Payroll in Philippines

Payroll in the Philippines runs on a semi-monthly cycle. The dossier does not state a statutory payday date or a maximum pay interval, so confirm the lawful payday rules with the labour authority (DOLE) and put the agreed paydays in the contract.

Payday and payslips

Set two paydays a month and keep them consistent. Each payslip should show gross pay for the period separately from every deduction, so basic salary, overtime, night shift differential, holiday pay, SSS, PhilHealth, Pag-IBIG and income tax withheld each appear as their own line. The dossier does not set out a required payslip format, so check the current DOLE requirements before your first pay run.

Your employee's payday is not the same as your remittance dates. The dossier gives no remittance deadlines for SSS, PhilHealth, Pag-IBIG or withholding tax, so confirm each one with the relevant agency and keep them as separate entries in your payroll calendar.

Thirteenth-month pay

Thirteenth-month pay is mandatory for rank-and-file employees who worked at least one month in the calendar year. The amount is one twelfth of the total basic salary earned, paid not later than 24 December. You may pay half before the school year opens. The simplest way to budget it is to accrue one twelfth of salary every month, so the cost does not land in one payroll.

Contributions and tax

Employer and employee both contribute to three schemes. Rates below come from the 2026 breakdown.

The SSS guidance gives a combined 15 percent of the monthly salary credit, split 10 percent employer and 5 percent employee, up to a ₱35,000 credit, effective 1 January 2025. That differs from the split in the table, so confirm the rate in force for your payroll year before you configure the system. On a ₱50,000 salary, the capped credit gives an employer share of ₱3,500 and an employee share of ₱1,750 a month.

PhilHealth premiums for 2024 to 2025 are 5 percent of monthly basic salary between a ₱10,000 floor and a ₱100,000 ceiling, shared equally. The handbook schedule stops at 2025, so ask which circular sets the rate for your year. Pag-IBIG has a handbook minimum of ₱100 each from employee and employer, but the Fund adjusts it by circular, so confirm the current figure. The Employees' Compensation contribution is paid by the employer alone: ₱10 a month for a salary credit of ₱14,500 and below, and ₱30 for ₱15,000 and above.

Income tax is withheld from pay on progressive brackets. The first ₱250,000 is taxed at 0 percent, and the rate rises through 15, 20, 25 and 30 percent to 35 percent above ₱8,000,000. Confirm the withholding procedure and filing calendar with the tax authority before the first pay run.

Working-time rules that affect pay

The normal working day is eight hours. Overtime on an ordinary working day is paid at the hourly rate plus 25 percent, and at plus 30 percent on a rest day or special day. Each hour between 10 p.m. and 6 a.m. carries a further 10 percent night shift differential. Managerial employees are excluded from these rules, so record the actual schedule and category in the contract.

Regular holidays are paid at 100 percent of the daily wage even when unworked, and work on a regular holiday is paid at least 200 percent. The DOLE handbook lists twelve regular holidays. Special non-working days follow no work, no pay, with a premium of at least 30 percent when worked. The dates are set each year by proclamation, so check the current proclamation before each year's calendar is built.

Employees get not less than one hour off for a regular meal. A shorter break of at least 20 minutes is allowed in listed cases, including non-manual work, and counts as paid hours worked.

The Philippines taxes employment income through progressive bands. Employers withhold the tax from pay and also withhold the employee's social contributions. This section covers the income tax bands, how withholding works, and the employee deductions. The top personal income tax rate is 35%.

Income tax bands

The bands below are annual amounts in PHP. Each rate applies only to the slice of income that falls inside the band, not to the whole amount.

How withholding works

The payroll cycle in the Philippines is semi-monthly, so withholding is applied to each of the two pay runs in a month. The dossier for this guide does not set out the withholding method, the tax authority's tables or the form used to remit the tax. It also does not cover personal allowances, exemptions or tax credits. Check the current withholding rules with the Bureau of Internal Revenue or your payroll provider before you configure payroll, and do not estimate net pay from the bands alone.

Thirteenth-month pay is mandatory for rank-and-file employees. It is one twelfth of the total basic salary earned and is paid not later than 24 December. Confirm with your tax adviser how it is treated for income tax purposes, because the dossier does not cover that.

Employee deductions

Besides income tax, three mandatory contributions come out of pay. The rates below are the employee and employer shares from the contribution breakdown.

