If you’re planning to hire remote skilled workers from the Philippines, e.g., computer programmers, web developers, data scientists, and virtual assistants, you have three options: set up a local entity, which can be a costly and time-consuming process amidst the business registration bureaucracies and complexities; engage with freelancers or independent contractors who manage all the compliance on their own but may not offer the same legal protections or long-term stability; or partner with an EOR service provider to bypass these challenges and simplify your global workforce management in no time.
This blog offers a complete guide to partnering with an Employer of Record (EOR) in the Philippines, covering the basics of EOR, service costs, and how you can get started. Read on or directly contact Tele HR Solutions — the preferred EOR for expat workers.
What is an Employer of Record (EOR)?
To start off, an Employer of Record (EOR) is a third-party service provider that takes on all employer-related legal and administrative responsibilities of employing staff on behalf of a client company. Essentially, it serves as the official employer on paper (i.e., normally in a foreign country).
A Global Employer of Record is an EOR that legally employs a global workforce on behalf of a company in countries where the company has no legal entity and in which the company does not want to risk violating local country or state employment laws.
Are EORs and PEOs the same? While both EOR and PEO are employment outsourcing solutions and often used interchangeably, they differ primarily in terms of responsibilities. EORs assume full legal responsibility for employment. Professional Employer Organizations (PEOs), on the other hand, provide co-employment, where both the client company and the PEO share employer responsibilities, but the client retains control over the day-to-day operations and management of employees.
When Do You Need an EOR?
As a foreign company, deciding when to expand globally or enter new markets is crucial. If your goal is to simply grow your workforce, such as in the Philippines, working with an Employer of Record (EOR) can help mitigate the risks of hiring independent contractors. If you’re also exploring new markets, an EOR allows you to hire full-time employees without needing to establish a local entity.
If you need to begin operations while still setting up or registering your legal entity, an EOR can serve as an entity stopgap and manage legal compliance, payroll, and administrative tasks for your employees during this transition. In acquisitions, mergers, and spin-offs, an EOR ensures seamless workforce transitions by managing payroll, compliance, and employee administration without the need for the acquiring or separating company to urgently establish the new entity or a temporary one.
EOR Functions and Responsibilities
Depending on your agreement or contract, the following tasks and responsibilities can be carried out by your Employer of Record (EOR) partner:
1. Legal Employer Representation
Your local EOR partner serves as the legal employer of your remote workers in the host country and ensures all necessary compliance with the local labor laws, employment standards, and other regulations.
2. Employee Onboarding
Your EOR can also support the hiring process and other onboarding tasks, even the conduct of comprehensive background checks to verify the authenticity of the identification and employment documents provided by your local hires.
3. Contract Management
While you may not have the expertise and experience in navigating the legal complexities in another country, your EOR partner can draft, manage, and enforce compliant employment contracts on your behalf as an employer.
4. Payroll Computation and Payments
Your EOR partner calculates your employee salaries, manages deductions, and pays them in the local currency. They also issue payslips and file all payroll-related reports to the appropriate local authorities.
5. Tax Compliance
Aside from salaries, income taxation for your employees is also managed by your EOR partner, i.e., from accurate calculations to withholding taxes from salaries and remittance to the local tax authority.
6. Labor Compliance
You also need not to worry about your company’s labor compliance, as your EOR ensures all employment practices, such as those related to working hours, rest periods, leave entitlements, and termination procedures, are all compliant with the local labor laws.
7. Statutory Compliance
Apart from payroll, tax, and labor compliance, other statutory requirements, including social security contributions, loan deductions, and other government reports, are also handled by your EOR.
8. Benefits Administration
Your EOR can also guide you through the mandatory benefits administration, as it handles employee enrollment to statutory agencies, remits contributions, and manages claims. It can also help you in providing your employees with your company’s optional perks and allowances.
9. Employee Support
While your company does not have a physical presence in the country, your employees can easily seek HR support and receive guidance on benefits, leaves, and company policies. It can also help mediate employee issues and ensure fair settlements.
10. Visa and Immigration Support
You can easily employ expat workers in the country, as your EOR can assist you with their visa and work permit applications. It can ensure that all immigration and local labor requirements are met for legal and gainful employment.
11. Employee Offboarding
Your EOR manages the termination or resignation process in compliance with local labor laws. This includes handling final pay, severance (if applicable), exit interviews, and ensuring that the employee’s transition is legally sound.
Benefits of Partnering with an EOR
It is nearly a consensus that an Employer of Record (EOR) simplifies global workforce management. But still, let’s take a closer look into the various ways your foreign company can benefit from this employment outsourcing solution:
1. Employing Global Workers Without Setting Up Local Entities
With EORs, you can hire skilled workers from anywhere else in the world and welcome them to your expanding workforce without going through tedious and costly company incorporation or business registration in the host country just to comply with local laws and regulations.
2. Faster Onboarding for International Talent
Whether you need these skilled workers in weeks or in a month, your local EOR partners can make it possible to onboard them and handle all administrative tasks. You can ensure quality hires by engaging with other EOR services, such as background checks and verifications.
