TL;DR
You can legally hire Filipino professionals without forming a local company through an Employer of Record (EOR) service like Smartual Philippines. The EOR becomes the legal employer on paper, handling payroll, taxes, government registration, and employee benefits—while you retain full control of day-to-day work. It’s the fastest, safest, and most compliant way to build your Philippine remote team.
Introduction: The Global Demand for Filipino Talent
Over the last decade, the Philippines has become one of the world’s most popular destinations for global hiring. From startup founders in California to accounting firms in Sydney, companies are increasingly turning to Filipino professionals for their English fluency, technical skills, and cultural compatibility with Western businesses.
Yet, one major question often arises:
“Can I legally hire someone in the Philippines if I don’t have a company registered there?”
The short answer: Yes, through an Employer of Record (EOR).
Smartual Philippines offers a seamless way for international businesses to hire and pay Filipino employees legally and fully compliant—without opening a branch, subsidiary, or local entity.
Why You Can’t Just Hire Directly Without a Local Entity
Before diving into how EOR works, it’s important to understand why hiring directly as a foreign company is not legally recognized in the Philippines.
When you hire an employee under Philippine law, you are automatically bound by the country’s labor and tax regulations, including:
- Registration with the Bureau of Internal Revenue (BIR) for tax withholding
- Enrollment with SSS, PhilHealth, and Pag-IBIG Fund for employee benefits
- Compliance with the Labor Code of the Philippines, including employment contracts, 13th-month pay, and paid leaves
- Remittance of taxes and government contributions on time
If you are not a registered local entity, you cannot perform any of these obligations. That means paying workers directly as “freelancers” may be considered illegal employment, leaving you open to penalties, tax exposure, and reputational risk.
This is where the EOR model becomes a game-changer.
What Is an Employer of Record (EOR)?
An Employer of Record (EOR) is a third-party organization that legally employs workers on your behalf in a foreign country.
In the Philippines, Smartual Philippines acts as the legal employer of your Filipino staff, while you continue to manage their roles, performance, and tasks as if they were your own employees.
In essence:
| Aspect | Your Company | Smartual (EOR) |
|---|
| Work management | You assign tasks, set KPIs, and lead daily operations | — |
| Legal employment | — | Smartual becomes the legal employer under Philippine law |
| Payroll and taxes | — | Smartual runs payroll, withholds taxes, and remits to BIR |
| Government benefits | — | Smartual registers and pays SSS, PhilHealth, Pag-IBIG |
| Employment contracts | — | Smartual issues compliant contracts under local labor laws |
This structure allows you to hire quickly and stay compliant without the cost or delay of setting up a corporation.
How Smartual’s EOR Model Works in Practice
Smartual’s process is designed to make international hiring as easy as signing a service agreement.
Step 1: You Select and Approve Your Candidate
You can recruit your own Filipino professional—or Smartual can help source qualified candidates from its network.
Once you’ve chosen your team member, Smartual verifies their background and prepares the local employment agreement in compliance with Philippine labor standards.
Step 2: Smartual Onboards the Employee
The employee is officially onboarded under Smartual’s company, ensuring:
- SSS, PhilHealth, and Pag-IBIG registration
- BIR tax identification and payroll setup
- DOLE-compliant employment records
The entire process is paperless and remote, using Smartual’s digital HR and payroll system.
Step 3: You Manage the Work — Smartual Handles Compliance
You supervise the employee’s day-to-day work, KPIs, and deliverables.
Smartual, meanwhile, takes care of:
- Monthly payroll processing
- Tax and government remittances
- Payslips and statutory reporting
- Employee benefits administration
- HR compliance support and documentation
Step 4: Transparent Monthly Billing
Each month, you receive a single invoice that includes:
- Employee’s gross salary
- Employer contributions
- Smartual’s EOR service fee
This means zero hidden charges—you can forecast your cost per employee accurately.
Why Businesses Prefer EOR Over Incorporation
Setting up a company in the Philippines can be strategic, but for many businesses—especially early-stage startups or teams under 10 employees—EOR offers a much faster and more flexible path.
Here’s how they compare:
| Factor | Incorporation | Employer of Record (EOR) |
|---|---|---|
| Setup time | 1–3 months | 1–2 weeks |
| Minimum capital | ₱5,000–₱5,000,000 (depending on foreign ownership) | None |
| Legal compliance | Must file SEC, BIR, LGU, and DOLE registrations | Covered by Smartual |
| Tax reporting | Monthly, quarterly, annual reports | Smartual handles all |
| Ideal for | Long-term establishment, large teams | Quick market entry, pilot teams |
In short:
If you’re testing the Philippine market or expanding a remote team, EOR lets you operate legally and instantly—without the paperwork headache.
Legal Basis for EOR in the Philippines
EOR arrangements are fully compliant under Philippine law when structured properly.
Smartual Philippines acts as the formal employer of record, assuming all responsibilities required by:
- Labor Code of the Philippines (Presidential Decree No. 442)
- National Internal Revenue Code (Tax Code)
- SSS Act, PhilHealth Law, and Pag-IBIG Law
Employees are legally registered, paid, and protected under these laws, while the client company is recognized as the beneficiary of the employee’s services under a service agreement.
This is distinct from labor contracting or manpower supply, since Smartual does not control the work output—you do. That makes it legally sound and compliant with Department of Labor (DOLE) regulations.
Key Benefits of Hiring Through an EOR
1. 100% Legal Employment
Smartual ensures every employee is formally documented and covered by statutory benefits, eliminating any risk of “under-the-table” arrangements.
2. Zero Entity Setup Required
No need for SEC or BIR registration. You can hire in weeks instead of months.
3. End-to-End Payroll and Tax Compliance
Smartual handles all filings, deductions, and government submissions accurately and on time.
4. Simplified HR and Benefits Administration
From 13th-month pay to government contributions and leave accruals, Smartual manages everything behind the scenes.
5. Full Operational Control
You retain full authority over daily work, KPIs, and performance—Smartual just ensures everything remains legal and compliant.
6. Scalable for Growth
Start with one employee and scale to fifty without changing your structure. When ready, you can easily convert to a full legal entity later.
Who Typically Uses EOR Services
Smartual’s EOR model is trusted by:
- Foreign startups hiring their first Philippine team
- Outsourcing companies wanting full-time staff under compliant employment
- Accounting, marketing, and tech firms seeking Filipino specialists
- Entrepreneurs running remote businesses with cross-border operations
- Recruitment and staffing agencies needing local employment hosting
Whether you’re hiring one virtual assistant or an entire back-office team, EOR gives you the infrastructure to do it legally.
Common Misconceptions About EOR
❌ “EOR is only for large corporations.”
Not true. Even small startups or solopreneurs can use Smartual’s EOR service for just one employee.
❌ “I’ll lose control over my employees.”
You remain the direct manager. Smartual’s role is administrative, not operational.
❌ “It’s more expensive than hiring directly.”
When you factor in incorporation costs, compliance filings, accounting, and HR management, EOR is more affordable for small to mid-sized teams.
Smartual Philippines: Your Trusted EOR Partner
At Smartual, we simplify Philippine employment for global businesses.
Our EOR solution includes:
- Legal onboarding and employment contracts
- Payroll processing and payslip generation
- Tax withholding and government remittances
- Statutory benefits management
- Dedicated account management and HR support
- Secure client dashboard for visibility
You can finally focus on growing your business, while we handle all the compliance and paperwork behind your Filipino workforce.
Conclusion: Build Your Filipino Team—The Smartual Way
You don’t need to set up a local company to hire top-tier Filipino professionals.
With Smartual’s Employer of Record service, you can legally employ, pay, and manage your team—all while staying fully compliant with Philippine laws.
It’s fast, legal, and scalable—the smarter way to expand globally.
✅ Ready to hire in the Philippines the right way?
Book a free consultation at Smartual.ph/contact and discover how Smartual can help you build your compliant, world-class Filipino team today.