SSS

SSS contributions are 15 percent of the monthly salary credit up to a PHP 35,000 credit, split 10 percent employer and 5 percent employee, effective 1 January 2025. The credit is capped, so on a PHP 50,000 salary the employer share is PHP 3,500 a month and the employee share PHP 1,750. Contributions on the part of the credit above PHP 20,000 go to the member's individual Pension Booster account. The breakdown table above shows a split of 9.5 and 4.5 percent, so check which split applies to your payroll date.

PhilHealth

Premiums for 2024 to 2025 are 5 percent of the monthly basic salary between a PHP 10,000 floor and a PHP 100,000 ceiling. That is PHP 500 to PHP 5,000 a month, shared equally between employer and employee. The schedule in the DOLE handbook stops at 2025, so ask which PhilHealth circular sets the rate for your payroll year. The 2 percent in the table above differs from this 5 percent total, so confirm the current rate before you budget.

Pag-IBIG

Membership is mandatory for SSS-covered employees. The 2023 DOLE handbook records a minimum monthly savings contribution of PHP 100 from the employee, matched by PHP 100 from the employer. The Fund adjusts the amount by circular, so confirm the current figure rather than budgeting from the handbook.

Employer-only contribution

The Employees' Compensation Program contribution is paid by the employer alone. It is PHP 10 a month for a monthly salary credit of PHP 14,500 and below, and PHP 30 for PHP 15,000 and above. It is not deducted from the employee.

Business taxes are separate

The corporate tax rate is 25% and the VAT rate is 12%. These are business and transaction taxes, not deductions from an employee's salary.

Employer contributions in the Philippines are the mandatory social charges you pay on top of gross salary. Three funds apply to every private-sector employee: the Social Security System (SSS), PhilHealth and the Pag-IBIG Fund. A fourth charge, Employees' Compensation, is paid by the employer alone.

Contribution rates

The table shows the employer and employee percentage rates for 2026, taken from the OECD breakdown.

Government guidance gives the headline SSS rate differently: 15 percent of the monthly salary credit, split 10 percent employer and 5 percent employee, effective 1 January 2025. The two sources do not line up exactly, and the table's PhilHealth and Pag-IBIG percentages do not match the other guidance below. Treat the table as indicative and confirm the rates and the split for your payroll year before you budget.

Ceilings and thresholds

SSS

SSS contributions apply to the monthly salary credit, which is capped at PHP 35,000. Contributions on the part of the credit above PHP 20,000 go to the member's individual Pension Booster account. On a PHP 50,000 salary, the employer share is PHP 3,500 a month and the employee share is PHP 1,750.

PhilHealth

For 2024 to 2025, the premium is 5 percent of monthly basic salary between a PHP 10,000 floor and a PHP 100,000 ceiling. That is PHP 500 to PHP 5,000 a month, shared equally between employer and employee. The DOLE handbook schedule stops at 2025, so ask which PhilHealth circular sets the rate for your payroll year.

Pag-IBIG

Membership is mandatory for SSS-covered employees. The 2023 DOLE handbook records a minimum monthly savings contribution of PHP 100 from the employee, matched by PHP 100 from the employer. The Fund adjusts the amount by circular, so confirm the current figure before budgeting.

Employees' Compensation

The employer alone pays this contribution: PHP 10 a month for a monthly salary credit of PHP 14,500 and below, and PHP 30 for PHP 15,000 and above.

What is and is not included

• Included in employer cost: the employer share of SSS, PhilHealth and Pag-IBIG, plus the employer-only Employees' Compensation contribution.
• Withheld from the employee, not an employer cost: the employee share of each fund.
• Separate from contributions: thirteenth-month pay, which is mandatory for rank-and-file employees and is budgeted as one twelfth of salary every month. Holiday pay, overtime premiums and separation pay are also outside the statutory contributions above.
• Top-ups you may owe: for maternity leave, SSS pays the daily benefit and the private employer pays the difference between that benefit and full salary.

Worked cost example

The dossier gives one worked figure, for SSS only. On a PHP 50,000 monthly salary, the capped credit means the employer pays PHP 3,500 a month and the employee PHP 1,750. This is not a full cost of employment. Add PhilHealth, Pag-IBIG, Employees' Compensation and thirteenth-month pay once you have confirmed the current figures for each.

