Background Checks

Background checks are legal in the Philippines but not mandatory for most roles. They are required for positions involving vulnerable populations (e.g., children, elderly) or safety-sensitive roles (e.g., drivers, construction workers)

Common Checks:

• Criminal record verification
• Employment history
• Educational background
• Professional licenses

Consent & Privacy:

• Employers must obtain informed consent from candidates.
• All checks must comply with the Data Privacy Act of 2012 (RA 10173), which mandates secure handling of personal data

Illegal Practices:

• Discriminatory checks (e.g., based on religion, political beliefs)
• Collecting irrelevant or excessive personal information

Verification and New Hire Reporting

Employers must verify the identity and eligibility of new hires by collecting and validating the following:

• Government-issued IDs (e.g., TIN, SSS, PhilHealth, Pag-IBIG)
• NBI or Police Clearance (if required for the role)
• Educational and employment records (e.g., diplomas, certificates of employment)
• Medical certificate (if a pre-employment medical exam is required)

For foreign nationals, employers must secure an Alien Employment Permit (AEP) from the Department of Labor and Employment (DOLE). As of 2025, stricter documentation is required, including:

• A notarized employment contract
• Proof of job advertisement
• Company tax clearance certificate

New Hire Reporting
Employers are required to report new hires to various government agencies:

• SSS (Social Security System) – New employees must be reported within 30 days of hiring.
• PhilHealth and Pag-IBIG – Registration and reporting are mandatory for social protection coverage.

Onboarding Process & Documentation

Upon hiring, employers must collect the following from new employees:

• Government-issued IDs (e.g., passport, TIN, SSS, PhilHealth, Pag-IBIG numbers)
• Tax Identification Number (TIN) – for proper tax withholding
• SSS, PhilHealth, and Pag-IBIG Membership – mandatory for social protection
• NBI or Police Clearance – often required for background checks
• Medical Certificate – if a pre-employment medical exam is required
• Transcript of Records/Diploma – to verify educational background
• Employment History or Certificate of Employment – if applicable

Employers must also register new hires with the Bureau of Internal Revenue (BIR) and Social Security System (SSS) within 30 days of hiring.

Healthcare

Health coverage for employees in the Philippines includes both mandatory government insurance and optional private plans, often provided by employers.

PhilHealth (Mandatory)

• Includes hospitalization, outpatient care, and other medical services at accredited facilities.
• Based on a percentage of the employee’s salary, shared by both employer and employee.
• Ensure accurate computation and timely remittance of contributions to remain compliant.

Retirement

Retirement planning in the Philippines is anchored on the Social Security System (SSS), with some employers offering supplementary retirement plans to enhance financial security.

Social Security System (SSS) Pension

• Mandatory Coverage: All private sector employees must be covered by SSS.
• Contribution Rate (2025): Increased to 15% of the employee’s monthly salary credit (MSC), with 10% paid by the employer and 5% by the employee.
• Retirement Age:
  • o Optional: 60 years old (with at least 120 monthly contributions)
  • o Mandatory: 65 years old
• Pension Increase: As of May 2025, monthly pensions increased by ₱1,976 to help retirees cope with inflation.
• MySSS Pension Booster: A new voluntary savings program offering up to 7.2% annual returns, tax-free, to supplement the standard pension.

Supplementary Retirement Plans

Some employers offer private retirement plans to attract and retain talent, especially in senior or specialized roles. These may include:

• Defined Contribution Plans: Similar to a 401(k), where employers (and sometimes employees) contribute to a retirement fund that grows over time.
• Defined Benefit Plans: Provide a fixed pension based on salary and years of service.

These plans are voluntary and vary by company. They can significantly enhance retirement income but require careful management of contributions, investments, and payouts.”

Social Security

To learn more about the Social Security System (SSS)’s contributions to pensions, see the above section.

Employment Contract Details

Types of Employment

• Regular Employment: Indefinite duration; employees gain regular status after a probationary period. Provides job security.
• Project Employment: Tied to a specific project with a defined end.
• Seasonal Employment: Limited to specific seasons (e.g., harvest time).
• Fixed-Term Employment: Has a clear start and end date, agreed upon voluntarily. Subject to strict legal standards to prevent abuse.

Essential Clauses in Employment Contracts

• Identification of Parties: Full names and addresses of employer and employee.
• Position & Job Description: Title and main duties.
• Start Date: When employment begins.
• Employment Term: Duration or conditions for ending employment.
• Compensation: Salary details and payment schedule.
• Benefits: Mandatory (e.g., SSS, PhilHealth) and company-provided perks.
• Working Hours: Daily/weekly hours, rest days, and overtime rules.
• Work Location: Main place of work.
• Probationary Period: Duration and criteria for regularization.
• Termination Grounds: Based on just or authorized causes under the Labor Code.
• Confidentiality: Protection of company information.
• Governing Law: Contract is governed by Philippine law.

