What is an Employer of Record in the Philippines? Here Is Everything You Need to Know
An Employer of Record in the Philippines allows companies to hire full-time employees without setting up a local legal entity. Instead of registering a corporation, navigating tax structures, and managing statutory filings, you can legally employ talent through a registered local employer.
This approach ensures compliance with Philippine labor regulations, reduces administrative risk, and enables faster hiring while maintaining operational control.
What is EOR?
An Employer of Record is a locally registered company that becomes the legal employer of your team on paper.
The EOR handles employment contracts, payroll, taxes, and statutory obligations.
Your company manages the employee’s daily responsibilities, performance, and deliverables.
The employment structure is outsourced. The work remains yours.
What Are Employer of Record (EOR) Functions and Responsibilities?
The Employer of Record is responsible for all legal employment requirements in the Philippines.
The EOR manages:
• Locally compliant employment contracts
• Payroll processing and tax withholding
• Mandatory government contributions
• 13th month pay administration
• Overtime, holiday, and leave compliance
• Regulatory reporting
The Client Company manages:
• Job scope and role design
• Compensation decisions
• Performance standards
• Day-to-day supervision
• Team culture
This clear division of responsibility protects your company from labor law exposure while preserving leadership control.
Service Scope of an Employer of Record
A Philippines EOR setup typically includes:
• Compliant employment contracts aligned with DOLE regulations
• Payroll processing and statutory remittances to SSS, PhilHealth, and Pag-IBIG
• 13th month pay calculation and distribution
• Benefits administration
• Onboarding and offboarding documentation
• HR compliance guidance
• Representation in dealings with Philippine authorities when required
This framework allows companies to operate without building local HR or legal infrastructure.
Choosing the Right Path for Your Philippine Expansion
Companies expanding into the Philippines often compare three common paths: engaging independent contractors, setting up a local corporation, or working with an Employer of Record.
Each option offers a different level of speed, control, cost, and compliance responsibility. For businesses that want to hire Philippine-based talent without immediately establishing a local entity, KMC’s Employer of Record services provide a structured way to employ, pay, and support teams while staying aligned with local labor requirements.
Feature | Independent Contractors | Setting Up a Local Entity | KMC Employer of Record Services |
Setup Time | Immediate, but limited by compliance risk | Typically several months, depending on incorporation, banking, registrations, and operational setup | As quickly as 7–14 days, subject to role requirements and onboarding timelines |
Legal Risk | Higher risk if the worker is misclassified or managed like a full-time employee | Lower risk when properly established and managed | Reduced compliance risk, with KMC managing local employment, payroll, and statutory requirements |
Cost | Lower upfront cost, but may carry hidden compliance exposure | Higher upfront and ongoing costs for legal, capital, HR, payroll, finance, and administration | Predictable monthly service model |
HR & Payroll | Manual or handled directly by the client | Requires an in-house or outsourced local HR and payroll function | Fully managed by KMC |
Local Presence | No formal local employment presence | Full local entity and operating structure required | Access to KMC’s Philippine workspace and employment infrastructure |
Understanding the Employer of Record Model in the Philippines
Navigating Philippine labor laws is critical when building a local team. The Employer of Record model gives companies a way to hire Philippine-based employees without immediately setting up their own local corporation. Below, we explain how the model works, how it differs from traditional outsourcing, and how KMC helps manage employment compliance.
What are the Benefits of Employer of Record (EOR)?
Using an Employer of Record in the Philippines provides:
Reduced compliance risk
Faster hiring without entity setup
Predictable employment administration
Structured monitoring of labor regulations
Lower administrative overhead
Access to a large English-speaking workforce
When to Use an Employer of Record (EOR)
An EOR is commonly used when companies:
• Enter the Philippine market without forming a subsidiary
• Test expansion before long-term incorporation
• Hire full-time employees instead of contractors
• Build distributed teams
• Support acquisitions or restructuring
• Require a compliant bridge before setting up an entity
This model allows companies to scale gradually without restructuring their global footprint.
How KMC Employer of Record (EOR) Services Work
How KMC Employer of Record (EOR) Services Work
KMC Teams employs your Philippine workforce under our registered entity while you maintain full control of operations.
We manage:
• Employment contracts
• Payroll and statutory compliance
• Government contributions and reporting
• HR documentation
• Regulatory updates
You manage performance, compensation approvals, and business outcomes.
This structure allows you to focus on execution while we manage employment compliance.
The Cost of Hiring in the Philippines
Hiring in the Philippines involves more than base salary. Employers must account for statutory contributions, mandatory benefits, payroll administration, and compliance requirements. For companies without a local entity, these obligations can become complex to manage without the right employment infrastructure.
13th Month Pay
In the Philippines, 13th month pay is a mandatory benefit for covered rank-and-file employees. It is generally equivalent to at least one twelfth of the employee’s basic salary earned within the calendar year and must be paid in accordance with Philippine labor requirements.
Employer Contributions
KMC manages the required employer contributions and statutory benefits for employees under its Employer of Record service, including:
Statutory Requirement | How KMC Supports |
SSS | Managed by KMC |
PhilHealth | Managed by KMC |
Pag-IBIG | Managed by KMC |
13th Month Pay | Managed in accordance with Philippine labor requirements |
Payroll Administration | Managed by KMC |
HR Compliance Support | Managed by KMC |
The Entity Setup Savings
Setting up a local corporation in the Philippines can require significant time, legal coordination, capital planning, payroll setup, HR administration, and ongoing compliance management.
For companies that want to start hiring before committing to full incorporation, KMC’s Employer of Record service provides a more flexible entry point through a predictable monthly service model.
- Entity Setup: Higher upfront legal, registration, capital, HR, and administrative costs
- KMC Employer of Record: Starting at $349/month, subject to scope and service requirements
Our EOR Process
Free Initial Consultation
We align on hiring goals, role requirements, and team structure in the Philippines or Colombia, including salary benchmarks and timelines.
Sourcing & Initial Interview
KMC leverages its employer brand and recruitment network to attract and screen qualified candidates aligned with your requirements.
Contract Signing
Once candidates are approved, KMC prepares compliant employment contracts and finalizes compensation, benefits, and start dates.
Employee Onboarding & Set Up
We provide workspaces, IT infrastructure, and operational support—whether your team works remotely or from one of our managed offices.
Continuous KMC Support and Partnership
Our HR, admin, and IT teams remain available to support both you and your employees throughout the engagement.
Frequently Asked Questions (FAQs)
We have hired 7000+ Employees for over 500+ Companies
Why Companies Choose KMC Teams
• 7,000+ professionals supported
• 500+ client companies
• 86 percent retention rate
• Registered entities in the Philippines and Colombia
• Office, hybrid, and remote work options
• Structured employment oversight