Running payroll in the Philippines isn’t just about sending money each month. It’s about doing it legally.
Many US companies only realize this after they’ve already hired and discovered their setup isn’t compliant.
This guide explains your payroll options clearly.
Can a US company run Philippine payroll directly?
Only if you:
- Have a registered Philippine entity or
- Use an Employer of Record
Anything else, including paying “contractors” for employee-like roles, carries compliance risk.
Legal payroll options explained
1. Employer of Record
- EOR runs local payroll
- Handles tax withholding and benefits
- Ensures labor law compliance
This is the most common option for US companies without an entity.
2. Local entity
- Full payroll control
- High setup and ongoing costs
- Requires local expertise
3. Contractors
- Only suitable for true freelancers
- High risk if misused
- Common source of disputes
What compliant Philippine payroll includes
A legal payroll setup covers:
- Income tax withholding
- SSS, PhilHealth, Pag-IBIG contributions
- 13th month pay
- Statutory leave entitlements
Missing any of these can expose your company to penalties and claims.
Why companies switch to EOR after DIY attempts
We often see companies come to us after:
- Payroll miscalculations
- Contractor disputes
- Employee dissatisfaction
- Compliance warnings
Fixing errors later is far more expensive than setting things up correctly from the start.
Is EOR payroll right for your team?
EOR payroll works best if you:
- Want full compliance
- Don’t want to run a local entity
- Need predictable monthly costs
- Are building a long-term offshore team
Unsure if your current payroll setup is compliant?
We can review your Philippine payroll structure and flag any risks before they become problems.
👉 Get a payroll and compliance check for your Philippine team.
