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Explore our detailed guides for professional advice on international growth, recruitment, compensations strategies, and a curated list of top service providers.

Philippines PEO (Philippines Professional Employer Organization)

VERDICT: The best Philippines PEO provider in 2024 is Horizons. With a leading global PEO platform, and deep knowledge of tax and labor laws in the Philippines, Horizons is an excellent local hiring partner. 

Key Takeaways

  • PEOs in the Philippines provide comprehensive HR services, including payroll and tax management, access to local expertise, risk mitigation & compliance assistance.
  • Partnering with a PEO in The Philippines enables businesses to benefit from improved employee experience and cost savings while remaining compliant with labor laws.
  • The leading Philippines PEO companies are Horizons, LennorHive, Talent Hero, Gloroots and Papaya Global

Understanding Philippines PEO

A Professional Employer Organization (PEO) acts as an employer for businesses requiring HR support. In the Philippines, companies looking to expand or streamline their operations can greatly benefit from a partnership with a PEO service. A PEO in the Philippines manages payroll, recruitment, and other services for employees in the Philippines, freeing businesses to concentrate on their core competencies without the complexities of hiring and managing employees.

Global PEO services, in particular, can offer seamless integration between your local and international workforce, ensuring a consistent, compliant, and efficient approach to managing employees across borders. With a PEO partner in the Philippines, you’ll have a powerful ally in navigating the intricate world of local labor laws, employee benefits, and tax compliance.

PEO vs EOR

While both PEOs and Employer of Record (EOR) services aim to simplify the process of hiring and managing employees, they differ in their degree of involvement. PEOs provide comprehensive HR management services, including payroll, recruitment, and headhunting, while EORs primarily offer administrative support for overseas hiring and employee management.

This distinction is crucial for businesses considering expansion in the Philippines. Companies that partner with a PEO gain from efficient payroll and tax administration, access to local expertise, and recruitment and talent management services.

Meanwhile, an EOR service may be more suitable for companies that prefer a lighter touch, focusing solely on the administrative aspects of hiring employees and managing staff in their branch office.

Note, many companies use the terms PEO and EOR interchangeably in their marketing. 

Top 5 Philippines PEO Companies

  1. Horizons: Horizons provides customized PEO and EOR solutions throughout the world. Their bespoke approach to meeting client needs gives them an edge in the Philippines market.  Horizons is our choice for the best Philippines PEO

  2. LennorHive: LennorHive are Philippines employment specialists. Their in-depth knowledge of local labor and tax compliance makes them a top Philippines PEO company. In addition to their PEO service, they also provide a full talent acquisition service, ensuring that your company can acquire the talent that it needs. 

  3. TalentHero: TalentHero are top Philippines PEO and outsourcing company. In addition to their PEO and payroll services, they also support client companies with recruitment, equipment procurement, and remote office space rentals. This makes them a useful hiring partner for companies with a range of HR needs.  

  4. GlorootsGloroots is an international PEO company with a strong presence in the Philippines. Gloroots will ensure all workers are hired and paid in full compliance with the law, whether in the Philippines or in any of their other locations. 

  5. Papaya Global: Papaya Global is an international PEO, payroll and payments platform. Papaya’s USP is their owned payments infrastructure, ensuring that your Philippines employees are paid on time, and without payroll errors. 

Advantages of Using a PEO in the Philippines

The many advantages of using a PEO in the Philippines make it an attractive option for businesses looking to expand their operations in the country. With a PEO, you can:

  • Improve your employee experience by ensuring that all the benefits and entitlements are in place
  • Streamline payroll and tax organization
  • Reduce HR overhead, ultimately saving your company time and money.

Partnering with a PEO offers several benefits, including:

  • Eliminating the need for additional personnel for mundane tasks
  • Providing cost savings
  • Making it an appealing choice for companies considering business process outsourcing in the Philippines.

Furthermore, a PEO can provide time and resource savings by transferring the responsibility of managing payroll, onboarding, and adhering to legal requirements to a third party, allowing your company to focus on its core business.

Streamlined Payroll and Tax Management

Managing payroll and tax processes can be a complex and time-consuming task, especially when operating across multiple countries. A PEO in the Philippines can significantly streamline these processes by offering payroll outsourcing services, ensuring precise and prompt processing, and guaranteeing that employees are entitled to their correct pay and benefits.

With an established PEO, companies can navigate the complexities of conducting business in the Philippines, including specific requirements for government employees. This expertise in payroll and tax regulations ensures employee tax compliance and covers aspects such as:

  • graduated income tax
  • payroll management
  • tax withholding
  • HR Compliance
  • ensures that human resources functions are effectively managed, freeing up valuable time and resources for your business to flourish.

Access to Local Expertise

Navigating the intricate employment landscape in the Philippines can be a daunting task, but with a PEO by your side, you’ll have access to invaluable local expertise and an understanding of local regulations. The relationship between a company and a PEO is essential in providing employees with cost-effective, beneficial offerings while alleviating administrative burdens and ensuring that each employee hired is well-supported and managed.

Moreover, a PEO’s local know-how on employment regulations and cultural idiosyncrasies in the Philippines makes their service an essential component of successful business operations in the country. With a PEO on your side, not only will you have a smoother hiring process, but you’ll also be better equipped to navigate the complexities of local labor laws and ensure compliance with all necessary regulations.

Key Employment Regulations in the Philippines

When operating in the Philippines, employers must understand and comply with the country’s key employment laws, as outlined in the Labor Code of the Philippines and Republic Act No. 442. Employers must adhere to essential aspects of these regulations, which include the employment contract, the probationary period for employees, required contributions for employees, and mandatory employee benefits such as the Social Security System (SSS)Government Service Insurance System (GSIS)Home Development Mutual Fund (HDMF), and Philippine Health Insurance Corporation (PhilHealth).

