How to Legally Pay Remote Employees in the Philippines

With global talent acquisition on the rise, companies are tapping into the highly skilled workforce in the Philippines to scale operations efficiently. Whether it's technology, customer experience, finance, or operations, hiring in the Philippines offers significant advantages—cost-effectiveness, a highly educated workforce, and strong English proficiency.

But how do you legally pay remote employees in the Philippines while ensuring compliance with labor laws, payroll taxes, and employee benefits? Many companies struggle with managing payments, tax deductions, and legal obligations—especially if they don’t have a registered entity in the country.

At KMC, we make it easy for companies to build an extension of their team in the Philippines while staying fully compliant—without the complexity of setting up a local entity.

The Philippine Labor Code outlines strict regulations governing employment contracts, benefits, and tax contributions. If you plan to hire remote employees in the Philippines, here’s what you need to consider:

1. Compliance with Philippine Labor Laws

Hiring employees in the Philippines requires adherence to:

• Minimum wage regulations (which vary by region)

• Overtime and holiday pay requirements

• Mandatory benefits such as Social Security (SSS), PhilHealth, and Pag-IBIG contributions

• 13th-month pay (a government-mandated annual bonus)

• Proper worker classification to avoid legal risks

2. Tax and Payroll Compliance

Employers must withhold and remit taxes to the Bureau of Internal Revenue (BIR) and ensure employees receive the correct government-mandated benefits. Failure to do so can result in penalties and legal issues.

3. Social Security & Employee Benefits

If you directly employ remote workers, you are responsible for processing:

• Social Security System (SSS): Provides retirement and disability benefits

• PhilHealth: National health insurance coverage

• Pag-IBIG Fund: Government savings and housing assistance

Managing these deductions and contributions can be complex—especially if you don’t have a legal entity in the Philippines.

Many companies attempt to pay remote workers through traditional payment methods, but not all are legally compliant.

1. International Wire Transfers

Using SWIFT bank transfers to pay employees directly seems convenient, but:

• High transaction fees reduce take-home pay

• Currency fluctuations create payment inconsistencies

• No automatic tax deductions, leading to compliance risks

2. PayPal, Wise, Payoneer, and Other Online Payment Platforms

• Primarily designed for freelancers, not full-time employees

• Does not include tax deductions or government contributions

• Can lead to worker misclassification issues

3. Setting Up a Local Entity

Some companies register a subsidiary in the Philippines to directly employ and pay staff. While this ensures full compliance, it also comes with:

• High setup costs (registration, legal fees, tax ID setup)

• Ongoing administrative burdens (HR, payroll, compliance)

• Long timelines before becoming operational

For businesses looking to hire quickly without setting up a local entity, this isn’t the most efficient option.

The easiest way to legally hire and pay remote employees in the Philippines—without setting up a local entity—is by partnering with KMC.

How It Works

• You choose the roles. We source and hire experienced, mid-to-senior level professionals in the Philippines.

• KMC hires the employees on your behalf, ensuring full compliance.

• We manage payroll, tax deductions, and government contributions.

• You retain full control—your hires, your culture, your way.

This gives you all the benefits of hiring legally in the Philippines without the legal and administrative burdens.

• Full Legal Compliance: We handle Philippine labor laws, payroll taxes, and mandatory benefits, eliminating compliance risks.

• Mid-to-Senior Level Professionals—Not Just Entry-Level Staff:
  Unlike traditional outsourcing, KMC specializes in experienced, mid-to-senior hires who can drive impact.

• Seamless Payroll & Tax Management: We process salary payments, tax withholdings, and government contributions so your employees are paid correctly and on time.

• No Need for a Local Entity: Instead of spending months setting up a business in the Philippines, KMC allows you to hire immediately—without entity registration.

• Premium Workspaces & Employee Housing: KMC provides high-quality offices, flexible workspaces, and premium employee housing, ensuring better talent retention.

• Cost-Effective Scaling: Skip the costs of entity setup, compliance, and HR administration—we take care of everything so you can scale efficiently.

• Avoid Worker Misclassification Risks: Improperly classifying workers as contractors instead of employees can result in legal fines. KMC ensures your workforce is classified correctly.

• A Top Employer in the Philippines: KMC is recognized as one of Asia’s Best Workplaces, ensuring that your team benefits from a work environment that fosters engagement and retention.

If you decide to work with a provider like KMC, here’s what to look for:

1. Proven Experience & Reputation

Partner with a provider that has a strong track record in the Philippines and deep expertise in compliance, payroll, and HR.

2. Full Legal Compliance & Transparency

Ensure the provider handles local tax regulations, labor laws, and government contributions with full transparency.

3. End-to-End HR, Payroll & Benefits Management

Look for a partner that goes beyond payroll processing and offers a full employment experience—including talent retention strategies, premium workspaces, and employee benefits.

4. Cost-Effectiveness

Compare pricing structures, hidden fees, and overall cost savings vs. setting up a local entity.

5. Scalability & Long-Term Growth

Choose a provider that can scale with your company’s needs as you grow your workforce in the Philippines.

Instead of navigating complex payroll, tax, and legal requirements, let KMC handle everything so you can focus on growing your business.

Contact us today to learn how to seamlessly hire and pay remote employees in the Philippines—without the hassle.