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How Global Companies Can Legally Hire Talent in The Philippines?

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How Global Companies Can Legally Hire Talent in The Philippines ?

How Global Companies Can Legally Hire Talent in The Philippines Galaxy

The Philippines has always been one of the preferred destinations for businesses looking to expand their global workforce. Cost efficiency is one of the key concerns and prime factors for these companies.

 

The Philippines is a developing economy with a lower GDP per capita compared to more developed nations, hence an employer can enjoy lower costs for operations. According to PayScale, the expected average annual salary for a Filipino customer service representative in 2025 is USD 4,013 as compared to USD 44,779 in the US.

 

The Asian Development Bank states in one of it’s reports, that besides facilitating lower operational costs for businesses, The Philippines is also home to approximately 700 active startups. These startups benefit from a workforce that possesses, higher levels of knowledge and advanced skills, to generate needful technological output.

 

Companies in the Philippines thus enjoy a combination of an affordable and skilled workforce together with high English proficiency – deeming it ideal for foreign investment.

 

In this guide, we explore different hiring models, from Employer of Record services to direct hiring and payroll management in Philippines, to help you navigate the legal and regulatory landscape when hiring in the Philippines.

Table Of Content

How to hire in the Philippines?

Direct Hiring

The Philippines government allows foreign companies or entrepreneurs to directly hire Filipinos, upon fulfilling the requirements of the SEC’s Company Registration System (CRS) for Corporations, or DTI Business Name Registration System for Sole Proprietorships – and having their respective businesses registered thereunder. 

 

One needs to check if they fall under the restricted category within the Foreign Investments Negative List (FINL), attain the required business permits, register with the Bureau of Internal Revenue (BIR) for taxes, and with the Filipino Social Security System, PhilHealth and Pag-IBIG.

 

Setting up a legal entity is beneficial for those who aim for long-term projections in The Philippines. Additionally, every business has its own differentiated need to opt for a particular business structure. For instance, large companies can quickly enter the Filipino market by acquiring companies and inherit it’s local capabilities. 

Engage an Employer of Record

Engaging an Employer of Record is a preferred choice for companies looking for an easier entry into the a foreign workforce. As local entity setups can take a lengthy and expensive process, companies can consider the EOR offering as a quicker and more cost-effective method.

 

Companies who have engaged an EOR service, are better able to devote their attention and resources to core business activities. A relief as well from the administrative burden of hiring and handling payroll, HR, and other related functions.

 

As EORs have a better understanding of their local labour laws, it helps to effectively mitigate any risk of non-compliance. Furthermore, it is also recommended for those who do not plan to make any heavy investments into The Philippines until some exploration has been carried out. 

BPO Model and Independent Contractors

It is worth noting that according to the IT & Business Process Association of The Philippines – IBPAP, the BPO industry in The Philippines employs over 1.4 million people and contributes to 8% of the country’s GDP.

 

However, it is also worth noting that not every business benefits from utilising a Business Process Outsourcing (BPO) model. This model will work for specific business tasks that often includes customer support, IT services and back-office operations. 

 

Similarly, Independent Contractors are more suitable for short-term projects and business needs for specialised skills; however, this presents a speedy and cost-effective avenue for hiring workers. It is thus important for future employers in The Philippines to have a grasp of the different models of hiring that can be employed, for specific needs.

Understanding Labor Laws & Employment Contracts

The principle that any doubts in the interpretation of labour laws should be resolved in favour of the employee rather than management – is critical for employers to understand about the fundamental thinking in Philippines jurisprudence. One can easily observe the kind of importance The Philippines government affords to labour rights. The basic laws are however similar to many other countries, few of the notable laws are as follows:

 

Ø  The employees have a right to a 13th month salary which should not be less than one twelfth of the total basic salary earned within a calendar year.

 

Ø  Contribution of 10% to Social Security System (SSS), 2.5% to the Philippine Health Insurance Corporation (PhilHealth), and 2% to Home Development Mutual Fund by the employer for fund salary above ₱1500.

