Employment in the Philippines is governed by the Labor Code and special laws enforced by the Department of Labor and Employment (DOLE). Minimum wages are set region by region, and employers must register with SSS, PhilHealth and Pag-IBIG. Here is what employers need to know about leave, pay, tax and ending employment.
The Labor Code only guarantees a short service incentive leave, so most employers offer more vacation and sick leave by policy or collective agreement. Parental and special leaves come from separate laws.
Paid leave a year after 1 year of service. Unused days are converted to cash. Employers that already give at least 5 days of paid leave are exempt.
Paid leave for live births, plus 15 days for solo parents and an optional 30 unpaid days. 60 days for miscarriage. Paid through SSS, with the employer topping up to full pay unless exempt.
Paid leave for married fathers for each of the first 4 deliveries of the legitimate spouse. The mother can also transfer 7 days of her maternity leave to the father.
Paid parental leave a year for solo parents after 6 months of service.
Set up each Philippine leave type in IceHrm with its own accrual, carry forward and approval rules, from service incentive leave to your own vacation and sick leave policy. Employees see their live balance before they apply, and managers see who is away on a shared calendar. Leave management →
There is no single national minimum wage. Regional Tripartite Wages and Productivity Boards set daily minimum wages for each region, often with different rates by sector and business size.
Under the current NCR wage order (2026). The higher rate applies to non-agriculture; other regions have lower rates.
Work beyond 8 hours a day is overtime. Employees are entitled to a rest day of 24 consecutive hours after every 6 working days.
One twelfth of basic salary earned in the calendar year, for rank-and-file employees, paid by 24 December.
Capture attendance, overtime and night hours in IceHrm and feed them straight into payroll, so overtime, rest day and holiday premiums reflect what was actually worked. Time & attendance →
Employers withhold income tax from compensation every payroll and file annual information returns with the Bureau of Internal Revenue (BIR). Employees with a single employer whose tax was correctly withheld generally do not need to file their own return. The 13th month pay and other benefits are tax-free up to PHP 90,000 a year.
| Annual taxable income | Rate | Tax due |
|---|---|---|
| PHP 0 – PHP 250,000 | 0% | Nil |
| PHP 250,001 – PHP 400,000 | 15% | 15% of the excess over PHP 250,000 |
| PHP 400,001 – PHP 800,000 | 20% | PHP 22,500 plus 20% of the excess over PHP 400,000 |
| PHP 800,001 – PHP 2,000,000 | 25% | PHP 102,500 plus 25% of the excess over PHP 800,000 |
| PHP 2,000,001 – PHP 8,000,000 | 30% | PHP 402,500 plus 30% of the excess over PHP 2,000,000 |
| Over PHP 8,000,000 | 35% | PHP 2,202,500 plus 35% of the excess over PHP 8,000,000 |
Employers deduct the employee share of three mandatory contributions and add their own share. Each is calculated on a capped salary base.
| Scheme | Employer | Employee | Salary cap |
|---|---|---|---|
| Social Security System (SSS) | 10% | 5% | PHP 35,000 monthly salary credit |
| SSS Employees’ Compensation | PHP 10–30 | – | Flat monthly amount |
| PhilHealth | 2.5% | 2.5% | PHP 100,000 |
| Pag-IBIG (HDMF) | 2% | 2% | PHP 10,000 (max PHP 200 each) |
Fringe benefits given to managerial and supervisory employees, such as housing or cars, attract a final fringe benefits tax of 35% of the grossed-up value, paid by the employer quarterly.
Build Philippine pay the way you already structure it, with your own salary components, deductions and formula columns, such as SSS, PhilHealth and Pag-IBIG columns. Want to know how well IceHrm handles payroll calculations for the Philippines? Contact us or see Payroll →
Regular employees have security of tenure. An employer may only dismiss for a just cause (such as serious misconduct or gross neglect of duty) after a written notice, a chance to be heard and a written decision, or for an authorised cause such as redundancy, with notice and separation pay.
| Situation | Notice |
|---|---|
| Resignation by the employee | 30 days (written) |
| Termination for an authorised cause | 30 days, to the employee and DOLE |
| Authorised cause | Separation pay |
|---|---|
| Redundancy or installation of labour-saving devices | 1 month’s pay per year of service (minimum 1 month) |
| Retrenchment or closure not due to serious losses | ½ month’s pay per year of service (minimum 1 month) |
| Disease | ½ month’s pay per year of service (minimum 1 month) |
Employees retiring at 60–65 with at least 5 years of service are entitled to retirement pay of at least half a month’s salary (22.5 days) per year of service where no better retirement plan applies. Final pay also includes the pro rata 13th month pay and the cash value of unused service incentive leave.
Regular holidays are set by law and are paid even when not worked. Each year the President also proclaims special non-working days (such as Chinese New Year, Ninoy Aquino Day, All Saints’ Day, the Feast of the Immaculate Conception and the last day of the year), which follow a “no work, no pay” rule unless company policy says otherwise.
Some dates may be moved by proclamation, and local holidays apply in individual cities and provinces.
Leave groups give each office its own holiday calendar, so sites in Metro Manila, Cebu and Davao can each follow the national proclamation plus their own local holidays. Holiday calendars →
Employees doing work that is necessary or desirable to the business become regular employees after probation, whatever the contract says. Written contracts are standard practice and should set out the standards for regularisation at the start.
Probation may not exceed 6 months from the start of work, except under an apprenticeship agreement. The employee must be told the standards for becoming regular when engaged. Fixed-term and project employment are allowed where the term is agreed knowingly and voluntarily, but cannot be used to avoid security of tenure.
Send contracts and regularisation standards for e-signing, store them on the employee’s record, and track onboarding with task lists so government registrations and probation reviews are not missed. Documents & e-signing →
This guide is general information to help you plan HR processes, not legal, tax or financial advice. Employment law and rates change regularly and awards, enterprise agreements and state rules may give employees more than the minimums shown here. Always confirm current requirements with the official sources or a qualified adviser.
Configure leave types, accrual rules and public holidays for Philippines, keep employee records and contracts in one place, and run payroll with your own salary components. Want to know how IceHrm handles payroll calculations for Philippines? Talk to us.
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