How Much Does It Cost to Use an Employer of Record (EOR) in the Philippines?

Introduction

The price on the EOR website is not your actual monthly bill. Employer of record services in the Philippines have three cost components: the service fee, the employee's gross salary, and the statutory employer contributions. Companies that budget based on the first number alone consistently under-forecast by 20–30%.

This guide gives you the full cost picture. Real numbers, real 2026 statutory rates, role-by-role worked examples, a breakdown of every cost layer, and the hidden fees most EOR comparisons skip. By the end, you will have a budget model you can put in front of your CFO before you hire the first person in Manila.

Team Up's Philippines EOR platform starts from €199 per employee per month. Here is exactly what that covers, and what sits alongside it.

The Three-Component Cost Formula

Before any numbers, the formula that governs every Philippines EOR cost calculation:

Total Monthly Employer Cost = Gross Salary + Statutory Employer Contributions + EOR Service Fee

Each component is separate. Each is real. Skipping any one of them produces a budget that does not survive the first invoice.

Component 1 — Gross Salary: What you have agreed to pay the employee, before any deductions. This is the number you negotiate with the candidate. It is not the number you pay monthly as an employer.

Component 2 — Statutory Employer Contributions: The mandatory payments that the Philippine government requires every employer to make on top of gross salary. These are SSS, PhilHealth, Pag-IBIG, and 13th-month pay. They are not optional, not negotiable, and not the EOR's fee — they are pass-through obligations the EOR remits on your behalf. They add approximately 18–22% above gross salary, depending on the salary level.

Component 3 — EOR Service Fee: What you pay Team Up to be the legal employer, manage payroll, file contributions, issue contracts, and provide compliance coverage. This starts from €199 per employee per month.

That is the formula. Everything below puts real numbers into it.

Statutory Employer Contributions: The Numbers That Change Your Budget

These are the four statutory obligations that apply to every Philippine employer, including an EOR acting on your behalf.

Social Security System (SSS) in the Philippines

Rate: 15% of Monthly Salary Credit (MSC) total — 10% employer, 5% employee. MSC range: PHP 5,000 to PHP 35,000 per month. Employer contribution ceiling: PHP 3,500/month (at MSC PHP 35,000) Employer contribution floor: PHP 500/month (at MSC PHP 5,000)

The cap matters. For employees earning above PHP 35,000/month (approximately $625), SSS employer contributions stop increasing regardless of salary. A PHP 150,000/month senior engineer and a PHP 35,000/month junior developer cost the same in SSS employer contributions: PHP 3,500/month.

EC (Employees' Compensation) contribution: Employer-only. PHP 10/month for MSC below PHP 14,750; PHP 30/month above. Covers work-related injury and disability.

Filing deadline: SSS contributions are due by the 15th of the following month.

PhilHealth (Philippine Health Insurance Corporation)

Rate: 5% of monthly basic salary — 2.5% employer, 2.5% employee

Floor: PHP 10,000 monthly salary basis (minimum PHP 500 employer contribution)

Ceiling: PHP 100,000 on a monthly salary basis (maximum PHP 2,500 employer contribution)

Like SSS, PhilHealth contributions are capped. For employees earning above PHP 100,000/month, the employer's PhilHealth contribution is fixed at PHP 2,500.

Filing deadline: PhilHealth contributions are due by the 10th of the following month.

Pag-IBIG Fund in the Philippines (Home Development Mutual Fund)

Rate:

• Employees earning PHP 1,500/month or below: employee contributes 1%, employer contributes 2%

• Employees earning above PHP 1,500/month: employee contributes 2%, employer contributes 2%

• Maximum Fund Salary: PHP 10,000

• Employer contribution cap: PHP 200/month

Pag-IBIG is the smallest contribution but also the most commonly overlooked. At a PHP 200/month employer cap, it is fixed for all employees above PHP 10,000/month gross, which covers virtually every professional hire.

Filing deadline: Pag-IBIG contributions are due by the 10th of the following month.

13th-Month Pay in the Philippines

The rule: All employees who have worked at least one month are entitled to 13th-month pay equal to 1/12th of their total basic salary earned during the calendar year. This is a statutory requirement under Presidential Decree No. 851 — not a bonus, not a discretionary payment.

Deadline: Full payment by December 24 each year. Some employers pay half in June and the remainder in December.

Tax treatment: The first PHP 90,000 of combined 13th-month pay and other benefits is tax-exempt under the TRAIN Law.

