TL;DR
Compliance is the backbone of legal employment in the Philippines.
If you’re hiring Filipino professionals—especially through an Employer of Record (EOR)—you must follow strict labor, tax, and benefits regulations.
This 2025 checklist by Smartual Philippines outlines all key requirements, filings, and best practices to ensure your global team operates 100% legally and penalty-free.
Why Compliance Matters in Philippine Employment
The Philippines is one of Asia’s most attractive countries for remote hiring—thanks to its highly skilled, English-speaking workforce.
But unlike contractor platforms or casual freelance work, direct employment is heavily regulated.
Employers must register with multiple agencies, issue compliant contracts, withhold taxes, and remit contributions on time.
For foreign companies without a local entity, doing all these independently is impossible.
That’s where Smartual’s EOR model comes in: we handle everything legally, so you can focus on running your team—not decoding tax laws.
But even with an EOR partner, it’s crucial to understand what compliance actually involves.
Here’s the complete 2025 compliance checklist every employer should know.
EOR Compliance Checklist for Hiring in the Philippines (2025 Edition)
1. Pre-Employment Compliance
Before onboarding your employee, make sure all initial documentation and legal requirements are met.
| Requirement | What It Means | Handled by Smartual |
|---|---|---|
| Employment Contract | Written agreement in accordance with the Philippine Labor Code (detailing salary, benefits, and work conditions) | ✅ Yes |
| Proof of Identity and TIN | Employee’s Tax Identification Number (BIR-issued) required for payroll and taxes | ✅ Yes |
| Government Registration Forms | SSS, PhilHealth, Pag-IBIG membership applications | ✅ Yes |
| Job Description and KPI | Document outlining roles and responsibilities | ✅ Assisted |
| Data Privacy Consent Form | Compliant with the Data Privacy Act of 2012 | ✅ Yes |
Pro Tip:
Under Philippine law, employment contracts must clearly define work scope, salary, and duration. Ambiguity may lead to labor disputes later.
2. Legal Employer Registration
Only a registered entity can hire, pay, and remit taxes on behalf of employees in the Philippines.
If you’re a foreign company without one, you must operate through a registered Employer of Record (EOR) like Smartual Philippines.
| Agency | Purpose | Smartual’s Role |
|---|---|---|
| SEC / DTI | Business registration (Smartual is a duly registered corporation) | ✅ |
| BIR (Bureau of Internal Revenue) | Employer tax registration, withholding, and filing | ✅ |
| SSS (Social Security System) | Retirement and employee protection | ✅ |
| PhilHealth | Medical insurance system | ✅ |
| Pag-IBIG Fund | Housing and savings fund | ✅ |
| DOLE (Department of Labor and Employment) | Compliance with labor standards | ✅ |
Smartual handles all these registrations, ensuring each employee under your team is legally employed under our EOR structure.
3. Payroll and Withholding Compliance
Every payday, Smartual ensures proper computation, deduction, and remittance of payroll taxes and contributions.
| Compliance Item | Frequency | Form / System | Deadline |
|---|---|---|---|
| Income Tax Withholding (BIR 1601-C) | Monthly | eBIR / eFPS | On or before 10th of following month |
| SSS Contributions | Monthly | SSS Employer Portal | By 10th day of following month |
| PhilHealth Premiums | Monthly | PhilHealth EPRS | By 11th–15th day of following month |
| Pag-IBIG Contributions | Monthly | Virtual Pag-IBIG | By 10th–15th day of following month |
| 13th-Month Pay Accrual | Monthly tracking | Payroll system | Paid by Dec 24 annually |
Smartual’s EOR payroll system automatically applies the correct tax rates and deadlines, removing the risk of penalties or missed filings.
4. Employee Benefits Compliance
Employees in the Philippines are entitled to mandatory statutory benefits, which Smartual manages end-to-end.
| Benefit | Mandated By | Description |
|---|---|---|
| 13th-Month Pay | Presidential Decree No. 851 | One month’s equivalent pay each December |
| Service Incentive Leave (SIL) | Labor Code, Art. 95 | Minimum of 5 paid days per year |
| SSS Benefits | SSS Act of 2018 | Retirement, sickness, maternity, and unemployment insurance |
| PhilHealth | Universal Health Care Act | Medical coverage for hospitalization and treatment |
| Pag-IBIG Fund | HDMF Law | Housing loans and savings |
| Overtime & Night Differential | Labor Code, Book III | Additional pay for work beyond regular hours |
| Holiday Pay | DOLE Wage Orders | Double or 200% pay for legal holidays |
Smartual ensures every employee’s payslip reflects these entitlements transparently — creating trust and compliance in one process.
5. DOLE Labor Standards
Employers must comply with the Department of Labor and Employment (DOLE) standards for all employment relations.
Smartual ensures all EOR contracts and HR policies follow these labor codes.
Key DOLE compliance points:
- Proper classification: All workers under EOR are regular employees, not independent contractors.
