If you’re looking to expand your business with international talent, the Philippines is a top destination to consider. From its large population to its strong economy, the country is among the best options for hiring in Southeast Asia. Many Filipinos also hold college degrees, and with a high concentration of young professionals, there are plenty of people eager to enter the workforce.
The Philippines also has a lower cost of living than many other countries, so businesses located elsewhere are often able to offer competitive pay without facing budget constraints. A majority of the population is also fluent in English, the second official language of the country.
But while these benefits are compelling, many companies face complex challenges when it comes to onboarding international hires. To address the intricacies of sourcing and hiring talent abroad, some organizations turn to a professional employer organization (PEO). Here, we break down what PEO services entail, along with alternatives for your business to consider.
What is a professional employer organization (PEO)?
A PEO is an organization that handles tasks related to employment for your company, acting as a co-employer of your staff. If you’re looking to hire professionals in the Philippines, working with a PEO may alleviate some of the administrative tasks that come with sourcing talent and managing a team.
A PEO partner can take on a number of responsibilities to help manage your employees in the Philippines, including complete HR services. For example, they could handle:
- Payroll: Your company can outsource payroll to a PEO, allowing them to track attendance and hours worked for your remote employees. They may also handle other responsibilities related to payroll, such as workers’ compensation coverage.
- Benefits: If you hire full-time employees who are eligible for benefits, a PEO can streamline benefits administration. They can oversee both mandatory benefits as well as optional packages such as retirement plans.
- Compliance: Working with a PEO allows your company to simplify compliance matters. These organizations are familiar with local labor laws and requirements, and can ensure you remain in compliance with applicable regulations.
- Taxes: PEOs can file and pay taxes for your company in the country in which you’re hiring. They can handle employment taxes on a local, state, and federal level.
- Human resources: Many PEOs provide comprehensive human resources services, including sourcing talent, onboarding, and offboarding.
Because a Filipino PEO will be well versed in the nuances of the Philippines labor market, they can help your business make competitive offers tailored to the needs and expectations of local hires. They may also oversee screening and interview processes, employee contracts, and leave administration. In other words, a PEO can take on the role of an outsourced HR team, acting under your company’s guidance.
Pros and cons of PEO services
While some companies may benefit from PEO services, it’s important to be aware of the pros and cons of working with a PEO. A PEO in the Philippines could be the right fit if you’re only expanding your workforce to the Philippines. Many small and midsize companies find working with a PEO useful for handling the more technical aspects of international hiring, since they lack the resources to manage the full scope of administrative activities. But if you plan to hire in other countries beyond the Philippines, you’ll need to find PEO partners in those locations as well.
PEO services also have other limitations. For one, finding the right fit in a PEO can be tedious and time-consuming. You’ll need to research different organizations to make sure their services align with your company’s goals, communication methods, and corporate strategy. Since services can vary from one PEO to the next, this process can quickly become complex, especially if you’re having to juggle different PEOs in different locations.
Moreover, the definition of PEO services can vary. No two organizations provide the same scope: some offer tax services, for instance, while others may offer HR support exclusively. If your company is seeking a full suite of talent management services, it could be tough to find a PEO that fits the bill. And if you’re hiring across multiple countries, expect to repeat the process in each country. After a while, this can become a major strain on your company’s resources.
Things to know about hiring in the Philippines
Each country has its own unique labor laws, tax regulations, and hiring practices. When hiring in the Philippines, you’ll need to ensure compliance with local legal requirements. Here are a few considerations you’ll have to keep in mind.
- Employers are not required to grant paid sick leave in the Philippines. Instead, employees may use “service incentive leaves” for sick days. This paid leave may also be taken as a holiday. Employees are eligible for five days of leave for every 12 months of service.
- Filipino employees receive a 13th-month salary. This pay amounts to one-twelfth of their annual pay, and can either be distributed in full on December 24 or split into two. If split, the other payment must be made at the beginning of the school year in June. (The 13th-month pay is not to be confused with a Christmas bonus, which is optional.)
- Employees in the Philippines work eight hours a day, five days a week. Hours worked beyond that are considered overtime, which qualifies for an additional 25% of the basic pay rate, or an additional 30% on holidays. Employees in managerial or supervisory positions are not eligible for overtime pay.
These are just some of the considerations for hiring in the Philippines. To learn more, check out our comprehensive guide to hiring employees in the Philippines. You can also use Oyster’s cost calculator to get a full breakdown of the cost of hiring in the Philippines.
A PEO alternative: Hire in the Philippines with Oyster
If you’re looking beyond PEO services to meet your company’s international hiring needs, you might also consider working with an EOR in the Philippines to act as the legal employer of your Filipino staff. One major advantage of EORs is that you don’t need an entity in the Philippines, which you would if co-employing staff with a PEO. However, if you’re hiring in multiple countries, you would still need multiple local EORs.
If you’re looking to onboard talent across several locations, a better option is to work with a global employment platform like Oyster. Our automated platform allows you to hire, pay, reward, and manage employees in more than 180 countries (including the Philippines), without having to establish legal entities. Whether you’re seeking to hire Filipino contractors, part-time workers, or full-time employees, our platform can support all of your hiring needs by streamlining contracts, onboarding, payroll, benefits, and more. With Oyster’s deep local knowledge and insights, you’ll be able to navigate local labor laws and hiring practices compliantly and confidently.
Learn more about how Oyster makes it easy to scale your team with international talent.
About Oyster
Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. We let growing companies give valued international team members the experience they deserve, without the usual headaches and expense of hiring abroad.
Oyster enables hiring anywhere in the world—with reliable, compliant payroll and great local benefits and perks.