Probation Period

Probationary employment period of up to six months to assess an employee’s suitability for regular status. Employers must clearly communicate performance standards. If the employee meets these standards, they become regular employees.

Visas

Types:

• Tourist (9a), Temporary Visitor, Employment (9g), Student, Retiree (SRRV), and Investor (E.O. 226).

Application:

• Submit documents (passport, forms, photos, proof of travel/finances) to a consulate or agency
• Processing time varies.

Extensions: Apply before expiry to avoid penalties.

Best Practices: Apply early, track validity, and consult experts for complex cases.

Independent Contractors

• Independent contractors are individuals or registered businesses who offer services for a fee and operate independently from the hiring party (client or principal).
• Theyare not considered employees, meaning labor standards such as minimum wage, overtime pay, and benefits (e.g., SSS, PhilHealth) do not apply to them.
• The relationship is contractual, not employment-based, and is governed by a contract for services under the Civil Code.

Key Legal Requirements

• Written Contract: A formal agreement is essential. It must clearly state:
• Scope of work
• Compensation and payment terms
• Duration of the engagement
• Termination clauses and dispute resolution
• Control Test: The contractor must have control over how the work is done (method and means), with the client only dictating the desired result
• No Employer-Employee Relationship: Contractors are responsible for their own taxes, contributions, and insurance.

Pending Reforms (As of 2025)

Several Senate bills are under review to strengthen protections for freelancers and independent contractors
Key proposals include:

• Mandatory written contracts for all freelance engagements.
• Advance payment of at least 30% of the contract value upon signing.
• Night shift differential and hazard pay for freelancers in high-risk or late-hour jobs.
• Penalties for delayed payments, coercive deductions, or contract violations (ranging from ₱50,000 to ₱500,000).

Practical Implications for Businesses

Businesses engaging independent contractors must ensure:

• The contract clearly defines the absence of an employer-employee relationship.
• The contractor is not subject to direct supervision or control.
• Payments and deliverables are handled transparently and fairly.

Paid Time Off

• Employees who have completed at least one year of service are entitled to 5 days of paid leave per year.
• This leave can be used for vacation or sick purposes.
• Unused leave must be converted to cash at the end of the year or upon separation from employment.

Public Holidays

In the Philippines, if a regular holiday falls on a Sunday, it is typically observed on the following Monday. Regular holidays are paid non-working days, while special non-working holidays are generally unpaid unless work is performed. Some religious holidays, such as Eid’l Fitr and Eid’l Adha, are based on the lunar calendar and are marked as tentative until officially confirmed.

• New Year’s Day (Regular Holiday)
• Chinese New Year (Special Non-working Holiday)
• Chinese New Year (Special Non-working Holiday)

Bereavement

While not mandated by the Labor Code, many employers provide 3 days of paid bereavement leave for the death of an immediate family member (e.g., spouse, child, parent, sibling, grandparent, or parent-in-law)

• In the absence of a national law, bereavement leave policies are typically set by company policy or collective bargaining agreements.

Maternity Leave

• Female employees are entitled to 105 calendar days of paid maternity leave, with an additional 15 days for solo parents.
• In cases of miscarriage or emergency termination, the entitlement is 60 days.
• The benefit is paid at 100% of the average monthly salary credit, advanced by the employer and reimbursed by SSS, up to a cap of ₱70,000.
• An optional 30-day unpaid extension may be taken.
• Employees must notify their employer at least 30 days in advance and provide a medical certificate.

Paternity Leave

• Solo parents with at least one year of service are entitled to 7 working days of paid leave per year to care for children under 18.

Parental Leave

• Married male employees are entitled to 7 calendar days of paid paternity leave for the first four deliveries of their legitimate spouse.
• The benefit is paid by the employer and reimbursed by SSS.
• Additionally, the mother may transfer up to 7 days of her maternity leave to the father, regardless of marital.

Sick Leave

There is no statutory requirement for separate paid sick leave.

• Employees may use their Service Incentive Leave (SIL) for illness.
• Many employers voluntarily offer additional sick leave as part of company policy.
• Employees who are hospitalized for more than 3 days and have made at least 3 SSS contributions in the past 12 months may claim SSS sickness benefits, equivalent to 90% of their average daily salary. Employers advance the payment and are later reimbursed by SSS.

Termination Requirements

The required notice period for terminating employment in the Philippines depends on the reason for termination, as defined by labor laws and regulations.

Termination for Just Cause
If an employee is dismissed for just cause—such as serious misconduct, willful disobedience, or gross and habitual neglect—no advance notice is legally required. However, employers must observe procedural due process, which includes:

• A first written notice detailing the specific grounds for termination and giving the employee a chance to respond.
• A hearing or opportunity to be heard, where the employee can present their side.
• A second written notice formally communicating the decision to terminate.