3. Legal, Labor, and Tax Compliance
As a foreign employer, you don’t need to hire additional HR personnel to focus on local laws and regulations or learn them by yourself. Your EOR partner can handle these matters with expertise and can guarantee your full compliance.
4. Zero Employee Misclassification Risks
Employee misclassifications, which often involve hired independent contractors who wrongly prove the employer-employee relationships, can lead to legal complications, penalties, and demands for payments of benefits. With EORs, you can hire full-time employees without exposure to these risks.
5. Scalability and Less Exit Costs
If you will need more skilled workers from the same country in the future, then there won’t be any issues. Your partner EOR will simply add employees to the account, and this will cost you less in the long run. Additionally, with a local entity, e.g., a branch office or subsidiary, it will be way more difficult to exit the market, as it needs to be deregistered, a process that usually takes months or even years.
6. Attracting and Retaining Top Talent
Partnering with an Employer of Record (EOR) means that your outsourced workers will receive the salary on time and in the local currency, together with all other benefits that are mandatory under the local laws. Depending on your agreement, these employees may also receive additional company perks and allowances that will attract and retain them.
EOR Partner of Choice for Expats for 14+ Years
Need an Employer of Record (EOR) in the Philippines?
Look no further — we, at THS, handle HR tasks, payroll, and labor compliance, so you can grow your workforce globally without the hassle of setting up a local entity.
How to Partner with an EOR Service Provider in the Philippines
Like any other business-related task, partnering with an Employer of Record (EOR) requires careful and informed decisions, but if you’re ready to get started, here’s our complete guide:
1. Choose the Right EOR Partner.
Start your selection with the service providers that have proven track records in the Philippines and whose capabilities align with your business and workforce management goals. You might also want to consider their solid local networks to provide you the best service.
2. Discuss Your Cross-Border Workforce Management Needs.
Typically, EORs offer standard service packages with a pre-determined scope of work, e.g., from employee onboarding to offboarding. As a prospective client, you need to clearly outline the services and boundaries that you want your EOR partner to provide. Your discussion may then proceed to the service rates and fees.
3. Establish Clear Contractual Agreements and Compliance Safeguards.
As you decide to finalize your partnership with your chosen EOR service provider, you need to secure contractual agreements, which stipulate terms and conditions, such as the scope of services, recruitment and hiring, employee onboarding, payroll and taxation procedures, legal and labor compliance, and data safeguards, among others.
4. Provide Your EOR with Information and Materials on Employees.
While not all EORs handle hiring and recruitment directly, they need key employee details and documentation to start the onboarding processes. You, as the client company, are responsible for supplying accurate information, such as job descriptions, employment terms, and candidate credentials.
5. Leave the Onboarding Duties in the Hands of Your EOR.
Once the employee information is provided, the EOR can take charge of the onboarding process and ensure initial compliance with the internal protocols and the local labor laws. This includes contract preparation, statutory benefits enrollment, taxpayer registration, and other tasks.
6. Delegate the HR Tasks, Payroll Management, and Tax Compliance.
Once your employees are onboard, your EOR partner can already start with the routine HR tasks, payroll management, tax compliance, government remittances, and benefits administration. With this, you can already focus on the day-to-day activities of these employees and other core business operations.
7. Collaborate with Your EOR on Managing Performance Feedback.
While the EOR handles employment logistics, performance management remains a collaborative effort. You provide regular feedback and evaluation, and the EOR assists in documenting performance issues or managing disciplinary actions in accordance with local laws.
8. Let the EOR Handle Employee Offboarding.
If termination becomes necessary, the EOR is responsible for executing the process in line with local labor regulations and helping you minimize legal risks. It ensures that proper notice, documentation, and final pay are handled correctly and professionally.
Cost of EOR Services in the Philippines
How much do EOR services cost in the Philippines? The cost varies depending on several factors, including the provider, the number of employees, the scope of services, and the employees’ compensation. If you haven’t engaged with an EOR service provider yet and have no idea about the costs, then consider these two basic payment models:
Percentage-Based Model
Most EOR providers in the Philippines charge a monthly fee based on a percentage of the employee’s gross salary, typically ranging from 10% to 20%. For example, if your employee earns PHP 50,000 per month and the EOR fee is 15%, the service fee would be PHP 7,500 per month.
Flat-Rate Model
Other providers offer a fixed monthly rate per employee, which may range from PHP 15,000 to PHP 30,000 or more, depending on the complexity of services such as compliance management, tax reporting, and benefits administration.
About Tele HR Solutions – The Philippines’ Preferred Employer of Record (EOR) for Expats
Tele HR Solutions brings together 14 years of industry expertise with a team of seasoned HR professionals, making it a trusted EOR partner for both expats and local talent. It stands out as the preferred choice for companies seeking reliable, compliant workforce solutions in the Philippines.
Backed by a strong network of sister companies—including a business consulting firm, a law firm, an international documentation provider, and a virtual office lessor — THS offers a comprehensive ecosystem tailored to the needs of your foreign company.