How Employers of Record in the Philippines Work to Benefit Your Business

Expanding your business into the Philippines offers access to a skilled, English-proficient workforce and cost-effective labor. While the opportunities are vast, navigating local employment laws can be challenging. This guide will provide key insights and solutions to help you succeed in this promising market.

• What is an EOR?
• How Does an EOR Work in the Philippines?
• What are the Key Industries That Can Benefit from EOR Services?
• What are the Benefits of Using an EOR in the Philippines?
• Comparison Between Employer of Record (EOR) and Incorporation
• FAQs

Employee of Record (EOR)

An Employee of Record (EOR) is a service provider that acts as the legal employer for your team in the Philippines. They take charge of crucial tasks such as handling payroll, managing taxes, ensuring compliance with labor laws, and providing employee benefits. This allows your business to focus on daily operations without navigating administrative or legal challenges.

Even though the EOR is responsible for the talent sourcing and other legal aspects, your team will work under your direction to make sure the employees are fully aligned with your business goals. This is a practical solution for simplifying workforce management while maintaining operational control.

How EOR Functions in the Philippines

An Employer of Record (EOR) in the Philippines serves as the legal employer, managing compliance and administration while you oversee daily operations. Here’s how it works:

• Hiring and Onboarding. The EOR manages recruitment, employment contracts, and onboarding processes, ensuring full compliance with Philippine labor laws.
• Payroll Management. The EOR oversees payroll processing, guaranteeing accurate and timely employee payments while handling tax deductions and contributions to mandatory benefits like PhilHealth, SSS, and Pag-IBIG.
• Compliance Assurance. The EOR ensures adherence to local labor laws, tax regulations, and employment standards, helping to mitigate legal risks.
• Employee Benefits Administration. Statutory benefits, including 13th-month pay, holiday leave, and health insurance, are provided by the EOR in accordance with Philippine law.
• HR Support. The EOR delivers ongoing HR support, managing employee relations, performance reviews, and terminations in line with local regulations.

Key Industries That Can Benefit from EOR

Certain industries benefit significantly from using an EOR in the Philippines, including:

1. Business Process Outsourcing (BPO). As a global leader in outsourced services like customer support, IT, and back-office operations, the Philippines allows BPO companies to scale quickly and manage remote teams efficiently with EOR support.
2. Technology and Software Development. With a robust pool of skilled IT professionals and developers, tech companies can use an EOR to onboard talent swiftly and hassle-free.
3. E-commerce. Businesses expanding into the Philippines can rely on an EOR to hire local teams for marketing, logistics, and operations, capitalizing on the country’s booming e-commerce sector.
4. Startups and SMEs. For smaller businesses exploring the Philippine market, an EOR offers a low-risk, cost-effective way to hire and operate without the need for entity setup or complex payroll management.

Other industries can also leverage EOR services based on their unique requirements, such as tapping into local talent, maintaining compliance, or streamlining administrative processes.

Benefits of Using an EOR

The Philippine market offers immense opportunities for growth, making it an attractive destination for businesses. Here are the key benefits of utilizing an EOR in the Philippines:

1. Labor Laws Compliance. The Philippines’ labor laws are complex, covering wages and mandatory benefits like SSS and PhilHealth. An EOR handles compliance, managing payroll, taxes, and employee classification to protect your business from penalties or missteps.
2. Access to Skilled Talents. The Philippines is home to a skilled workforce in fields like IT, healthcare, and BPO. An EOR simplifies recruitment and onboarding, ensuring compliant and competitive employment packages. Whether you need digital marketers or software developers, an EOR helps you secure top talent efficiently.
3. Streamlined Hiring and Onboarding. Hiring in the Philippines involves complex tasks like drafting contracts and registering employees with government agencies. An EOR handles these efficiently, ensuring smooth onboarding and compliance so you can focus on growing your business.
4. Reduce Expenses. Setting up a legal entity in the Philippines is costly and time-consuming, with ongoing expenses like office space and legal fees. An EOR lets you hire under their infrastructure, cutting overhead and providing flexibility for scaling or testing new markets without heavy investments.
5. Mitigating Risks with Flexibility. Expanding abroad involves legal risks and market uncertainties. An EOR handles regulatory compliance, reducing disruption risks. In addition, it offers flexibility to scale teams up or down, making it ideal for short-term projects or testing new markets.

Comparison Between Employer of Record (EOR) and Incorporation

When expanding internationally, businesses often choose between an Employer of Record (EOR) or setting up a legal entity through incorporation.

EOR is perfect for quick market entry, enabling hiring and operations without the need for a formal setup. For a long-term presence and deeper market integration, Business Incorporation is the next logical step. Below is the comparison between the two: