If you’re building virtual teams or converting freelancers into full-time staff in the Philippines, there’s something you cannot ignore—Philippine labor laws. Staying compliant isn’t just about avoiding penalties; it’s about building trust with your team, maintaining ethical practices, and setting your business up for long-term success.
At Comply.ph, our platform helps you navigate all of this. Whether you’re hiring new talent or turning your VAs and freelancers into employees, we handle compliance so you can focus on growth. In this blog, we’ll walk you through 7 key labor laws every employer in the Philippines must follow if you want to legally and ethically hire or convert virtual staff.
Let’s get into it.
1. Proper Classification of Workers
What It Means:
You must correctly classify whether someone is an employee or an independent contractor. Misclassification can result in legal and financial penalties.
Why It Matters:
A lot of foreign businesses mistakenly assume they can keep Filipino workers as “freelancers” indefinitely. But under Philippine labor laws, long-term workers who follow your company’s schedule, use your tools, and report directly to you are likely considered employees—not independent contractors.
At Comply.ph, we:
- Help you review your current contracts
- Identify misclassifications
- Seamlessly convert freelancers or VAs into full-time employees under our Employer of Record model
What Happens If You Don’t Comply:
- You may be liable for back wages, benefits, and taxes
- Workers may file complaints with the Department of Labor and Employment (DOLE)
- Your reputation may be affected, both legally and professionally
2. Payment of Statutory Benefits
What It Includes:
All Filipino employees are entitled to statutory benefits such as:
- SSS (Social Security System)
- PhilHealth (public health insurance)
- Pag-IBIG (home development mutual fund)
- 13th-month pay
- Paid holiday leaves
Your Obligation:
If you’re employing staff in the Philippines, you must remit contributions for each of these agencies and ensure employees receive mandated benefits.
With Comply.ph:
You don’t have to worry about this. We calculate and remit all statutory contributions on your behalf, ensuring full compliance and accurate payments.
Why This Builds Loyalty:
Virtual staff who receive benefits feel more secure and respected. This leads to:
- Higher retention
- Improved performance
- Stronger team relationships
3. Compliance with the 13th-Month Pay Law
What the Law Says:
Under Presidential Decree No. 851, all rank-and-file employees in the Philippines are entitled to a 13th-month pay, which must be paid on or before December 24 each year.
What You Need to Know:
- It must be at least one-twelfth of the employee’s total basic salary within a calendar year
- It is not optional, even if the employee is working remotely or as part of a virtual team
What Comply.ph Handles for You:
- Accurate 13th-month computation
- Timely disbursement
- Full documentation and reporting
If you’re serious about building a long-term team in the Philippines, this isn’t just a legal obligation—it’s a sign that you value and respect your team.
4. Observing Legal Working Hours and Overtime Pay
What the Law Requires:
The standard work hours in the Philippines are:
- 8 hours per day
- 40–48 hours per week
- Overtime must be paid at 125% of the regular rate, and higher for night shifts, holidays, or rest days
Virtual Teams Are Still Covered:
Even if your Filipino staff works from home, these labor laws still apply. You need to make sure:
- There’s a clear time-tracking system
- Overtime is authorized and paid accordingly
Comply.ph Solutions:
Our platform helps you set up proper timekeeping systems and ensures that employee conversions from freelancers include clear terms around work hours, breaks, and overtime. We take care of the payroll calculations so you don’t miss a thing.
5. Paid Leaves and Holiday Pay
Leave Types That Are Mandated:
- Service incentive leave – 5 days annually for employees who have been with the company for at least a year
- Holiday pay – for both regular and special holidays as recognized in the Philippines
Holiday Categories:
- Regular holidays (e.g., New Year’s Day, Independence Day)
- Special non-working days (e.g., All Saints’ Day)
Employer Responsibilities:
- Pay the correct holiday premium rates
- Allow time off or compensate accordingly
- Document all leave balances
How Comply.ph Helps:
We make leave management simple. When you build virtual teams through us, we automate leave tracking and calculate the correct pay based on Philippine labor standards.
6. Termination and Due Process
What Labor Laws Say:
You cannot terminate an employee in the Philippines without just cause and due process. Common valid reasons include:
- Serious misconduct
- Habitual neglect of duties
- Breach of trust
- Company redundancy (must follow due notice)
Due Process Involves:
- A written notice to the employee stating the cause
- An opportunity for the employee to respond
- A second notice confirming the decision
Avoid Legal Risk:
Unlawful termination can result in serious penalties and back wages. That’s why our legal team at Comply.ph ensures every termination is processed ethically and legally.
We take care of:
- Notices
- Hearings (if required)
- Settlement documentation
7. Occupational Safety and Health Standards (OSHS)
Do These Apply to Remote Workers?
Yes, certain parts of the OSHS apply to virtual staff, particularly those working from home. Employers must ensure that working conditions do not pose risks to physical or mental health.
Your Obligations Include:
- Monitoring work hours and ensuring proper breaks
- Offering mental health support where possible
- Training employees on safety, even for remote work
Our Support at Comply.ph:
We help you meet the compliance standards even for distributed teams. When you convert freelancers into employees through our platform, we provide onboarding tools and HR support that incorporate these safety and wellness guidelines.
Why Labor Law Compliance Is a Strategic Advantage
Following labor laws in the Philippines isn’t just about avoiding legal issues. It’s about setting your business up for long-term success.
Here’s what you gain:
- Employee loyalty and retention
- Peace of mind from knowing you’re compliant
- Stronger company culture
- Better performance from happy and secure employees
When you work with Comply.ph, you’re not just ticking legal boxes—you’re creating a foundation for sustainable growth.
How Comply.ph Helps You Stay Compliant with Philippine Labor Laws
At Comply.ph, we specialize in helping international businesses like yours build virtual teams or convert existing freelancers into real employees—without the legal headaches.
Here’s how we make it seamless:
1. We Hire On Your Behalf
We act as the Employer of Record in the Philippines. That means:
- We legally hire your staff under our local entity.
- You remain in full control of day-to-day work.
- We handle the HR, tax, legal, and compliance side of things.
2. We Manage Payroll and Statutory Contributions
We handle all the local payroll, tax withholdings, and government benefit contributions:
- Social Security (SSS)
- Health Insurance (PhilHealth)
- Housing Fund (Pag-IBIG)
- 13th-month pay and leave benefits
You get one consolidated monthly invoice—no surprises, no hidden fees.
3. We Convert Freelancers Ethically
If you’re currently working with Filipino freelancers, virtual assistants, or contractors, we help you convert them into employees so that:
- You retain talent for the long term
- You avoid the risks of misclassification
- Your team feels secure and valued
We take care of the employment contracts, documentation, benefits setup, and everything else needed for a smooth transition.
Take the Next Step
Don’t wait for compliance issues to catch up with you.
- Build virtual teams the right way
- Convert your freelancers into real employees
- Ensure long-term success by securing your talent today
Book your free consultation call with Comply.ph and let’s build a compliant, loyal, and high-performing Filipino team together.
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Comply.ph—We Handle the Compliance, So You Can Focus on the Growth.
