Summary
Foreign companies can now hire Filipino employees legally and efficiently without setting up a local entity by using an Employer of Record (EOR) in the Philippines. Through an EOR, businesses can ensure full compliance with Philippine labor laws, handle payroll and statutory benefits, and focus on managing performance while their local EOR partner, like Smartual Philippines, takes care of the legal and administrative side of employment.
Introduction: Why Foreign Companies Are Hiring Filipino Talent
In 2025, the Philippines continues to be a global hub for remote work and outsourcing, driven by a highly skilled, English-speaking workforce and competitive labor costs. From tech startups in California to accounting firms in Sydney and e-commerce businesses in London, many are discovering the immense potential of hiring Filipino employees.
However, one major challenge remains: how to legally employ and pay Filipino workers without setting up a local company. The solution? The Employer of Record (EOR) model—an innovative approach that allows you to hire Filipino talent quickly, compliantly, and cost-effectively.
What Is an Employer of Record (EOR)?
An Employer of Record (EOR) is a third-party organization that legally employs staff on behalf of another company. In this setup, the EOR becomes the official employer in the Philippines, handling all statutory obligations such as:
- Employment contracts compliant with Philippine labor laws
- Payroll processing and payslip generation
- Remittance of government-mandated contributions (SSS, PhilHealth, Pag-IBIG)
- Withholding and remittance of taxes to the Bureau of Internal Revenue (BIR)
- Administration of 13th-month pay, leaves, and benefits
Meanwhile, the foreign company retains full control over the employee’s work, performance, and deliverables—just as if they were hired directly.
This arrangement bridges the gap between legal compliance and operational flexibility, making it the smartest way to hire Filipino employees in 2025.
Why Use an Employer of Record in the Philippines?
1. No Need to Register a Local Entity
Traditionally, to hire employees in the Philippines, a foreign business must establish a domestic corporation or branch office—a process that can take months and involve significant legal, tax, and regulatory hurdles.
With an EOR, however, you can skip company formation entirely. The EOR serves as your local employer of record, allowing you to:
- Hire within days, not months
- Avoid capital requirements and local directorship
- Test the Philippine labor market before long-term expansion
This flexibility makes EOR ideal for startups, scale-ups, and international firms exploring the Philippines for the first time.
2. Full Compliance with Philippine Labor Laws
The Philippines has one of the most protective labor codes in Asia. Employers must comply with a wide range of statutory benefits and regulations, including:
- 13th-month pay
- SSS, PhilHealth, and Pag-IBIG contributions
- Holiday pay and overtime
- Service incentive leave
- Termination procedures and due process
An EOR ensures 100% compliance with these obligations, minimizing legal risks and penalties. Through Smartual Philippines, all employment contracts, pay slips, and contributions are accurately managed under Philippine law.
3. Seamless Payroll and Tax Management
Handling payroll for remote Filipino workers can be complicated, especially when dealing with currency conversions, tax withholding, and government remittances.
An EOR automates this process. Every pay period, the EOR:
- Calculates gross pay and deductions
- Withholds taxes and contributions
- Processes net pay in Philippine pesos
- Generates payslips and general ledger reports
- Remits payments to government agencies
This guarantees your Filipino employees are paid on time while keeping your business compliant with BIR and labor regulations.
4. Local Employee Benefits and Engagement
Filipino employees value job stability and compliance. Working through a compliant EOR arrangement builds trust and confidence since employees enjoy the same legal protections as any locally employed worker.
With Smartual Philippines, employees receive:
- Enrollment in SSS, PhilHealth, and Pag-IBIG
- Proper computation of 13th-month pay and leave credits
- Assistance in bank account setup and tax registration
- Option to access HMO and insurance coverage
This allows foreign employers to attract top talent with legitimate, full-time employment status.
5. Scalability and Speed
Expanding your remote team should not be a bureaucratic nightmare. Whether hiring one designer or a 50-member support team, an EOR enables instant scalability.
- Hire within days: Once you identify candidates, Smartual can onboard them within a week.
- Add or remove team members easily: Scale your workforce up or down without worrying about local employment termination complexities.
- Stay agile: Perfect for project-based engagements, pilot programs, or growing offshore teams.
How EOR Works in Practice
Here’s a simple breakdown of how the EOR process typically works:
| Step | Process | Responsible Party |
|---|---|---|
| 1. Recruitment | You recruit or select your desired Filipino employee(s). | Client Company |
| 2. Employment Setup | The EOR (Smartual) drafts the employment contract and registers the employee. | Smartual Philippines |
| 3. Onboarding | The employee is formally hired under the EOR and begins work for your company. | Smartual + Employee |
| 4. Payroll & Compliance | Smartual handles salary disbursement, taxes, and government contributions. | Smartual Philippines |
| 5. Performance Management | You directly manage tasks, KPIs, and output as if they were your own staff. | Client Company |
In essence, the EOR acts as your legal HR and payroll department in the Philippines—so you can focus on what truly matters: running your business.