 

Ø  Work performed beyond eight (8) hours is considered overtime. An additional compensation equivalent to employee’s regular wage plus at least twenty-five percent (25%) thereof, is required to be paid for overtime. Work performed beyond eight hours on a holiday or rest day shall be paid an additional compensation equivalent to the rate of the first eight hours on a holiday or rest day plus at least thirty percent (30%) thereof.

 

Ø  Provision of service incentive leaves, paternity leaves and maternity leaves is duly required.

 

Ø  The Social Security Program provides a package of benefits in the event of death, disability, sickness, maternity and old age.

Conclusion

Companies need to assess and decide on choosing an appropriate way for effective hiring in The Philippines. By setting up a legal entity in The Philippines, companies can hire directly and retain full control over the process.

 

Alternatively, an EOR shoulders the responsibility of hiring by acting as the official legal employer. The EOR takes on the administrative burden of handling the entire process, and is in charge of the compliance and risk management of the engagement.

 

Contact Galaxy Payroll Group – a leading HR and Business Advisory service provider for the Asia Pacific region.

Expand Your Workforce in The Philippines with Galaxy Payroll Group

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FAQ’S

Can a foreign company hire employees in the Philippines without a local entity?

Yes, foreign companies can hire employees in the Philippines by engaging an Employer of Record (EOR) service provider. They can also outsourcing the required function to a Business Process Outsourcing (BPO) provider, if suitable.

Foreign employers must comply with Filipino labour laws. This covers properly crafted employment contracts, adherence to statutory benefits, contributions and tax obligations.

There is high competition for skilled talent. There also needs to be clear understanding of employment regulations and cultural differences. Payroll and workforce management are common challenges for new overseas employers.

Building Trust in Short-Term Employment – 7 Key Strategies

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Building Trust in Short-Term Employment - 7 Key Strategies

Building Trust in Short Term Employment 7 Key Strategies Galaxy

As economies progresses, employer-employee relationship trends at times witness upside-down shifts. In the past, employees and employers have expectations of long-term work commitments. In today’s era of work, employees have a higher focus on work-life balance and look for more flexibility in work. On the other hand, as the marketplace evolves, companies have a higher need for access to  more specialised roles.

 

Short-term employment has therefore become a prevalent trend across the globe, especially, in the Asia-Pacific (APAC) region. This is driven by the gig economy, project-based roles, and evolving workplace dynamics. However, since the employees are engaged for a specific or short duration, building trust among them is challenging.

 

This article will explore what short-term employment entails and strategies to build trust with short-term employees.

Table Of Content

What Is Short-Term Employment ?

Short-term employment refers to a work arrangement where employees are hired for a fixed duration, often ranging from a few weeks to a few months. Unlike traditional long-term roles, these positions are time-line focused, project-based, seasonal, or require specific expertise.

 

Freelancers or consultants for specialised tasks, temporary staff for peak business periods, and project teams for short-term assignments, all come under the short-term employment category.

 

Importance Of Building Trust In Short-Term Employment

Just like long-term employees, trust needs to be established for those under short-term work arrangements. This is because of the following reasons:

  1. Enhanced Productivity: trust creates a positive work environment which leads to employee engagement and higher productivity.
  2. Reputation and Branding: Trustworthy organisations gain positive feedback in the market, attracting top talent even for short-term roles, thereby building a strong brand image.
  3. Retention of Knowledge: Employees who trust their employers do not hesitate to share knowledge with peers and trained successors, minimizing disruptions when they leave.
  4. Collaboration and Innovation: Trust enables employees to stay collaborated and share innovative ideas, leading to long-term business growth.
  5. Ethical and Sustainable Practices: Trust reflects the company’s commitment to employee respect and engagement which aligns to long-term sustainability and ethical practices.

Building Trust In Short-Term Employment – 7 Key Strategies

Building trust among employees is challenging, especially for short-term engagements. It requires intentional strategies tailored to meet the needs of the business. Here are key strategies that companies should adopt:

 

1.Create Inclusivity Through Employee Orientation And Effective Communication : The initial experience of employees, whether long-term or short-term, plays a crucial role in establishing trust. Creating a welcoming environment from day one reduces the “outsider” complex that short-term employees might experience. This would help foster better collaboration and develop the team dynamic. One of the best starts is to conduct an effective orientation by introducing new short-term employees to team members and vice-versa.