Budget impact: 13th-month pay adds 8.33% to total annual employment cost (1/12th of annual salary). For budget modeling, the cleanest approach is to accrue PHP salary ÷ 12 each month as a 13th-month reserve. Treating it as a December cash-flow event instead creates a capital crunch every year-end.

Combined maximum statutory overhead (SSS + PhilHealth + Pag-IBIG, employer only, at salary caps):

• SSS: PHP 3,500

• PhilHealth: PHP 2,500

• Pag-IBIG: PHP 200

• EC: PHP 30

• Total statutory cap: PHP 6,230/month

This is the maximum statutory employer contribution regardless of how high the salary goes. For senior engineers at PHP 150,000/month, the statutory contribution rate is effectively less than 5% of gross. For junior roles at PHP 30,000/month, statutory contributions represent approximately 14% of gross.

EOR Service Fee: What Team Up Charges and What It Covers

Team Up's Philippines EOR service starts from €199 per employee per month.

EOR Cost in the Philippines

• Employment contract drafting compliant with the Philippine Labor Code

• Payroll processing in PHP on the semi-monthly Philippine payroll cycle (15th and end of the month)

• SSS, PhilHealth, Pag-IBIG enrollment and monthly remittance management

• 13th-month pay accrual and December disbursement

• BIR income tax withholding calculation and monthly Form 1601-C filing

• BIR annual income tax summary (Form 1604-C) by January 31

• DOLE compliance management

• Probationary period tracking and confirmation/exit process management

• Offboarding processing, including final pay and pro-rated 13th-month calculation

What the EOR fee does not include

• The employee's gross salary (billed separately at cost, no markup)

• Statutory employer contributions (passed through at exact government rates)

• Supplementary benefits above the statutory minimum (HMO, additional leave, allowances — if structured through Team Up, these are billed at cost with a disclosed administration charge)

• AEP and 9G visa sponsorship for foreign nationals (available as an add-on — see Section 4)

• Termination costs — notice pay, separation pay for authorized-cause exits, pro-rated 13th-month on exit (these are statutory costs, not EOR fees)

For context on market pricing: Philippines EOR fees across the market range from $199–$599 per employee per month. At €199/month, Team Up's rate sits at the competitive entry point among providers with genuine Philippines compliance operations. Some providers (Gloroots, RecruitGo) use percentage-based models: typically 10% of total monthly employer cost with a cap. For lower-salary roles, this can be cheaper; for higher-salary roles, the flat fee always wins.

The Hidden Cost of the EOR in the Philippines

Most Philippines EOR cost guides stop at the service fee and statutory contributions. These five cost categories belong in your budget model even if the EOR does not bill them as line items.

1. Semi-Monthly Payroll Cycle Timing

The Philippines runs on a semi-monthly payroll cycle, and employees are paid twice per month, typically on the 15th and the last day of the month. If your company runs monthly payroll in your home market, the Philippines cycle means you are cash-flowing two payroll runs each month. The annual cost is the same, but the cash timing is different, and it matters for working capital planning.

2. Night Shift Differential

The Labor Code mandates a 10% night differential premium for any hours worked between 10 pm and 6 am. For BPO teams, customer support operations, or any role with significant nighttime coverage requirements, this adds 10% to the effective hourly cost for those hours.

Budget impact on a PHP 40,000/month operations hire working a nighttime shift: the standard PHP 40,000 gross understates the actual cost. If 100% of working hours fall between 10 pm and 6 am, the effective gross cost is PHP 44,000. For mixed shifts, the premium applies only to the nighttime portion.

An EOR calculates and pays night differentials as a statutory requirement. Your budget should reflect the shift pattern, not just the base salary.

3. Holiday Premium Pay

The Philippines has 18 public holidays per year, 12 regular holidays (200% of daily rate if worked) and 6 special non-working holidays (130% of daily rate if worked, or 100% if not worked but employee is paid). For operations teams that work on public holidays, this premium is a real and recurring cost.

Budget for 4–6 additional day-equivalent costs per year for employees on full-year operations schedules that include public holidays.

4. Separation Pay for Authorized-Cause Terminations

If you need to exit a confirmed employee for business reasons — redundancy, retrenchment, or closure, Philippine labor law requires separation pay:

• Redundancy: 1 month per year of service

• Retrenchment: ½ month per year (minimum 1 month)

For a 2-year-tenured employee at PHP 80,000/month, redundancy separation pay is PHP 160,000 (~$2,860). This is a statutory cost that sits outside the EOR service fee. Budget for it as a risk reserve when building a Philippines team, particularly for roles with uncertain long-term headcount.

