The complete guide to offering employee benefits in the Philippines
When hiring employees in the Philippines, it's crucial to offer them the right benefits package to stay compliant with the country’s labor laws.
Here's what you need to know to meet those statutory requirements—and how to go above and beyond for your Filipino employees.
What employee benefits are mandatory in the Philippines?
Mandatory benefits programs are required by the Labor Code of the Philippines, which sets the minimum labor standards for the country’s workforce. If you employ Filipino workers and fail to offer them these mandatory employee benefits, you could wind up with a hefty fine.
Also keep in mind that the benefits required by the government of the Philippines are statutory minimums, and employers can always offer more than these mandatory benefits.
Social Security
The Philippines has a Social Security System (SSS) that funds most of its benefits. Contribution rates are generally pegged at 13% of an employee’s monthly salary, with employers contributing 8.5% and the worker contributing the remaining 4.5%. The contribution rate will increase by 1% every other year until 2025. The scheme covers self-employed workers and household workers, in addition to full-time employees.
Once employees and employers make their required SSS contributions, the benefits covered through this scheme include:
- Retirement. This is a cash benefit paid out as a monthly pension or as a lump sum granted to a retiree. Most employees who are at least 60 years old and have made a minimum of 120 contributions are eligible.
- Sick leave. Entitles employees to at least 90% of their daily wage in case of hospitalization or need to stay home due to illness. Employees can receive this sick pay up to 120 days a year. Employers pay this leave benefit, which then gets reimbursed by the SSS.
- Disability. Employees who develop permanent disabilities are entitled to a minimum monthly pension of between ₱1,000 and ₱2,400 depending on years of service, plus a ₱500 supplemental monthly allowance.
- Maternity leave. Grants 105 days of fully-paid leave to employees becoming mothers, with an optional extra 30 days leave without pay. The SSS reimburses the employer for funding the leave.
- “Death benefit.” Beneficiaries of deceased employees are given a lump sum or monthly pension. If the deceased employee has dependents, up to five of them are given 10% of the member’s monthly pension or ₱250,000, whichever is higher.
- Unemployment insurance. Offers a one-time payment to employees who are “involuntarily separated” from work. This does not apply to employees who are let go due to misconduct.
- Funeral grants. Given to fund the funeral expenses of the deceased employee. The payment ranges between ₱20,000 and ₱40,000 depending on the employee’s SSS contributions and salary history.
Health insurance
The Philippine Health Insurance Corporation (known as PhilHealth) is a government-owned health insurance program covering all full-time Filipino employees. Employers split monthly contributions with employees 50-50, with premiums at 4.5% of an employee’s base salary—though this will increase to 5% for 2024 and 2025.
PhilHealth covers:
- Inpatient services
- Outpatient services
- “Z benefits,” which are a series of 20 severe illnesses (such as certain types of cancer) that require extensive treatment
- “SDG benefits” named after the United Nations’ Sustainable Development Goals, which addresses illnesses like malaria, HIV-AIDS, and animal bites
Home development mutual fund
The Pag-IBIG Fund is a government program that provides housing loans and financial assistance to Filipino citizens in search of affordable housing. Employers are required to contribute 2% of an employee’s monthly salary to the fund, while employees themselves contribute 1% or 2%, depending on their income.
Vacation entitlements—and other types of paid leave
Filipino employees are entitled to five days of paid “service incentive leave” for every year they’ve worked. It can be converted to cash if not used over the course of a year.
Statutory holidays
Employees in the Philippines are entitled to two types of holidays. During “regular holidays,” employees get a paid day off (and are entitled to double their pay if called upon for work. If a statutory holiday falls on a weekend, employees are typically given a substitute holiday (usually on the first working day following the statutory holiday).
The Philippines also has “special non-working holidays,” in which employees get a day off but aren’t entitled to pay. If an employee does work during the holiday, they’re entitled to a 30% pay bump.
13th month pay
Employers are required to provide non-management employees in the Philippines with an extra month’s salary by Christmas Eve, with some employees choosing to receive it in biannual installments. Employers need to file a compliance report by mid-January to confirm they’ve made the mandatory extra payment.
Supplementary benefits in the Philippines
The statutory benefits we've covered so far are all minimums that must be provided by employers in the Philippines. In addition to these required benefits, many Filipino employers also provide additional benefit plans and perks to help them attract and retain employees. Some of the most common supplementary benefits are below.
Paid time off
Many employers offer paid time off beyond the Philippines' statutory minimums to make their workplaces more attractive to top workers. Paid time off can include additional vacation time, extra parental leave, paid personal days, or flexible leave policies.
Private health insurance
While all Filipino employees are covered by government health insurance plans, it's common for employers to offer supplemental insurance benefits with more robust coverage.
Extended healthcare coverage may include things like prescription drug coverage, paramedical services like massage therapy or physical therapy, dental, and vision coverage.
Group life insurance
Many employers offer their Filipino workers added coverage in case of work-related accidents, life-threatening illnesses, and disabilities. Like the mandatory insurance contributions, employers and employees each pay a portion of an employee’s salary to fund the coverage.
Christmas or mid-year bonus
In addition to the 13th month’s salary which, as mentioned, is mandatory, many employers offer bonuses worth another month’s salary (in essence, a 14th month’s pay). Employers often disburse this optional bonus in the middle of the year, as to not confuse it with the required extra payment by the end of the year.
Quarterly rice subsidy
Since rice is a nutritional staple in the Philippines, many employers offer allowances that help offset inflation and make the grain easier to purchase.
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Disclaimer: Rippling and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.