 

To add further, the exercise of effective communication will help build a foundation of trust. Businesses must provide detailed contracts, outlining roles, responsibilities, expected outcomes, and expected timelines. This will help ensure that short-term employees are well-informed about compensation, benefits, and company expectations.

 

2.Know About Your Team and Extend Support : Businesses who have a better understanding of their short-term employees’ backgrounds, skills and motivations, are best suited to tailor assignments or feedback to align with the individual’s strengths. This will also significantly help increase employee productivity and build employee confidence.

 

Additionally, extend support by :

  • Encouraging them to learn from mistakes without fear of blame, acknowledging your own errors to set an example of accountability.
  • As it is a short-term engagement, it is important to be able to provide guidance and constructive solutions.
  • It is also important to equip short-term employees with the right tools and resources for them to do the job and meet expectations.

When short-term employees feel prepared and supported, they are more likely to trust the organisation and deliver high-quality work.

 

3.Respect Ideas and Use Feedback Constructively : Actively listen to short-term employee suggestions and give assurance that their feedback is acknowledged.

Recognise and appreciate innovative ideas to problem-solving and offer constructive feedback that focus on improvement rather than criticism.

 

4.Foster Approachability and Friendliness : Short-term employees are more likely to trust leaders who are friendly and approachable. Creating an open communication channel where they can feel comfortable sharing concerns and conducting informal interactions helps maintain a positive and supportive demeanor, even in challenging periods during their short employment.

 

5.Honor Your Commitments : In lieu of the nature of short-term employment, keeping to your commitments is particularly important when building trust with short-term employees. Do ensure that you fulfil all your commitments made to short-term employees :

  • payment schedules and role expectations.
  • timely delivery of resources or support promised during onboarding.
  • Consistency in action builds credibility. Therefore,
  • Uphold company values uniformly across all employee levels.
  • Clearly communicate expectations and follow through consistently.
  • Demonstrate reliability in all interactions.

 

6.Create An Equitable Environment : An equitable environment has to exist to build trust with short-term employees. Therefore, companies should ensure:

  • that they offer competitive and fair compensation,
  • access to the same tools and resources as other employees,
  • provide additional benefits like completion bonuses, access to wellness programs or flexible work arrangements (if possible),
  • consistent and ethical treatment of all employees,
  • implement fair policies that reflect the company’s values.

 

7. Highlight Growth and Networking Opportunities : While short-term roles may not always lead to full-time positions, companies can foster a good relatiolnship by demonstrating long-term value. Consider:

  • facilitating networking opportunities within and outside the company,
  • providing certificates of service or endorsements for future work opportunities,
  • supporting employees in exploring company-wide roles across other projects or regions.

Being transparent about growth avenues demonstrates genuine care for the short-term employee’s future with the company.

Conclusion

Although there is currently a shift from long-term to short-term employment trends, it is essential for a business to not lose focus on it’s mission and organisational culture. However, taking strategic advantage of short-term employment might be challenging for HR teams who need to focus more on their core operations rather than short-term employee management.

In this regard, partnering with an EOR service provider can present a win-win situation for both your company and your employees. Engage Galaxy Payroll Group as your partner for short-term employment. As a leading EOR service provider in the APAC region, we can help simplify short-term employment operations like onboarding, compliance assurance, payroll management and employee support.

 

Read our latest guide on: How to Hire International Employees: A Comprehensive Guide

Building Trust With Short-Term Employees

Partner with Galaxy Payroll Group, a leading EOR service provider in APAC. Let us handle the brunt work while you focus on core business operations.

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FAQ’S

How can trust be established in short-term roles?

Trust can be built by offering open communication channels, clear expectations, constructive feedback, resource support, equitable treatment and adhering to mutually agreed commitments. 

Trust fosters better collaboration and helps improve productivity. When trust in the company is established, short-term employees are more motivated  to share ideas and train new incoming colleagues or replacements. Lastly, a happy short-term employee will likely give positive feedback in the marketplace which helps build a positive employer brand for the business.

Clear visibility on roles, goals, challenges and expected outcomes reflects transparency in the system. This energizes mutual understanding and helps avoid misconceptions.