5. Supplementary Benefits: The Market Expectation Gap

Statutory minimum benefits (5 SIL days, PhilHealth, SSS, Pag-IBIG) are the floor. For competitive hiring in Manila's technology and BPO sectors, market expectations substantially exceed that floor:

Private HMO: Annual cost PHP 15,000–40,000 per employee (~$270–$715). For many Filipino professionals, HMO coverage is valued more highly than salary increments. In the technology and BPO sectors, this is effectively table stakes for professional hires.

Additional leave: Market standard is 10–20 days rather than the 5-day statutory minimum. The cost is leave-day equivalent pay per employee.

Rice allowance: Common in many Philippine companies. PHP 2,000/month, partially tax-exempt as a de minimis benefit.

Transport allowance: PHP 2,000–5,000/month. De minimis treatment up to PHP 2,000/month.

Internet and equipment allowances: For remote or hybrid roles, internet connectivity stipends (typically PHP 1,000–2,000/month) and equipment provision are standard.

When all supplementary benefits are included, total compensation packages in competitive Philippines roles commonly reach 130–140% of base salary.

The Total EOR Cost Model: What You Actually Pay Per Month

Now the full picture. Three salary levels, Philippines 2026 rates.

Example A: Junior Operations / Customer Support (PHP 30,000/month gross)

Cost Component	Monthly Amount
Gross salary	PHP 30,000
SSS employer (10% of MSC PHP 30,000)	PHP 3,000
PhilHealth employer (2.5%)	PHP 750
Pag-IBIG employer (2%, capped at PHP 200)	PHP 200
EC contribution	PHP 30
13th-month accrual (÷12)	PHP 2,500
Statutory subtotal	PHP 6,480
EOR service fee (€199 ~PHP 11,700)	PHP 11,700
Total monthly employer cost	PHP 48,180
Annualized	PHP 578,160 (~$10,320)

Cost advantage vs US equivalent: A US customer support role at $45,000/year costs approximately PHP 2.52 million annually. The Philippines equivalent: PHP 578,160. 77% cost advantage.

Example B: Mid-Level Software Engineer (PHP 80,000/month gross)

Cost Component	Monthly Amount
Gross salary	PHP 80,000
SSS employer (capped at MSC PHP 35,000 = PHP 3,500)	PHP 3,500
PhilHealth employer (2.5% of PHP 80,000)	PHP 2,000
Pag-IBIG employer (capped PHP 200)	PHP 200
EC contribution	PHP 30
13th-month accrual (÷12)	PHP 6,667
Statutory subtotal	PHP 12,397
EOR service fee (€199 ~PHP 11,700)	PHP 11,700
Total monthly employer cost	PHP 104,097
Annualized	PHP 1.25 million (~$22,300)

Cost advantage vs US equivalent: A mid-level US software engineer at $120,000/year costs approximately PHP 6.72 million annually. The Philippines equivalent through Team Up: PHP 1.25 million. 81% cost advantage.

Example C: Senior Engineer / Team Lead (PHP 150,000/month gross)

Cost Component	Monthly Amount
Gross salary	PHP 150,000
SSS employer (capped at PHP 3,500)	PHP 3,500
PhilHealth employer (2.5% × PHP 100,000 ceiling = PHP 2,500)	PHP 2,500
Pag-IBIG employer (capped at PHP 200)	PHP 200
EC contribution	PHP 30
13th-month accrual (÷12)	PHP 12,500
Statutory subtotal	PHP 18,730
EOR service fee (€199 ~PHP 11,700)	PHP 11,700
Total monthly employer cost	PHP 180,430
Annualized	PHP 2.17 million (~$38,700)

Cost advantage vs US equivalent: A senior US engineer at $160,000/year costs approximately PHP 8.96 million annually. The Philippines equivalent through Team Up: PHP 2.17 million. 76% cost advantage.

Note on senior salary levels: The contribution caps mean that statutory overhead becomes a smaller percentage of gross salary as salary increases. At PHP 150,000/month, employer statutory contributions are PHP 6,230/month — only 4.2% of gross. The EOR fee is 7.8% of gross at this salary level. This is precisely where the flat-fee model favors high-salary professional hiring.

Role-by-Role Salary Benchmarks: Philippines 2026

These are market salary ranges for the Philippines' most commonly hired roles in technology and BPO sectors, covering Metro Manila, Cebu, and Davao. All figures are gross monthly in PHP.