A partnership with a PEO ensures your business complies with these regulations and benefits from the PEO’s expertise in the local labor market. This will ultimately save your company time and resources, allowing you to focus on growth and expansion in the Philippines.

Working Hours and Overtime

The Philippines has established regulations concerning maximum working hours and overtime pay, which are essential for businesses to understand and comply with. Here are the key regulations:

  • Employees should not exceed 8 hours of work per day, excluding a 1-hour lunch break.
  • Employees are entitled to additional compensation for work done beyond these hours.
  • For regular working days, the overtime pay rate is 25% of their hourly pay.
  • For rest days, regular holidays, and special holidays, the overtime pay rate is 30% of their hourly pay.
Philippines working hours
Average working hours for full-time employees in the Philippines, January 2022

PEOs can help businesses manage these requirements by guiding on working hours, overtime regulations, and the appropriate compensation for employees. This ensures that your business remains compliant with local labor laws while also fostering a positive work environment and promoting employee satisfaction.

Leaves and Employee Benefits

In the Philippines, employees are entitled to various types of paid leave and benefits, including vacation leave, sick leave, and maternity leave. Female employees, for instance, are entitled to 105 days of paid maternity leave, with an additional 30 days of unpaid leave. Employers are required to make up the difference between the employee’s social security benefits and their salary during this period.

philippines maternity leave

PEOs play a vital role in administering these benefits, ensuring employees receive their entitlements and the business remains compliant with local regulations. By partnering with a PEO, you can create a supportive work environment that fosters employee satisfaction and retention, ultimately contributing to the long-term success of your business in the Philippines.

PEO Services for Expanding Businesses

PEO services offer a range of valuable support to businesses planning to expand in the Philippines. This includes:

  • Recruitment assistance
  • Compliance with local labor laws and regulations
  • Payroll and benefits administration
  • Risk mitigation and HR support

By leveraging the expertise of a PEO, companies can save time and resources when hiring in the Philippines and managing employees, ensuring a smooth entry into the Philippine market.

Furthermore, a global PEO can offer seamless integration between your local and international workforce, ensuring a consistent, compliant, and efficient approach to managing employees across borders. This makes a PEO partner an indispensable asset for businesses seeking to capitalize on the burgeoning Philippine market.

Recruitment and Talent Management

PEOs in the Philippines provide comprehensive recruitment and talent management services to assist businesses in locating the ideal personnel. They employ a range of methods for effective talent management, such as:

  • Recruiting and strategic hiring
  • Employee training and engagement
  • Performance management
  • Payroll and benefits administration
  • Compliance with labor laws

Outsourcing HR functions to a PEO allows companies to:

  • Shift their focus to creating a positive work environment
  • Implement effective retention programs
  • Ensure efficient recruitment and management of employees
  • Significantly decrease employee turnover
  • Contribute to the overall success and growth of the business.

Risk Mitigation and Compliance

Operating in a foreign market can present various risks and challenges, particularly when it comes to compliance with local labor laws and regulations. PEOs in the Philippines offer expertise in employment compliance and advice on legal requirements, including obtaining an alien employment permit, to support risk mitigation in business expansion. They can assist in establishing compliant employment contracts for employees, ensuring that businesses are adhering to local labor laws and regulations.

PEOs put their in-country knowledge to use assisting businesses in mitigating operational risks and ensuring compliance, reducing the potential for penalties and noncompliance issues. Partnering with a PEO in the Philippines can be an invaluable asset in ensuring the smooth expansion and growth of your business.

Steps to Engage a PEO in the Philippines

Engaging a PEO in the Philippines involves several steps, including recognizing business requirements, selecting a provider, and ensuring compliance with local regulations. Identifying and connecting with PEO providers requires assessing your company’s staffing needs, researching and reviewing various PEO providers, considering engagement with a global PEO for a smoother market introduction, and contacting the chosen providers to discuss your specifications and request tailored proposals.

When evaluating potential PEO partners, consider the following factors:

  • Accreditation
  • Pricing and value
  • Benefits and programs
  • Service quality
  • Responsiveness

By thoroughly assessing your options, you can ensure that you choose a PEO that best aligns with your business needs and objectives, providing a seamless and efficient experience in the Philippines.

Summary

In conclusion, Philippines PEO services offer a wealth of benefits for businesses looking to expand or streamline operations in 2024. From navigating the complexities of local labor laws and regulations to providing invaluable local expertise, a PEO partner can be a game-changer for companies operating in the Philippines. As the country continues to establish itself as a thriving business hub, PEOs will play an increasingly vital role in helping businesses capitalize on the opportunities that this dynamic market presents.

Philippines Business Guides

Frequently Asked Questions

PEO stands for professional employer organization, an organization that provides HR services and share employee-related responsibilities and liabilities with employers. They help businesses manage payroll, benefits, workers' compensation, and training.

 

PEO in the Philippines is a Professional Employer Organization which enables companies to quickly and easily expand their businesses globally, without needing to navigate the time-consuming and costly paperwork.

Employers in the Philippines are required to provide 5 days of paid Service Incentive Leave per year, which may be used as PTO.

ADP TotalSource is the largest PEO in the world, with over 400,000 worksite employees and headquarters in Roseland, New Jersey. It is an American provider of human resources management software and services.

A PEO in the Philippines offers payroll, recruitment, and management services to help businesses expand or operate more efficiently.

Travis is a global business development advisor. He has spent the last 14 years supporting business establishment and development in North America, Southeast Asia, and throughout the world. With multiple degrees from the University of Oregon, Travis currently splits his time between the US, and Bali, Indonesia. At RemotePad, Travis writes about remote work, hiring internationally and PEO/EOR business models.

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