Plenty of Australian businesses decide they want a Filipino staff member before they work out how to actually employ one. The recruiting part is familiar. The employment part is where it gets unfamiliar quickly.
This article covers the mechanics: what has to be in place, what Philippine law requires of an employer, and what you cannot do from Australia.
If you are still choosing between a contractor arrangement, a PEO and an Employer of Record, start with our guide to Employer of Record vs PEO vs contractor, then come back here.
The thing most people get wrong first
An Australian company cannot simply put a Philippine resident on its Australian payroll and call it done.
The work is performed in the Philippines, so Philippine employment law applies to the relationship. That brings statutory contributions, local leave entitlements, 13th month pay and dismissal rules that look nothing like the Fair Work system.
To employ someone there lawfully, somebody needs to be a Philippine employer. That is either a company you register yourself, or an Employer of Record that already holds one.
What you need before you start
A defined role. Tasks, hours, the overlap with your working day, and the software involved. Vague roles produce vague hires.
A salary in pesos. Philippine salaries are quoted monthly rather than hourly. Benchmark against the local market for that role rather than converting an Australian figure.
A budget that includes more than salary. Statutory contributions and 13th month pay sit on top. Our article on what Australian employers pay for in the Philippines sets out the numbers.
Somewhere for the work to live. Systems, logins and a way to see output. Deciding this after someone starts wastes their first fortnight.
Recruiting
The Philippine market is deep for administrative, technical and industry-trained roles, which is why most Australian offshore hiring goes there.
Expect volume. A well-paid remote role attracts hundreds of applications, and filtering them is the work. Screen for evidence of the specific tasks rather than the job title, look at how candidates write, and ask them to describe a process they have actually run.
Allow around two to four weeks from defining the role to someone starting. Specialist and technical roles take longer because the pool is smaller.
Our step-by-step hiring guide covers screening, interviewing and trial tasks in detail.
Contracts and what Philippine law requires
A few things differ enough from Australian practice to be worth knowing before you sign anything.
Probation is time-limited. Probationary employment generally runs to a maximum of six months, and the standards the employee must meet have to be communicated at the start. Once that period passes, the employee is regular and dismissal protections apply properly.
Dismissal requires cause and process. Philippine law recognises specific grounds and expects procedural steps to be followed. It is not an at-will system, and getting the process wrong is where most disputes come from.
Leave entitlements are statutory. Service incentive leave and public holidays apply, along with premium pay rules for work on rest days and holidays.
Doubts are resolved in favour of the employee. Article 4 of the Labor Code of the Philippines directs that all doubts in interpreting the Code be resolved in favour of labour. That is a deliberate feature of the system and it shapes how ambiguity gets read.
This is general information rather than legal advice. Your circumstances may differ, and it is worth confirming with an adviser.
Payroll, registration and remittances
Employing someone in the Philippines means registering as an employer with three agencies and remitting to each on its own schedule: the Social Security System, PhilHealth, and the Pag-IBIG Fund. Withholding tax runs through the Bureau of Internal Revenue.
Each has its own deadlines, its own remittance system, and its own penalties for late payment. The employee share is deducted from pay and held in trust, so non-remittance is treated seriously.
This is the part Australian owners consistently underestimate. It is not difficult work, but it is monthly, it is unforgiving of mistakes, and it does not pause because you are busy.
What you cannot do from Australia
Without a Philippine entity, you cannot register as an employer with the agencies above, remit statutory contributions, or issue a compliant local employment contract.
That leaves three honest options. Register a Philippine company, which makes sense at scale but carries real overhead. Engage the person as a genuine contractor, which only works if the relationship really is independent. Or use an Employer of Record.
How this works with us
Under our Employer of Record service, Digitek Operations Inc., our Philippine company, is the legal employer. It holds the contract, runs payroll in pesos, registers with the agencies and remits the contributions.
You choose the person, direct their work and manage their performance. What you do not do is incorporate overseas or learn Philippine payroll.
If you would rather we ran the recruitment too, Managed VA Solutions covers sourcing, screening and ongoing support alongside it.
Frequently asked questions
Can an Australian company employ someone in the Philippines directly?
Not without a Philippine entity. Because the work is performed in the Philippines, Philippine employment law governs the relationship, and employer registration with the Social Security System, PhilHealth and the Pag-IBIG Fund requires a local company. Australian businesses either register one, engage the person as a genuine contractor, or use an Employer of Record that already holds the entity.
How long does the probation period last in the Philippines?
Probationary employment generally runs to a maximum of six months, and the standards the employee has to meet must be made clear when they start. After that period the employee becomes regular, and the full dismissal protections apply. This is shorter and more prescriptive than many Australian employers expect.
Do I pay a Philippine employee in pesos or Australian dollars?
In pesos. Salaries are quoted and paid monthly in local currency, and statutory contributions are calculated on peso figures. Benchmark the salary against the Philippine market for that role rather than converting an Australian salary, which usually produces a number that is either uncompetitive or unnecessarily high.
How long does it take to hire someone in the Philippines?
For most administrative roles, around two to four weeks from defining the role to the person starting. Specialist and technical roles take longer because the candidate pool is smaller and screening is more involved. If you are setting up your own entity rather than using an Employer of Record, add the incorporation timeline on top.
What happens if I get the employment arrangement wrong?
Obligations that should have applied become payable, which can include statutory contributions, leave entitlements and 13th month pay, and exposure builds over the length of the engagement. Article 4 of the Labor Code also directs that doubts be resolved in favour of labour, so a borderline arrangement is unlikely to be read in the employer’s favour.
Getting started
The useful first step is the role itself. What the person will do, how many hours, and how much overlap you need with your day.
Send us that and we will tell you what it looks like as a Philippine role, what it would cost all in, and which arrangement suits it.
