This article is part of a larger series on Hiring.
Hiring from the Philippines may prove beneficial to your company and give you a competitive advantage. Many Filipino workers are experts in their fields, speak English, and can help your organization grow at a fraction of the cost you’ll pay US staff. After confirming that hiring from the Philippines is right for your business, you’ll want to write your job description and determine salary; post a job ad; review applicants, conduct interviews, and check references; and then make your offer.
When hiring Filipinos remotely, you may need to file special tax forms to stay in compliance. An international payroll provider like Papaya Global can do it for you. If you plan to hire employees vs contractors, it can help you set up an entity in the Philippines to pay your employees and taxes the right way. Sign up to learn more.
Step 1: Determine If Hiring From the Philippines Is Right for Your Small Business
The biggest reason US small businesses hire Filipino workers is the reduced overhead. The cost of living in the Philippines is much less than in the US—nearly 50% lower on average. Salaries are also much less, averaging about $890 US dollars per month. The ability to save money is a good reason to hire Filipino workers, but make sure you consider other factors as well.
Common Types of Work Outsourced to the Philippines
Remote workers in the Philippines hold various roles in many industries, just like those in the US. Here are some of the most common jobs outsourced to Filipino workers:
- Office and admin assistants
- Customer service and support reps
- Webmasters and web developers
- IT support reps
- Content writers
- Research assistants
- Graphics and multimedia designers
- Marketing, sales, and advertising reps
- English teachers
The Philippines’ education system has modeled itself after the US. Expect Filipinos to have similar educational backgrounds and resumes as US workers.
When hiring employees, certain skills are necessary to complete the job effectively. Some of these skills are soft skills that come about through cultural differences. While the Philippines and the US education system are similar, Filipinos are generally more communal in their decision-making and respectful of hierarchy, traits not always found in US workers.
As a result, you may find that some Filipino workers will check in with you or defer important decisions to you or another supervisor, making them less autonomous than US workers. Understand that this does not make them ineffective workers; it is instead simply a cultural difference that may require some adjustment on your end.
The East Coast of the US is 12 hours behind the Philippines. When it’s 8 a.m. in New York, it’s 8 p.m. in the Philippines, making it difficult for workers to overlap and collaborate. If your company doesn’t need workers to do so, then the time difference won’t be an issue.
However, if your company needs teams to work together, you may need to shift hours. Your US-based employees may have to work earlier some days, while your Filipino members may have to work later. Some companies require Filipino workers to work US hours all the time. While that means they’re working overnight, it can benefit your company by having every employee on the same schedule.
Employee vs Contractor
When hiring international employees, you need to set up a legal entity in the Philippines to pay the employee and taxes. There are registration requirements, fees, and corporate taxes you may need to pay, including US tax withholdings. It’s easy to expand your business in the Philippines by setting up a foreign entity, but if you’re only hiring one or two employees, this may be more trouble than it’s worth.
You have options for the type of worker you hire: full time, part time, seasonal, or temporary. You can also hire Filipino workers as independent contractors. While this can save the headache of setting up a legal entity and reduce your overhead, you will have less control over the work done and will face stiff fines and penalties for misclassification if the worker should really be an employee.
Many Filipino workers are used to working on an independent contractor basis. So, if your company only needs to hire one or two people, this may be the best way forward.
Compliance notes on resumes: It’s common for Filipino workers to put headshots and even physical attributes on resumes. We recommend asking applicants to remove these items from their resumes before applying, as US anti-discrimination laws could be breached. It’s a grey area, but it’s better to avoid even the appearance of discrimination
Step 2: Write the Job Description & Determine Salary
When you write job descriptions, be clear and include the skills and prerequisites necessary to perform the job well. Whether you’re hiring an employee or an independent contractor, you need to be clear on the expectations you have for the person.
As discussed above, the average salary for a Filipino worker is much less than a US worker. However, depending on the work you need done, the skills required, and the experience you seek, you may need to pay much higher than the average.
Ensure Payroll & Employment Law Compliance
Whether you’re hiring an employee or a contractor, you’ll need to make sure you have a way to pay them. There is no requirement of how frequently you make payments, but most Filipino workers are used to being paid twice monthly. If you’re partnering with an independent contractor, make sure you have a completed IRS Form W-8BEN-E from them to verify you’re paying them correctly and withholding appropriate taxes.
The general workweek in the Philippines is 40 hours, and each worker is required to receive at least one one-hour break each day. Overtime is allowed at 1.25 times the regular hourly rate and must be paid to employees working over 40 hours in a workweek or eight hours in a single workday. Here are some special laws you need to know.
- 13th Month Pay: This payment, a requirement for companies registered in the Philippines, is usually made at the end of the year and equivalent to one-twelfth of the employee’s annual salary. If an employee is part-time, you can prorate the amount. This is in addition to any end of year or holiday bonus a company may give employees.