The Legal Basis of EOR in the Philippines
The Employer of Record model operates within the bounds of Philippine law, aligning with the Labor Code of the Philippines, BIR withholding regulations, and statutory social benefit programs.
Here’s how compliance is ensured:
- Labor Code Compliance: All employment contracts are written in accordance with Philippine labor standards.
- Tax Compliance: The EOR is registered with the Bureau of Internal Revenue (BIR) and remits withholding taxes on behalf of the employees.
- Social Security Compliance: The EOR registers and remits contributions to SSS, PhilHealth, and Pag-IBIG Fund.
Through this setup, foreign companies stay fully compliant without direct employer liability under local law.
Who Benefits Most from EOR Services?
1. Startups and SMEs
Startups looking to expand globally without large overhead costs can hire Filipino developers, accountants, and customer support specialists through an EOR. It allows immediate access to top talent without needing a Philippine subsidiary.
2. Remote-First Companies
Global teams can add Filipino remote workers as full-time employees, ensuring compliance and stability while maintaining flexibility.
3. Foreign Corporations Testing the Market
Companies exploring business opportunities in the Philippines can hire a local representative or small team via an EOR before establishing a local office.
4. Outsourcing Firms and Agencies
EOR services support agencies that want to legally employ staff for overseas clients—especially in digital marketing, IT, customer service, and design industries.
Why Choose Smartual Philippines as Your EOR Partner
Smartual Philippines is a trusted corporate solutions firm based in Davao City specializing in Employer of Record, Payroll Outsourcing, and Business Registration services.
Here’s what sets Smartual apart:
Local Expertise, Global Standards
Our team of lawyers, accountants, and HR professionals ensures your operations are fully compliant with Philippine laws while meeting international standards of transparency and efficiency.
Complete HR and Payroll Management
From onboarding to offboarding, Smartual handles every stage of the employment lifecycle—preparing compliant contracts, processing payroll, managing leave, and issuing certificates.
Transparent Pricing
No hidden fees. You’ll receive a clear monthly rate per employee, inclusive of payroll processing, statutory remittances, and reporting.
Customizable Solutions
Whether you’re hiring one employee or an entire remote team, Smartual tailors its EOR services based on your business needs and budget.
Data Security and Confidentiality
Smartual applies strict data protection measures, ensuring compliance with the Data Privacy Act of 2012, giving both clients and employees peace of mind.
EOR vs. Incorporation: Which Is Better?
| Factor | Employer of Record (EOR) | Incorporation / Branch Setup |
|---|---|---|
| Setup Time | 1 week or less | 2–3 months |
| Legal Entity Required | None | Required |
| Cost | Low | High (registration, capital, legal fees) |
| Compliance Burden | EOR handles all | Company must manage |
| Best For | Hiring small to mid-sized teams | Long-term physical presence |
Verdict:
If your main goal is to hire Filipino employees quickly and legally, EOR is the smarter and more flexible solution. Incorporation is only necessary when you’re ready to establish a full local operation.
The Future of Hiring in the Philippines
The Employer of Record model is shaping the future of global employment. In 2025, with the continued rise of remote work and international teams, EOR services will become a core strategy for global workforce expansion.
For the Philippines, this means greater opportunities for local professionals to work with international clients under legitimate, secure employment conditions. And for foreign companies, it means faster market entry and reduced risk.
How to Get Started with Smartual Philippines
Hiring through Smartual Philippines is simple:
- Contact Smartual: Discuss your staffing needs and job roles.
- Review Proposal: Receive a transparent EOR proposal and pricing.
- Onboard Employees: Once approved, your employees are onboarded legally under Smartual.
- Start Operations: Manage your team directly while Smartual handles HR, payroll, and compliance.
Within days, your business can be fully operational in the Philippines—without the hassle of setting up a local company.
Conclusion
In 2025, the Employer of Record in the Philippines stands out as the smartest way to hire Filipino employees—bridging the gap between global business ambitions and local labor compliance.
Through EOR services like Smartual Philippines, foreign companies gain access to world-class Filipino talent, minimize compliance risks, and accelerate growth—all while maintaining flexibility and cost-efficiency.
Whether you’re a startup testing the waters or an established firm scaling operations, Smartual Philippines can help you build your compliant remote workforce in the Philippines—smartly, securely, and seamlessly.