Role	Metro Manila	Cebu / Davao	Estimated Total Cost (Manila, incl. statutory + EOR fee)
Customer support agent	PHP 20,000–30,000	PHP 18,000–25,000	PHP 40,000–48,000/month
Junior software developer	PHP 30,000–50,000	PHP 25,000–40,000	PHP 53,000–72,000/month
Mid-level software engineer	PHP 60,000–100,000	PHP 50,000–80,000	PHP 83,000–123,000/month
Senior software engineer	PHP 100,000–180,000	PHP 80,000–140,000	PHP 124,000–204,000/month
QA engineer (mid-level)	PHP 50,000–80,000	PHP 40,000–65,000	PHP 73,000–103,000/month
Product manager	PHP 80,000–150,000	PHP 60,000–120,000	PHP 103,000–174,000/month
Finance/accounting analyst	PHP 40,000–70,000	PHP 35,000–60,000	PHP 63,000–93,000/month
Digital marketing specialist	PHP 35,000–60,000	PHP 28,000–50,000	PHP 58,000–83,000/month

Total cost estimates include statutory employer contributions at 2026 rates plus Team Up EOR service fee from €199/month. Add HMO (PHP 1,250–3,333/month) and other supplementary benefits separately.

For specific salary benchmarking by role and location before building your budget, request a cost breakdown from Team Up's team. The salary ranges above reflect 2026 market data for median performers; specialist skills and niche roles command a premium.

EOR vs. Entity: The Cost Comparison at Different Headcounts

This is the decision most finance leads eventually ask: at what point does building a Philippine entity become cheaper than paying EOR fees?

At 5 employees (PHP 80,000/month gross each):

Cost category	EOR (Team Up)	Own entity
Annual EOR service fees (€199 × 5 × 12)	~PHP 702,000	None
Entity setup (SEC, BIR, LGU, legal)	None	PHP 150,000–500,000 (~$2,600–$8,700)
Annual entity compliance (audit, filings)	None	PHP 100,000–300,000/year
Foreign capital requirement	None	$100,000–$200,000 (locked)
Statutory contributions	Same (pass-through)	Same
First-year total (ex. capital)	~PHP 702,000	~PHP 250,000–800,000

At 5 employees, EOR is competitive or cheaper on total first-year cost, particularly when the capital lockup is included in the entity analysis.

At 20 employees (PHP 80,000/month gross each):

Cost category	EOR (Team Up)	Own entity
Annual EOR service fees (€199 × 20 × 12)	~PHP 2.81 million	None
Annual entity compliance	None	PHP 150,000–400,000
Statutory contributions	Same	Same
Annual cost difference	EOR costs ~PHP 2.41–2.66M more

At 20 employees with a running entity (post setup cost amortization), entity economics begin to compete with EOR. This is the crossover zone.

The Philippines crossover: approximately 20–30 employees with a confirmed long-term commitment. Below that: EOR wins on total cost, speed, and flexibility. Above it: entity math becomes more favorable.

Note: The $100,000–$200,000 foreign capital requirement for Philippine entities moves this crossover point higher than in most other markets. Even at 20 employees, the locked capital has an opportunity cost that the entity must account for.

What Happens to Cost When You Hire Across Multiple Markets

One of the strongest arguments for Team Up's Philippines EOR is not the Philippines cost in isolation — it is the multi-market consolidation value.

Companies building teams across the Philippines and other emerging markets — Georgia, Armenia, Kazakhstan, India, Turkey- face a vendor management overhead that accumulates with each additional market. Separate EOR providers per country means separate invoices, separate compliance calendars, separate account relationships, and separate contract frameworks.

Team Up's platform covers 20+ countries from one engagement. Philippines operations. Owned entities in Georgia, Armenia, Azerbaijan, Turkey, India, Kazakhstan, and Uzbekistan. One invoice for the full team. One compliance calendar. One account team manages payroll, statutory contributions, and immigration across every market simultaneously.

For a company with 3 engineers in Georgia (€199/month each), 2 QA in Armenia (€199–250/month each), and 5 customer success in Manila (€199/month each) — that is 10 employees across three markets from one Team Up relationship, with country-specific payroll, contributions, and immigration sponsorship managed through one platform.

The total Team Up EOR fees for that scenario: approximately €2,000/month. A comparable arrangement with three separate market-specialist EOR providers would cost more in service fees alone, and significantly more in internal vendor management overhead.