- Retirement Pay: All employees may retire once they reach age 60 and must retire by 65. Employees must receive at least one-half of their normal monthly salary (which comes out to 22.5 days) and must include:
- 15 days salary based on working salary
- Five days of incentive leave
- 1/12 of the 13th month pay
Note: Employees must have worked for the company for at least five years. The minimum retirement pay = amount the employee made per day x 22.5 days x number of years of service.
- Paid Leave: The Philippines government requires companies to provide five days of PTO for any reason (e.g., sick and vacation). If an employee does not use the time, it must be included as pay in the employee’s last paycheck of the year.
- Parental Leave:
- Maternity: 105 days of 100% paid maternity leave (120 days for a single mother)
- Miscarriage: 60 days of 100% paid leave for a miscarriage or emergency termination of pregnancy
- Paternity: Seven days of 100% paid paternity leave
- Solo-parent: Seven days of 100% paid leave, provided that the employee had been working for at least one full year before the leave
- Gynecological Leave: Any woman who has worked at least six months in the prior year is eligible for two months of full pay leave following surgery for a gynecological disorder.
- Leave for Women and Children of Domestic Violence: Victims of domestic violence may take up to 10 days of paid leave. This time may be extended based on court order.
- Social Security System: For any Filipino worker under 60 years old making more than ₱1,000 per month, contributions are mandatory and determined by salary.
- Philippine Health Insurance Corporation: Even if private insurance is offered by a company, contributions to the Philippine Health Insurance Corporation are required at 3% of the employees’ monthly salary.
- Home Mutual Development Fund: This fund collects money for a national savings program and affordable housing. For Filipino workers making less than ₱1,500 per month, their contribution is 1% of their monthly salary. For all other workers, the contribution is 2%.
- Holiday Pay:
- Regular Holidays: These are recurring holidays like New Year’s and Christmas. If you need a Filipino worker to work on a regular holiday, you are required to pay them twice their normal hourly rate for the first eight hours.
- Special Non-Working Days: These holidays are flexible and generally based on regional events. Companies must pay workers required to work on these days 1.3 times their hourly rate for the first eight hours of work.
Hiring international employees requires compliance with laws in two countries. That can be overwhelming for small businesses, and that’s why we recommend using an international payroll provider like Papaya Global. Its services can help you pay your Filipino workers correctly and ensure compliance with both Philippine and US laws.
Step 3: Post the Job Ad
Your job ad needs to be posted on job boards Filipino workers will see. Some of the most used job sites include
Your job ad needs to describe not only the duties and responsibilities of the position clearly but also the work hours. Whether you decide to let the Filipino worker work their local hours or work your hours, leave no ambiguity here and make it clear what you expect. This will help you weed out applicants not looking to work hours you require, reducing the amount of time you need to spend reviewing resumes and interviewing candidates.
Step 4: Review Applications & Conduct Interviews
After you’ve posted your job ad, you will receive applicants quickly. Especially for lower-level jobs that don’t require much experience, expect an influx of candidates in the first few days. To help you sort through these applicants quickly and effectively, we recommend you make a must-haves list for the position. No applicant will match up perfectly, but the best candidates should be able to meet your handful of must-haves.
Conducting international interviews will present some time zone challenges, but this is good practice for you to see how the individual candidates communicate given these obstacles. Set up a video interview with five to eight of the most qualified candidates. The best way to ensure that they have a stable internet connection is by conducting a video interview.
We also recommend having a list of structured interview questions for each applicant. As a result, you will be able to rate candidates based on their answers to the same questions, allowing you to narrow the candidates down to just one.
Step 5: Check References
After the interviews are complete and you have targeted the candidate you want to hire, ask for references. You want to make sure you speak with at least two supervisory references. This will give you a good idea of the candidate’s work ethic and the skills they possess. A supervisory reference will also help you understand what it’s like to manage this individual.
Checking international references can be difficult. While we usually recommend all reference checks be completed over the phone only, it might be too cumbersome to do so. Only if necessary, it would be acceptable to communicate with a reference via email. Ask the reference direct and follow-up questions to gauge whether the worker is capable of the job.
Step 6: Make a Job Offer
Completing all of the above steps will lead you to a successful conclusion of your hiring process: making a job offer. We recommend connecting with the chosen candidate first to discuss the offer with them and discuss any remaining details. Once you’ve agreed on all the terms, present the candidate with a formal written offer letter that includes:
- Salary and pay frequency
- Job title
- Start date
- Specific working hours
Also include the job description for the candidate to sign off on. This will allow you the ability to hold the person accountable should they not meet your expectations. Give the candidate at least a week to review the offer letter and return it to you.
If you’re partnering with an independent contractor, send them an independent contractor agreement instead of an offer letter. This document should lay out similar details and include the scope of work for the job. While you have less control over an independent contractor’s daily work, you can also avoid the legal complexities associated with hiring an international employee.
Hiring any international employee comes with unique challenges. Making the hiring process streamlined and stress-free for both you and your new employee can be achieved by following the above structure.
Hiring from the Philippines or partnering with an international independent contractor will present international challenges. Seek advice from an international employment lawyer to ensure your company remains compliant.