Annual leave

The statutory paid leave floor in the Philippines is service incentive leave: five days a year, usable for sick, vacation and other purposes. It applies to an employee with at least one year of service. Managerial employees are among the exclusions. Most offers add company leave above that floor, so state the actual leave in the contract rather than relying on the statutory minimum.

Public holidays

The DOLE handbook lists twelve regular holidays in a year. Regular holidays are paid at 100 percent of the daily wage even when unworked, and work on a regular holiday is paid at least 200 percent. Special non-working days follow no work, no pay, with a premium of at least 30 percent when worked. The dates are set each year by proclamation, so check the current proclamation before each payroll year rather than reusing a prior calendar.

Sick leave and sickness benefit

There is no separate statutory sick pay scheme in the dossier beyond the five days of service incentive leave, which can be used for sickness. SSS pays a sickness benefit of 90 percent of the average daily salary credit. Confirm with your provider how the benefit is claimed and whether the employer advances it, and check any company policy that tops it up.

Maternity leave

Maternity leave is 105 days with full pay for every pregnancy. A solo parent gets 15 more days, and an employee may take an optional 30 further days without pay after a live birth. For miscarriage or emergency termination, leave is 60 days with full pay.

SSS pays a daily benefit of 100 percent of the average daily salary credit. The private employer pays the difference between that benefit and full salary, so budget for that gap.

Paternity and parental leave

Paternity leave is seven days with full pay for a married male employee for each delivery of his lawful wife, including miscarriage, regardless of employment status. A qualified solo parent employee gets up to seven working days of paid parental leave a year after six months of service.

Other paid leave

A female employee who is a victim of violence under the VAWC law is entitled to up to ten days of leave with full pay, extendable under a barangay or court protection order. Under the Magna Carta of Women, a female employee with at least six months of service in the last twelve gets a special leave benefit of two months with full pay after surgery for a gynecological disorder.

Compliance in Philippine payroll rests on a handful of areas: government registrations, contribution payments, written terms, wage order compliance, annual pay obligations and the rules for ending employment. The dossier here does not cover every filing, so for deadlines and forms it flags what to confirm with your provider or the agency concerned.

Registration and contributions

An employer must enrol employees with the Social Security System (SSS), PhilHealth and the Pag-IBIG Fund. Pag-IBIG membership is mandatory for SSS-covered employees. The Employees' Compensation Program contribution is paid by the employer alone.

The SSS total is 15 percent of the monthly salary credit up to a ₱35,000 credit, split 10 percent employer and 5 percent employee. That differs from the OECD-sourced breakdown in the table, so confirm the applicable split with the provider before you build the payroll. The Pag-IBIG handbook figure is a minimum of ₱100 each from employee and employer, adjusted by circular, so confirm the current amount. For PhilHealth, the schedule in the DOLE handbook stops at 2025, so ask which circular sets the rate for your payroll year. Remittance deadlines are not in the dossier. Get them from each agency or your provider.

Contracts and written terms

State the actual terms in the contract rather than relying on statutory floors. At a minimum, record the working schedule and employee category, because managerial employees are excluded from the hours rules. Record the actual leave, since statutory service incentive leave is only five days a year and most offers add company leave above it. Probation is commonly six months, and it should be set out in writing.

Wages and annual pay

Minimum wages are daily rates set by regional wage boards by sector class, so they follow the workplace, not the head office. Identify the wage order and class for each site before setting pay. Paying below the wage order carries double indemnity, and criminal liability can fall on a corporation's responsible officers. Thirteenth-month pay is mandatory for rank-and-file employees and is due not later than 24 December. Budget it as one twelfth of salary each month. Payroll commonly runs semi-monthly.

Records

The dossier does not set a retention period or list required forms. Confirm both with DOLE or your provider. Keep the signed contract, the schedule and category record, payslips, and the wage order and sector class applied to each employee.

Notice and termination

Termination for an authorized cause, such as redundancy or retrenchment, needs written notice to both the employee and the DOLE regional office at least one month before the intended date. Separation pay is due.

A fraction of at least six months counts as a whole year. An employee retiring at 60 to 65 with at least five years of service is owed retirement pay of at least half a month of salary per year of service, with exemptions for small retail, service and agricultural establishments. The dossier does not cover just-cause dismissal procedure, so take advice before any disciplinary termination.