How to Read a Philippines EOR Quote

When you receive an EOR quote for Philippines hiring, verify it includes all of the following before comparing providers:

On the statutory side:

• SSS employer contribution at 10% of MSC (capped at PHP 3,500/month)

• PhilHealth employer contribution at 2.5% of basic salary (capped at PHP 2,500/month)

• Pag-IBIG employer contribution (capped at PHP 200/month)

• 13th-month pay — either shown as a monthly accrual or as an annual lump sum

On the EOR fee side:

• Is this a flat fee or a percentage of salary? (Both models exist — know which you are looking at)

• Are there setup or onboarding fees per employee?

• Are there offboarding or termination administration fees?

• Is AEP and 9G visa support included or an add-on?

• Are supplementary benefits (HMO, allowances) billed at cost or with a markup?

• What is the FX treatment if billing in USD or EUR?

On the compliance side:

• Who calculates and remits the SSS, PhilHealth, and Pag-IBIG? (Should be the EOR, not passed to the client to manage)

• Who files BIR Form 1601-C monthly? (Should be the EOR)

• Who tracks the 6-month security of tenure threshold? (Should be the EOR, with proactive notification)

A quote that cannot answer all of these specifically is not a complete quote. It is the beginning of a conversation that ends with a larger invoice than you expected.

Start with a Cost Breakdown, Not a Surprise

The Philippines is one of the most cost-competitive hiring markets in the world. An 81% cost advantage versus US engineering talent, a 77% advantage on operations roles, and a statutory contribution cap structure that favors professional hiring — the economics are real.

What changes that math is building a budget based on one component instead of three. Gross salary is not your monthly cost. Statutory contributions are mandatory and add 8–22% depending on salary level. 13th-month pay is a statutory cost that adds 8.33% annually. And the EOR fee, from €199/month with Team Up, covers the infrastructure that makes all of it compliant.

Team Up's Philippines EOR platform starts from €199 per employee per month, on the same unified platform covering 20+ countries. For companies building teams across the Philippines and the Caucasus, Central Asia, Turkey, or India simultaneously, the consolidation benefit adds further value beyond the per-employee rate.

200+ businesses. 4,000+ talent placed. 92% client retention over five years.

Frequently Asked Questions

What is the total employer cost of hiring a PHP 80,000/month software engineer in the Philippines through an EOR?

Approximately PHP 104,097 per month — gross salary PHP 80,000 plus statutory employer contributions (SSS PHP 3,500, PhilHealth PHP 2,000, Pag-IBIG PHP 200, EC PHP 30, 13th-month accrual PHP 6,667) plus Team Up's EOR service fee from €199/month (~PHP 11,700). Annualized: approximately PHP 1.25 million (~$22,300). This represents an 81% cost advantage versus an equivalent US-based engineer at $120,000/year.

Is 13th-month pay included in the EOR fee?

No — and it should not be. The 13th-month pay is a statutory employer obligation equal to 1/12th of the annual basic salary, payable by December 24. Team Up accrues this monthly and disburses it as a statutory payment — it appears as a separate line item in the cost breakdown, billed at the actual statutory amount without markup. What Team Up's service fee covers is the administration of the 13th-month calculation, accrual tracking, and payment execution.

Do statutory contributions cap out in the Philippines?

Yes. SSS employer contributions cap at PHP 3,500/month (at MSC PHP 35,000, approximately $625 monthly salary). PhilHealth caps at PHP 2,500/month (at PHP 100,000 monthly salary). Pag-IBIG caps at PHP 200/month. For senior engineers earning PHP 100,000–150,000/month, the statutory employer contribution overhead is effectively capped at approximately PHP 6,230/month — making the Philippines cost structure more favorable at higher salary levels than markets with uncapped contribution percentages.

What does AEP and 9G visa sponsorship add to the EOR cost?

Government filing fees for AEP and 9G visa combined are approximately PHP 13,000–23,000 (~$230–$410) per application. Provider administration and coordination fees vary. Budget for a total first-year immigration cost of approximately $400–$900 per foreign national hire, plus 4–8 weeks of processing time before the employee can legally start. These costs are separate from the monthly EOR service fee. See our guide on work permit and AEP sponsorship requirements for full detail.

At what headcount does building a Philippine entity become cheaper than EOR?

The crossover for the Philippines, given the $100,000–$200,000 foreign capital requirement for fully foreign-owned entities, typically sits at 20–30 employees with a confirmed long-term commitment. Below that threshold, EOR is almost always cheaper on total first-year cost — particularly when the capital lockup is included in the entity analysis. Entity economics improve significantly after Year 1 when setup costs are amortized and only ongoing compliance costs remain.