Global companies continue to invest heavily in the Philippines as a leading outsourcing destination. With its large pool of skilled professionals, high English proficiency, and strong cultural compatibility with Western businesses, the country is ideal for expanding global teams.
In fact, the Philippine economy is projected to grow by around 6% in 2025, driven largely by the expansion of the Business Process Outsourcing (BPO) industry.
“We expect the growth in 2025 to stay within the 6% handle,” said Amol Gupte, Citi Asia South Head. This projection aligns with the lower end of the government’s 6–8% target range.
In 2024 alone, the IT-BPM sector generated $38 billion in export revenues and provided 1.82 million full-time jobs. With this demand rising, many companies are exploring how to hire Filipino talent legally and efficiently—without having to establish a local entity.
Key Takeaways:
- EOR is legal in the Philippines if the provider complies with local labor laws and is properly registered.
- Using an EOR avoids the need to set up a local entity, enabling fast, compliant hiring of Filipino talent.
- Costs range from $299–$1,500+ per employee/month, depending on services and team size.
- Hiring without a legal structure poses risks such as misclassification, tax issues, and labor violations.
- CreaThink Solutions provides full-service EOR support, covering contracts, payroll, compliance, and HR functions.
What Is an Employer of Record (EOR) and How Does It Work?
An Employer of Record in the Philippines is a third-party service provider that legally employs workers on your behalf. In the Philippines, an EOR handles:
- Payroll and tax compliance
- Benefits administration
- Mandatory contributions
- Labor law adherence
This enables foreign companies to legally hire Filipino talent without establishing a physical office or registering a local entity.
Importantly, an EOR does not manage daily workflows. The client company retains control over job assignments, performance evaluations, compensation, and decisions like hiring or termination.
If you’re new to the concept, check out how EOR services can help U.S. startups looking to expand remotely in the Philippines.
How Much Does It Cost to Use an EOR in the Philippines?
The cost of EOR services typically ranges from $299 – $1,500+ per employee per month, depending on:
- Services included (e.g., payroll, legal, HR support)
- Team size and complexity
- Specific roles and industries
Full-service EOR providers usually charge more but handle everything end-to-end. Smaller providers may offer lower rates but require you to manage some functions like benefits or compliance independently.
Is Using an EOR Legal in the Philippines?
Yes. Employer of Record services are legal in the Philippines—if they comply with all local labor laws and regulations.
A legitimate EOR must:
- Be a registered business in the Philippines
- Hold valid licenses and government permits
- Follow the Philippine Labor Code, including wage and benefits laws
- Handle all required contributions to:
- SSS (Social Security System)
- PhilHealth
- Pag-IBIG Fund
- BIR (Bureau of Internal Revenue)
EORs that meet these standards provide a compliant, low-risk way for foreign companies to employ staff in the Philippines.
Are There Risks to Hiring Without a Legal Entity in the Philippines?
Trying to bypass local laws by hiring Filipino talent directly—especially as freelancers or independent contractors—can expose your company to significant legal and financial risks. These risks include misclassification, tax compliance issues, and violations of labor laws. To avoid these pitfalls, many companies are turning to legal process outsourcing as a compliant and efficient way to engage overseas talent. This approach ensures you stay aligned with local regulations while benefiting skilled professionals abroad.
Lack of Contracts or Legal Structure
The Philippines is a pro-labor market with complex, region-specific labor laws, such as varying minimum wages. Hiring without a local entity or legal partner often means unclear contracts, no formal HR process, and zero legal protection for either party. This puts you at risk of disputes or claims that you’ll have no jurisdiction to resolve.
Employee Misclassification
Misclassifying employees as independent contractors can cause serious legal and financial consequences. In the Philippines, contractors are not entitled to the same rights and benefits as full-time employees, such as government-mandated contributions, paid leave, and job security.
Labor-only Contracting
This refers to arrangements where a contractor merely recruits or supplies workers to a client without real control over the work or resources. Philippine law prohibits it and can cause joint employer liability, fines, and reputational damage.
Intellectual Property Protection
Protecting intellectual property is essential when working with remote staff, especially across borders. Without proper safeguards, there’s a risk that virtual assistants or other remote workers may misuse, leak, or even steal sensitive company data, assets, or proprietary information. That’s why it’s vital to have legally binding contracts, clear confidentiality clauses, and secure data-handling protocols in place.
Non-Compliance with Taxes and Contributions
Outsourcing can bring tax complexities, and foreign companies that hire directly without a legal structure in the Philippines are often unaware of mandatory payroll taxes and government contributions. Failure to remit these can lead to hefty fines, legal actions, and the invalidation of the worker’s benefits.
When choosing an EOR provider, look for expertise in payroll, DOLE compliance, SSS, PhilHealth, Pag-IBIG contributions, and local hiring practices.
Without a legal entity, risks include non-compliance with local laws, cultural gaps, and employee integration issues. Partnering with a trusted legal outsourcing services company like CreaThink Solutions helps you avoid these challenges and hire safely.
CreaThink Solutions: Your Trusted EOR Partner in the Philippines
CreaThink Solutions offers legal, compliant, and cost-effective Employer of Record services in the Philippines for U.S. companies looking to hire in the Southeast Asia nation. We act as the local employer on your behalf and handle:
- Employment contracts compliant with local laws
- Payroll processing, tax remittance, and benefits administration
- HR support and local labor law guidance
- Statutory contributions and reporting to all relevant government agencies
Our mission is simple: Help international companies hire top Filipino talent with speed, compliance, and peace of mind.
Explore how CreaThink Solutions can help you grow your team in the Philippines with peace of mind and scalability. Learn more about our EOR services and other offerings.
Visit our website to discover how we can support your business goals, or reach out to us directly at inquiry@creathink-solutions.com if you have any queries.
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