The Philippines is a popular destination for remote hiring, helped by widespread English and working hours that can overlap with both the US and Australia. Employer contributions are modest because each government scheme has a salary cap. The larger statutory cost is the 13th-month pay.
The three government contributions
| Scheme | Employer share | Cap | Maximum per month |
|---|---|---|---|
| SSS (social security) | 10% of monthly salary credit | ₱35,000 salary credit | ₱3,500 |
| SSS Employees’ Compensation | Fixed | — | ₱30 |
| PhilHealth (health insurance) | 2.5% (half of the 5% premium) | ₱100,000 monthly salary | ₱2,500 |
| Pag-IBIG (housing fund) | 2% | ₱10,000 monthly compensation | ₱200 |
Because of these caps, the employer’s share shrinks as a percentage when salaries rise. For a developer earning ₱84,080 a month, the employer pays about ₱5,832 a month — roughly 6.9% of salary.
13th-month pay
Rank-and-file employees are entitled to 13th-month pay equal to one-twelfth of their basic salary earned during the year, paid no later than 24 December. It is not a discretionary bonus: if you employ someone for part of a year, they receive a pro-rated amount. Developers who are not managers are generally rank-and-file employees, so budget for it.
Worked example: $16,000 a year
| Item | PHP per year | USD |
|---|---|---|
| Gross salary | ₱1,008,960 | $16,000 |
| SSS + Employees’ Compensation | ₱42,360 | $672 |
| PhilHealth | ₱25,224 | $400 |
| Pag-IBIG | ₱2,400 | $38 |
| 13th-month pay | ₱84,080 | $1,333 |
| True employment cost | ₱1,163,024 | $18,443 (+15.3%) |
Calculate a Philippine developer’s true cost
Leave and benefits
- The legal minimum is 5 days of Service Incentive Leave after one year of service.
- Many tech employers offer more paid leave than the legal minimum.
- Private HMO health coverage is not mandatory, but it is commonly offered by tech employers.
Regularization: the rule that surprises foreign employers
Probation in the Philippines can last up to six months. After that, an employee becomes “regular” and can only be dismissed for just or authorized causes, following due process. The same logic can apply to long-term contractors who do core, controlled work: they may be found to be regular employees, owed 13th-month pay and government contributions for the whole period.
Genuine freelancers register with the Bureau of Internal Revenue as self-employed, pay graduated or 8% flat income tax, and issue official receipts or invoices.