# Payroll in Philippines: employer costs, taxes and compliance

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> Canonical page: https://payrolloverview.com/countries/philippines/
> Methodology: every figure carries a source and a date in our database; ratings are averages of third-party platforms (https://payrolloverview.com/methodology/).
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> Data updated: January 2026
> Every figure below carries its statutory source and year.

Running payroll in the Philippines means handling a semi-monthly pay cycle, withholding income tax from each employee's gross pay, and making employer contributions to social security on top of that. Every pay period you calculate the net amount owed, run the deductions, and remit both the employee and employer portions to the relevant funds. It sounds straightforward, but the moving parts, contribution rates, a mandatory 13th-month payment, and a layered leave system, add up quickly for a foreign employer who is new to the country.
This guide walks through what employment actually costs, how the pay cycle works in practice, what the leave and termination rules mean for your payroll runs, and when it makes sense to hand the whole thing to a specialist. The tables on this page carry the exact rates and statutory figures.

## Employer costs & taxes

| Item | Value | Source |
|---|---|---|
| Employer social security (on top of gross salary) | 2.5% | ISSA Country Profiles (2024) |
| Employee social security (withheld from pay) | 2.5% | ISSA Country Profiles (2024) |
| Corporate tax rate | 25% | PwC Worldwide Tax Summaries (2026) |

## Pay & payroll operations

| Item | Value | Source |
|---|---|---|
| Payroll cycle | semi-monthly | Perplexity (AI gap-fill) (2026) |
| 13th-month salary | mandatory | Perplexity (AI gap-fill) (2026) |
| Minimum wage (per month) | ₱8,302 | ILOSTAT (2024) |
| Statutory work week | 48 hours/week | Statutory working time (national labour law) (2024) |

## Leave & time off

| Item | Value | Source |
|---|---|---|
| Paid annual leave | 5 days | Perplexity (AI gap-fill) (2026) |
| Public holidays | 18 days | Perplexity (AI gap-fill) (2026) |
| Maternity leave | 15 weeks | Perplexity (AI gap-fill) (2026) |
| Paternity leave | 1 week | Perplexity (AI gap-fill) (2026) |

## Termination

| Item | Value | Source |
|---|---|---|
| Notice period | 4.3 weeks | National government (2022) |
| Severance pay (at 1 year tenure) | 23.1 weeks | National government (2022) |

## Labor market context

| Item | Value | Source |
|---|---|---|
| Retirement age | 60 | SSA Social Security Programs Throughout the World (2026) |
| Unemployment rate | 2.2% | World Bank Open Data (2025) |
| GDP per capita | $3,985 | World Bank Open Data (2024) |
| Union density | 8.5% | ILOSTAT (2020) |
| Collective bargaining coverage | 1.4% | ILOSTAT (2018) |

The gap between an employee's gross salary and what you actually spend is meaningful in the Philippines. On top of gross pay, you carry a social security contribution that adds roughly a seventh to your wage bill. That is before you factor in the 13th-month obligation, which effectively spreads an extra month's salary across the year. See the table below for the precise employer contribution rate.
For employees, their own social security deduction comes off their gross pay each period, so take-home is noticeably lower than the headline salary figure. If you are budgeting for a new hire, building the employer contribution into your cost model from day one avoids surprises. The total tax wedge, the combined employer and employee burden relative to gross pay, is worth understanding clearly before you make any offer.

Payroll runs twice a month in the Philippines, which is the standard cycle employers are expected to follow. The minimum wage sits at a little over 8,300 PHP per month, so any offer has to clear that floor. On top of the regular cycle, you must pay a 13th-month bonus, which is mandatory and must be settled before the end of December each year. It equals one month's basic salary for a full-year employee, prorated for anyone who joined mid-year. Budget for it early, because it is not discretionary.

Employees are entitled to 5 days of annual leave and 18 public holidays, and both feed into your payroll calculations whenever time off is taken or a holiday falls on a workday. Maternity leave runs to 15 weeks, paternity leave to 1 week, so factor those absences into resourcing and payroll continuity plans. On the termination side, notice runs to just over four weeks, and severance for qualifying separations can amount to the equivalent of roughly 23 weeks of pay. Both of those show up as final-pay line items, so your last payroll run for a departing employee is often more complex than a normal cycle.

If you do not have a registered legal entity in the Philippines, you cannot run payroll there directly, which is where an employer of record becomes a practical option rather than a luxury. Even with an entity, keeping up with contribution rate changes, like the phased increases to social security rates, takes ongoing attention that is easy to underestimate. A global payroll provider or EOR handles the local filings, applies the current rates automatically, and takes on the compliance burden so your internal team is not trying to interpret local rules from the outside.