Top Benefits For Remote Teams or Workers in the Philippines (Filipino VAs)

 

One of the benefits of hiring a remote team is the access to global talent. And with the global shift to remote work, the global talent pool has become more competitive and retaining that highly skilled talent becomes a challenge. One of the popular countries for hiring a remote employee is the Philippines. As one of the leading outsourcing destinations globally for talented and skilled professionals, it is no wonder that a lot of global companies show their interest in the Philippines when looking to hire remote employees in order to help scale their team cost-effectively. 

Why Hire Filipino Talent? 

Filipino workers are not necessarily more talented than workers from other countries but from the collective experience of outsourcing companies, they’re proven to be more loyal, honest, and reliable.

What You Need To Know To Retain Filipino Talent 

Compensation and benefits are important to employees and your company. Following all the Philippines’ compensation laws as well as having a relevant benefits package will make you competitive to local offers from small businesses, multinationals, & outsourcing companies which will attract the best employees to your open positions for the long term! 

What is the average salary of a Filipino remote employee? 

While the average daily minimum wage in the Philippines ranges from PHP 290 (USD 5.70) to PHP 537 (USD 10.61), depending on the employee’s location, the average salary will depend on the nature of the job, skills, and experience. You can offer a high salary but not all Filipino talent looks at the take home pay, they also look for other benefits (as mandated by the government or optional) they can get from working with you. The right combination of salary and benefits can attract top talent to your open roles. 

What are the computations for income tax in the Philippines? 

For more information about income tax, you can visit the PH government website.

The Philippines is one of the Southeast Asian countries with the highest corporate and personal income tax. And reporting it is never easy and can be quite tedious. But due to the global pandemic, the Philippine freelance market has exploded from 2% of the population in 2018 (roughly 1.5 Million of the Philippine population) – and the numbers have grown exponentially after that. 

However, one big issue with Filipino freelancers is payment of taxes. Without a local registered company withholding income tax for them, freelancers can fail to pay their income tax or simply state that their income is below taxable income. 

What are the typical working hours in the Philippines? 

Filipino employees usually work an average of 8 hours a day, across 5 days a week. Filipinos are also required to have at least a 1 hour break each day by law. Should you require your employee to do overtime, this will cost you an additional 25% of the employee’s hourly pay rate. There are no maximum hours for overtime, and will be up to your discretion. 

Due to the outsourcing industry in the country, Filipinos are already familiar with working morning, mid or even night shifts. 

Regulations on working during the holidays in the Philippines 

If you require your Filipino employee to work on a Regular Holiday, you must pay them 200% of their daily rate for the first 8 hours. On the other hand, if you’re requiring your employee to work on a Special Non-Working Day, you will be required to pay them 130% of their daily rate for the first 8 hours. 

In the Philippines, holidays are generally divided into two categories: Regular Holidays and Special Non-Working Days. Regular Holidays are usually those scheduled on a fixed date such as New Year’s Day, Christmas, Independence Day, National Heroes Day, Labor Day, etc., while Special Non-Working Days are more flexible, and sometimes only apply to certain areas. The difference between the two is also reflected in their respective pay rates. 

What benefits are required by law to provide a Filipino employee? 

Your Philippines benefit management strategy must include statutory benefits that every employee is guaranteed to receive. For example, employees must get five days of paid time off that can be used for vacation or sick leave. The Philippines has two types of holidays — regular and special non-working days. Employees get paid time off for regular holidays and non-paid time off for special non-working days. 

13th month pay: In the Philippines, 13th month pay – payment that is 1/12 of an employee’s annual pay – is mandatory. If the person is not a full-time employee, the payment is usually prorated. This is usually paid on or before December 24 or in conjunction with the first December salary payment, usually on the 15th of December. 

Annual/Sick Leaves: The Philippines Labour Code states that an employer must allow employees a minimum of 5 days of annual leaves. Take note that these 5 days also include sick leaves. If your employee takes less than 5 days of leave in one year, then by law, the unused leaves shall be paid by the employer at the end of the year. 

