Philippines Employer of Record Service: Key Responsibilities Explained

Introduction

This is where many companies get tripped up. They set up employer of record services in the Philippines, hand over the compliance, and assume the EOR is now responsible for everything employment-related. The EOR is the legal employer on paper. It runs payroll, manages contributions, and handles the regulatory side. That’s all accurate.

What doesn’t come with that package is operational control. Who the employee reports to, what they’re expected to deliver, how their performance is tracked: that stays with you. And in the Philippines specifically, those decisions have legal consequences that don’t disappear just because an EOR is in the picture.

Philippine law is built to protect workers from day one, including during probation. That’s the context you’re operating in when you engage an EOR here.

What an Employer of Record in the Philippines Is Responsible For

When a company engages employer of record services in the Philippines, the EOR becomes the legal employer on paper. It issues the employment contract, enrolls the employee with the Social Security System (SSS), PhilHealth, and Pag-IBIG, and handles monthly payroll and tax withholding through the Bureau of Internal Revenue (BIR). Compliance with the Department of Labor and Employment (DOLE) is also the EOR’s job, as are the administrative steps around termination: preparing notices, calculating separation pay, and filing the 30-day DOLE notification for authorised cause cases.

What the EOR holds is the compliance structure. Who actually works on what, under what expectations, and whether those expectations are being met. That’s down to you.

Where things get interesting is around the boundaries. A good EOR advises on risk, flags process requirements, and executes correctly. But it can’t generate the decisions or documentation that make any of that work. Those have to come from the client company.

Employer Responsibilities That Don’t Transfer to the EOR in the Philippines

Setting Performance Standards: Why It Stays With the Employer

Under Article 296 of the Philippine Labour Code, probation can run for up to six months (180 calendar days). During that window, you can end employment if the employee doesn’t meet the standards that were communicated at the time of hire.

The critical word there is “communicated.” Philippine case law is clear: those standards need to be specific, written down, and given to the employee on day one. Not figured out as things go wrong. Not implied by the job description. Handed over explicitly at the start.

An EOR handles the onboarding admin. But deciding what good performance looks like for this specific role, and making sure those expectations are in the employee’s hands before they start. That’s your call.

One more thing worth knowing: if an employee keeps working past the six-month mark without a documented extension, Philippine law automatically considers them a regular employee. And a regular employee can only be let go for just or authorised cause. That’s a very different threshold.

Performance Management Stays With the Client

The EOR doesn’t see what the employee is doing day to day. You direct the work: the tasks, the priorities, the feedback, the reporting line. The EOR only knows what you tell it.

That matters when termination for just cause comes into play. Just causes under Article 297 of the Labour Code include things like serious misconduct, gross neglect, and wilful breach of trust. Each one requires evidence, and before any dismissal can take effect, the two-notice rule applies: a show cause notice first (giving the employee a chance to explain), then a notice of decision after reviewing the response.

That chain only starts if you’ve documented the incidents. Without a paper trail from the client’s side, the EOR has nothing to act on, even if the underlying issue is real.

Missing the two-notice rule in the Philippines doesn’t just make a dismissal procedurally messy. It can mean reinstatement orders and full back-wage liability, sitting with the employer of record and ultimately traceable to the client’s decisions.

Compensation Decisions Above Statutory Minimums Stay With You

Part of the EOR’s job is making sure salaries stay above legal minimums. Regional Wage Boards set minimum wages across the country, and Metro Manila’s rate sits at PHP 645 per day as of mid-2026.

Everything above that floor is yours to decide: the salary you offer, any allowances, discretionary bonuses, benefit packages. The EOR implements what you set. If the package later turns out to be uncompetitive, or if something the employee was promised gets pulled without their agreement, the exposure sits with the company that made those decisions.

Termination Decisions Belong to the Client Company

Philippine law gives employers two grounds for termination. Just cause relates to the employee’s conduct: misconduct, neglect, fraud. Authorised cause covers business reasons like redundancy or retrenchment. Both require 30 days’ written notice to the employee. Authorised cause also requires a copy to be sent to the DOLE Regional Office, and in most cases, separation pay of at least one month’s salary per year of service.

The EOR handles the execution: drafting the notices, calculating what’s owed, filing with DOLE. But the decision itself (who, why, and on what grounds) belongs to you. If you’re letting someone go for redundancy, you need to be able to show the redundancy is real, that the selection process was fair, and that it’s documented. An EOR in the Philippines can help you think through how that works, but it can’t build the case for you.

Frequently Asked Questions

1. What responsibilities does the client company keep when using employer of record services in the Philippines?

Day-to-day work direction, performance standards and documentation, compensation above statutory minimums, and the decision to terminate, along with the rationale behind it. The EOR handles payroll, SSS, PhilHealth, Pag-IBIG, BIR withholding, DOLE compliance, employment contracts, and the administrative execution of termination.

2. Does security of tenure apply during the probationary period in the Philippines?

It does. Even probationary employees in the Philippines have legal protections from day one under Article 294 of the Labour Code. They can be dismissed for just cause or for failing to meet performance standards, but those standards need to have been communicated upfront and in writing. Without that, the grounds for dismissal become very difficult to rely on. And if probation ends without a documented extension, the employee automatically becomes a regular employee.

3. Who handles performance documentation when an EOR is involved?

The client company does. The EOR doesn’t have visibility into how the employee is performing because the client runs the work. When a just cause termination is being considered, the two-notice rule kicks in (show cause notice, then notice of decision), and both rely on documentation that only the client company can produce.

4. What happens if a dismissal doesn’t follow due process in the Philippines?

If the termination is missing procedural requirements (the two-notice rule for just cause cases, or the 30-day DOLE notice for authorised cause), a dismissal can be found defective even when the underlying reason was valid. The National Labor Relations Commission (NLRC) may award nominal damages. If there’s no valid ground either, the employee may be entitled to reinstatement and full back wages. The employer of record is the legal respondent, but the client’s decisions typically drive how disputes unfold.

5. Can a foreign company hire in the Philippines without an EOR?

Not legally without a registered local entity. Without one, there’s no way to remit SSS, PhilHealth, Pag-IBIG, or withholding tax contributions, and no structure to issue a compliant employment contract. Employer of record services in the Philippines provide that foundation. For companies thinking through this option, the Philippines EOR service page explains how Galaxy APAC sets this up in practice.

An EOR in the Philippines takes a significant compliance load off your hands. Payroll, contributions, contracts, and the procedural side of employment. All handled. But the employment relationship itself doesn’t transfer. Performance, compensation, and termination decisions remain yours, and in a market where security of tenure is constitutionally protected, how you manage those decisions matters. Connect with the Galaxy APAC team to talk through how this works for your specific Philippines hires.