Termination for Authorized Cause
When termination is due to authorized causes—such as redundancy, retrenchment, business closure, installation of labor-saving devices, or health-related disqualification—the employer must:

• Provide a written notice at least 30 days in advance to both the employee and the Department of Labor and Employment (DOLE).
• Clearly state the reason and the effective date of termination in the notice.

Notice Period

The required notice period for terminating employment in the Philippines depends on the reason for termination, as defined by labor laws and regulations.

Severance Pay

Severance pay is generally required only when an employee is terminated for authorized causes. It is not required for just cause terminations unless otherwise provided in a company policy, employment contract, or collective bargaining agreement.

The amount of severance pay depends on the reason for termination:

• For redundancy or installation of labor-saving devices, the employee is entitled to at least one month’s pay or one month’s pay for every year of service, whichever is higher.
• For retrenchment, business closure not due to serious losses, or termination due to disease, the entitlement is at least one month’s pay or one-half month’s pay for every year of service, whichever is higher.

In these cases:

• One month’s pay includes the employee’s basic salary and any allowances that are part of the regular pay.
• A year of service is counted as one full year if the employee has worked for at least six months.

Unemployment Insurance

To qualify for the SSS Unemployment Benefit, a member must:

• Be involuntarily separated from employment due to authorized causes under the Labor Code (e.g., redundancy, retrenchment, business closure, disease, or calamities).
• Be under 60 years old at the time of separation (exceptions apply for certain professions like miners and jockeys).

Anti-Discrimination Practices

Employers are prohibited from discriminating in hiring, promotion, training, or termination based on certain protected characteristics.

Protected Characteristics and Relevant Laws

• Sex/Gender – Protected under the Labor Code and the Magna Carta of Women.
• Age – Covered by the Anti-Age Discrimination in Employment Act.
• Disability – Protected by the Magna Carta for Persons with Disabilities.
• Religion – Safeguarded by the Philippine Constitution and the Labor Code.
• Ethnicity/Ancestry – Protected under the Indigenous Peoples’ Rights Act.
• Marital Status – Labor Code prohibits discrimination, especially against women based on marriage or pregnancy.
• Health Status – Includes protections for individuals with HIV/AIDS, hepatitis, and similar conditions.
• Union Membership – The Labor Code guarantees the right to self-organization and prohibits discrimination based on union affiliation.

Enforcement and Remedies

• Enforcing Body: Department of Labor and Employment (DOLE)
• Employer Obligations:
  • Must ensure equal opportunity and fair treatment.
  • Cannot impose conditions that violate anti-discrimination laws.
• Employee Rights:
  • May file complaints with DOLE.
  • May pursue legal action if discrimination occurs

Workplace Safety Standards

Ensuring a safe and healthy workplace is a core responsibility of employers in the Philippines. The Occupational Safety and Health Standards (OSHS), enforced by the Department of Labor and Employment (DOLE), outline the legal requirements for workplace safety across industries.

Employer Responsibilities

• Maintain a workplace free from hazards that could cause injury, illness, or death.
• Fully comply with OSHS regulations.
• Provide safety training and appropriate personal protective equipment (PPE).
• Establish a safety and health committee.
• Report all work-related accidents and illnesses.
• Offer access to medical and dental services, depending on workforce size.

Additional Requirements

• Specific safety measures must be followed for hazards such as chemicals, electricity, fire, and machinery.
• DOLE has the authority to inspect workplaces, enforce compliance, and impose penalties for violations.

Workers’ Compensation

Mandatory for all employers and covers all employees, including those in the private and public sectors. Includes work-related injuries, illnesses, and death.

Benefits Provided:

• Medical Services: Hospitalization, surgery, and rehabilitation.
• Temporary Total Disability (TTD): Daily income benefit during recovery.
• Permanent Partial or Total Disability: Monthly pension or lump sum, depending on the severity.
• Death Benefits: Monthly pension for primary beneficiaries or lump sum for secondary beneficiaries.
• Rehabilitation Services: Physical and vocational rehabilitation for injured workers.

Filing a Claim

• Must be filed with the SSS or GSIS within three years from the onset of the injury or illness.
• Requires medical certification and employer’s report of the accident or illness.

Employer Obligations:

• Must report work-related injuries or illnesses promptly.
• Required to pay monthly contributions to the ECP.
• Cannot charge employees for ECP contributions.

Labor Law Sanctions

Non-Compliance with Wage Laws (Presidential Decree No. 442): Employers who fail to pay the minimum wage or provide mandated benefits can face fines, imprisonment, and orders to pay back wages.

Unlawful Termination: Dismissing an employee without just or authorized cause can lead to reinstatement orders, back pay, and damages.

Violation of Occupational Safety and Health Standards (Republic Act No. 11058): Non-compliance can result in fines, temporary closure, and other penalties to ensure workplace safety.

Discrimination and Harassment (Republic Act No. 10911): Acts of discrimination or harassment can lead to fines, imprisonment, and other sanctions to protect employees’ rights.