Specific Leaves (Parental): 

* Maternity leave - 100% of daily pay rate for 105 days (7 of which can be transferred to the father, regardless of marital status) 

* Miscarriages or pregnancy termination - 100% of daily pay rate for 60 days 

* Solo parent maternity leave - 100% of daily pay rate for 120 days 

* Paternity Leave - 7 days 

Insurance and social security: Other benefits, which are already included in the tax deductions, include monthly contributions to the Social Security System (SSS), PhilHealth (PHIC), and the Home Development Mutual Fund (HDMF) otherwise known as ‘Pag-Ibig’. 

Home Development Mutual Fund (HDMF/Pag-Ibig): The HDMF or Pag-Ibig as it is more commonly known, was established to provide a national savings program and affordable house financing for Filipinos. Like SSS and PhilHealth, this contribution is also mandatory. If the employee’s monthly salary is below PHP 1,500, the Pag-Ibig contribution is 1% of the monthly basic salary. If the employee’s monthly salary is above PHP 1,500, the Pag-Ibig contribution is 2% of the monthly basic salary.

Philippine Health Insurance Corporation (PhilHealth): While most employers will seek private health insurance for their employees, it is still mandatory to make contributions to PhilHealth. Contributions to PhilHealth are currently at 3% of the employees’ monthly basic salary. Take note that this increases by 0.5% every year. PhilHealth Contribution Guide.

‍Social Security System (SSS): The purpose of the SSS is to help private employees and their dependents avail of maternity, sickness, disability, retirement, funeral, and death benefits. It is mandatory for all employees under the age of 60 (who earn more than PHP 1,000 per month) to make regular contributions to the SSS. See the SSS contributions table for computation guidelines.

Philippine Benefits Management 

An important part of giving benefits is also the supplemental benefits that aren’t required by law but are generally expected by employees. Offering these additional benefits can also make a big difference in finding and keeping key talent to help your company grow. 

Philippine law also allows ‘de minimis’ benefits which are facilities or privileges given as a means to promote health, goodwill, or efficiency to employees. Many employers choose to give housing, transportation, and medical allowances, which are tax-deductible if they’re classified as a cost of living allowance. 

You can also offer supplemental insurances such as life, disability, and health insurance in addition to the country’s universal healthcare scheme. 

Paying your Filipino Talent 

Typically, Filipinos get paid bi-monthly (every 15th and 30th of the month); however, it is not uncommon to have other arrangements as well. If you’re working with freelancers or independent contractors, you can also use platforms such as Paypal, Transferwise, Payoneer, Western Union, or Bank Transfers.

Also, it is highly recommended that payment be in Philippine Peso as it makes it easier to compute local taxes and benefits. Agreeing on a flat rate in Philippine Pesos is also beneficial in that it helps to avoid fluctuations in conversion rates. 

Building The Right Benefit Package 

From your business side of things - Designing your benefits plan can be overwhelming. Your goal is to find a balance between your company’s resources and your employees’ needs and expectations. With research and preparation, you can create a benefits plan that supports your success while balancing your revenue and existing expenses to support your benefit spending. 

You can also use this initial stage to identify your goals and how your benefits plan may support them. For instance, if you want to focus on retention, you can offer benefits that many other companies don’t. 

From the perspective of Filipino Talents - Although some are not happy with governance and want to avoid taxes, these taxes and benefits are acknowledged to be very useful when Filipino workers decide to take a loan, to get their dream car, or house. The mandatory government benefits are especially helpful during emergencies and calamities as well. 

Filipinos are family oriented and they usually also enroll their immediate family members into healthcare or insurance programs typically offered by local companies. So having a relevant benefits package can set you apart and compete with other companies if you understand what they need. 

Why does having benefits make a happy and productive Filipino Employee? 

1. Happy employees are far more productive than unhappy ones -  Happier employees are more engaged and less stressed. 

2. Employees prioritize work life balance - Companies should highlight the benefits they offer to help employees with their work-life balance. 

3. Unhappy employees will leave to find happiness - We live in a time when employee turnover has become a concern for most employers. In today’s world, however, it’s common for employees to spend just one or two years at a company before moving onto another opportunity that offers a better work culture.

Hiring a PH HR or someone familiar with this will definitely keep your remote Filipino workers happy!

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