- Working hours: 8 hours/day, 40–48 hours/week maximum unless overtime is authorized.
- Leave benefits: Sick, vacation, maternity, and paternity leave must follow DOLE regulations.
- Equal pay: No discrimination based on gender, age, or status.
- Notice periods and termination pay: Follow Art. 297–299 of the Labor Code.
Smartual’s HR team monitors DOLE circulars and updates client policies automatically.
6. Record-Keeping and Documentation
Accurate and accessible records are essential for tax and labor audits.
Under Philippine law, employers must retain records for at least 10 years.
Smartual maintains:
- Digital copies of employment contracts
- Payroll registers and payslips
- Tax filings and proof of remittance
- Employee time and attendance logs
- Government contribution receipts
All documents are securely stored and available for both audit and client access.
7. Data Privacy and Cybersecurity
Remote employment involves cross-border data sharing.
Smartual complies with the Data Privacy Act of 2012 and ensures all personal data is processed lawfully and securely.
Best practices include:
- Employee consent for data storage and transmission
- Encrypted HR systems for payslips and payroll data
- GDPR-aligned data storage for foreign clients
- Role-based access control for internal staff
Smartual uses secure cloud infrastructure to protect both employee and client information.
8. Exit and Offboarding Compliance
When an employee resigns or is terminated, there are legal obligations for both the employer and the employee.
Smartual handles:
- Notice of termination or resignation acknowledgment
- Final pay computation (including pro-rated 13th-month pay, unused leaves, and last salary)
- BIR Form 2316 release (tax clearance certificate)
- Certificate of Employment (COE) issuance
- Government benefit clearance updates (SSS, PhilHealth, Pag-IBIG)
This ensures clean separation, protecting both the employer’s and employee’s records.
9. Annual Reporting Compliance
Every January to March, employers must complete annual filings for the previous year.
Smartual’s EOR team handles all annual submissions accurately and on time.
| Form / Report | Agency | Deadline |
|---|---|---|
| BIR Form 1604-C | Bureau of Internal Revenue | January 31 |
| BIR Form 2316 Distribution | Employees | February 28 |
| SSS Annual Summary (R-3) | Social Security System | March 31 |
| PhilHealth Annual Report | PhilHealth | March 31 |
| Pag-IBIG Yearly Report | HDMF | March 31 |
| DOLE Annual Report | Department of Labor | March 31 |
Smartual’s clients receive a summary confirmation report once all filings are complete—ideal for audit trail and compliance assurance.
10. Cross-Border Compliance and Taxation
For foreign clients, Smartual also ensures that the employment arrangement aligns with international tax rules, such as:
- Avoiding permanent establishment risk in the Philippines
- Ensuring cross-border payments (service fees) are properly documented
- Applying withholding tax exemptions where applicable under tax treaties
This dual-level compliance—local + international—protects your business from double taxation or misclassification risk.
Common EOR Compliance Mistakes to Avoid
Even companies using EOR services can run into compliance trouble if they’re not aware of these pitfalls:
- ❌ Issuing dual contracts (foreign and local) with inconsistent terms
- ❌ Paying allowances or bonuses off-record
- ❌ Failing to update employee information (marital status, dependents, tax code)
- ❌ Ignoring DOLE-mandated notice periods for termination
- ❌ Delaying final pay or 13th-month pay beyond the legal deadline
Smartual proactively audits your records and corrects these before they become regulatory issues.
Why Partnering with Smartual Ensures Total Compliance
Smartual Philippines is more than a payroll processor — it’s your legal compliance partner.
Every function is supervised by licensed accountants and Philippine lawyers to ensure every rule, filing, and deadline is covered.
Smartual provides:
- DOLE and BIR-compliant employment contracts
- Real-time payroll and contribution tracking
- Government remittance proofs each month
- Legal HR support and documentation assistance
- Secure digital compliance reports for transparency
Whether you hire one employee or fifty, Smartual guarantees 100% compliance across all Philippine agencies.
EOR Compliance = Risk-Free Expansion
Hiring Filipino professionals through Smartual’s EOR service means:
- You avoid misclassification penalties (up to ₱500,000 per violation under DOLE rules)
- You stay tax-compliant with BIR and SSS submissions handled on time
- You protect your brand with ethical, transparent employment practices
Compliance isn’t just about avoiding fines — it’s about building credibility in the Philippine market and protecting your global reputation.
Conclusion: Stay Compliant, Stay Competitive
The Philippines offers world-class talent—but only if you hire the right way.
Through Smartual’s EOR model, you gain all the advantages of local employment without the compliance burden.
Use this 2025 EOR Compliance Checklist as your guide, and trust Smartual to handle the rest.
From payroll and benefits to tax filings and legal support, we ensure your Philippine team runs 100% by the book—every single month.
✅ Download the full EOR Compliance Checklist (PDF)
or
📞 Book a consultation to review your company’s compliance with Smartual Philippines today.
👉 Visit smartual.ph/contact
