then a full month of salary again in December. The Philippines has four employer cost lines where most countries have one or two. Miss the 13th month and your annual budget is short by a full month of salary. Know every line before you send the offer. Tom Price-Daniel · Co-founder, Teamed ## Related Philippines guides - Hiring in the Philippines, overviewparent - [Philippines tax and payroll](/country-hiring-guides/philippines/tax-and-payroll)sibling - [Philippines termination and severance](/country-hiring-guides/philippines/termination-and-severance)sibling - [Employer of Record overview](/lp/employer-of-record)core - [Pricing, Zero FX Fixed](/pricing)core - [Employer Cost Calculator](https://www.teamed.global/tools/employer-cost)tool - [Talk to an expert](https://www.teamed.global/contact)CTA A note on this page. This is a guide, not legal, tax or accounting advice. Rules change and vary by jurisdiction. Verify current requirements with DOLE, SSS, PhilHealth, Pag-IBIG, and the BIR before relying on any specific figure. Worked examples in this guide are illustrative only and computed from statutory rates. They are not statutory figures. SSS, PhilHealth, and Pag-IBIG contribution rates are subject to periodic adjustment by the relevant government agencies.