Key takeaways:

• The Philippine Supreme Court ruled that an employer-employee relationship begins once a job offer is signed, even before the employee’s official start date.
• Withdrawing a signed job offer without just cause can be deemed illegal dismissal under Philippine labor law.
• Proper documentation is crucial to support claims of redundancy, including updated staffing plans, feasibility studies, job descriptions, and formal management approval.
• This ruling applies to foreign and remote employers hiring Filipino professionals, even if they don’t have a physical presence in the Philippines.
• Employers found non-compliant may face costly penalties, including back wages, separation pay, attorney’s fees, and legal interest.
• Compliance is non-negotiable. Being unaware of local labor laws is not a valid excuse and may expose your business to significant legal and financial risks.

Bottom line:
If you’re hiring or planning to hire Filipino professionals, this ruling makes it clear: employment obligations begin at job offer acceptance, not on day one. For global employers, staying compliant with Philippine labor laws is not just best practice, it’s essential for protecting your business, building trust, and ensuring a successful and sustainable partnership with Filipino talent.

A recent landmark ruling by the Philippine Supreme Court is creating ripples across the global outsourcing and remote work industry, particularly for businesses hiring Filipino professionals.

On April 2, 2025, the Supreme Court clarified a critical detail in Philippine labor law: the employer-employee relationship begins the moment a job offer is signed, even if the employee hasn’t officially started working yet.

This decision overturns earlier rulings from the National Labor Relations Commission (NLRC) and the Court of Appeals, making it clear that employment obligations don’t just start on an employee’s first day, they begin at the moment of a signed agreement.

The case that changed the game involved a biotechnology company and a Filipino professional, Paolo Landayan Aragones, who accepted a signed offer for a high-level role in 2016 with a monthly salary of ₱140,000. After he resigned from his previous job and prepared for the transition, the company rescinded the offer, citing a “global restructuring” and paid him a one-time goodwill amount.

Aragones took legal action. Now, after years of back-and-forth rulings, the Supreme Court has affirmed that a legally binding employment contract was established as soon as the job offer was accepted. The company was found guilty of illegal dismissal and was ordered to pay back wages, separation pay, and attorney’s fees, with interest.

What Employers Should Take Away

This update is not just a local issue, it’s a critical insight for global businesses hiring talent from the Philippines, whether directly or through outsourcing.

Here’s what you should remember:

1. Signed Job Offers Create Legal Obligations

Once a Filipino candidate signs your offer, even if the start date is in the future, you are entering into a binding employment relationship under Philippine law. Withdrawing the offer without just cause may be treated as illegal dismissal.

2. You Need Proper Documentation for Redundancy

Citing “restructuring” isn’t enough. To legally justify redundancy, companies must provide solid evidence: updated staffing plans, feasibility studies, job descriptions, and proof of management approval.

3. Labor Law Compliance Is Not Optional

Failure to comply, intentionally or unintentionally, can result in costly penalties. In this case, Alltech must pay significant compensation, including back wages from 2016, separation pay, and legal interest.

4. The Philippines Protects Its Workforce

This ruling reinforces the Philippines’ strong labor protections, which apply even to remote or offshore employers who hire Filipino talent without a physical office in the country.

Planning to Hire or Already Working with Filipino Talent?

If you’re outsourcing or building a global team that includes Filipino professionals, it’s more important than ever to stay ahead of local labor developments. That’s where Filta can support you.

We help businesses find the right Filipino talent who seamlessly complement your team, without needing to set up an entity in the Philippines. From payroll, taxes, and benefits management to labor law compliance, we take care of the complex details, so you can focus on growth and performance.

And we don’t just stop there — we also help employers stay informed with the latest labor law updates, provide support, and offer guidance on managing and adjusting to evolving labor standards. It’s not just about hiring, it’s about building long-term partnerships and minimizing risks from day one.

Staying compliant isn’t just about avoiding penalties. It’s about building trust, supporting your team, and ensuring operational security.

If you have Filipino team members, or are planning to hire from the Philippines, make sure you’re protected, supported, and compliant every step of the way. Filta can help you out.

Head to filtaglobal.com to learn more how we can support you.