Payroll in the Philippines is built from a statutory stack that sits on top of gross salary: social security (SSS), national health insurance (PhilHealth), the Pag-IBIG housing fund, withholding tax on compensation, and the mandatory 13th month pay every December. Each piece has its own rate schedule, salary bands and filing calendar, and several have been moving by law in recent years, so a US company employing Filipino staff, directly or through an employer of record, should budget from the current official schedules rather than last year's figures. This page covers the load-bearing pieces and where the official numbers live.
Social security: SSS under RA 11199
The Social Security Act of 2018 (Republic Act 11199) set a stepped schedule of contribution increases, raising the SSS rate by one point every two years until reaching 15% of the monthly salary credit in 2025, where the schedule ends. The employer carries the clear majority of the contribution: at the earlier 14% step the split was 9.5% employer and 4.5% employee, with the increases deliberately placed on the employer side, and SSS reporting noted that workers earning under 25,000 pesos a month were shielded from bearing the increase. For an employer, the practical points are that the SSS line is now at its statutory ceiling under current law, that it is calculated against salary credit bands rather than raw salary, and that the current contribution table on the SSS site is the only safe source for the exact peso amounts.
13th month pay: a wage, not a bonus
Presidential Decree 851 requires private sector employers to pay rank-and-file employees a 13th month pay equal to at least one twelfth of the basic salary earned in the calendar year, and the Department of Labor and Employment's annual guidance holds the deadline at 24 December with no exemptions or deferrals. Entitlement is broad: any rank-and-file employee who has worked at least one month in the year qualifies, regardless of position, employment status or how wages are paid, including employees who resigned or were terminated during the year, who receive a proportionate amount. The computation base is basic salary; unused leave conversions, overtime, premium and holiday pay and cost of living allowance are excluded unless company practice or agreement folds them in. Employers must also report compliance to DOLE through its online portal early in the new year.
The rest of the stack: PhilHealth, Pag-IBIG and withholding
Beyond SSS and the 13th month, employers contribute to PhilHealth, the national health insurer, and to the Pag-IBIG fund, which finances housing loans, both shared employer-employee contributions computed from monthly pay against published tables. On the tax side, the employer is a withholding agent: income tax on compensation is deducted each pay period under Bureau of Internal Revenue tables and remitted on the BIR's calendar, with annualization at year end so employees on a single employer typically have no separate filing. Rates and bands for all three move by regulation, so the reliable practice is the one the statutory sources model: pull the current table from the issuing agency at each change, not from a summary. A payroll provider's country guide is a convenience; the agency schedule is the authority.
What this means for a foreign employer
None of this stack is optional, and two pieces regularly surprise US buyers: the 13th month pay is a statutory wage cost that belongs in every annual cost model at one twelfth of basic salary, and the employer share of SSS and the other funds adds a real margin on top of gross pay at typical BPO and professional salary levels. A US company with no Philippine entity cannot simply run this itself; the choices are incorporating locally and registering with each agency, or engaging an employer of record whose Philippine entity already carries the registrations and runs the remittances. Whichever route, ask for a cost breakdown that itemizes each statutory line against the current official tables. Figures cited here come from the sources below; verify them there before budgeting, and treat nothing on this page as legal or tax advice.
Questions people ask about payroll in philippines
What is the SSS contribution rate?
Under RA 11199's schedule the rate reached 15% of the monthly salary credit in 2025, the final step in the law, with the employer paying the larger share; the exact peso amounts per salary band are in the current SSS contribution table.
Who is entitled to 13th month pay in the Philippines?
Rank-and-file private sector employees who worked at least one month in the calendar year, whatever their status or pay method, including those who left during the year, who get a proportionate share. It must be paid by 24 December.
How is 13th month pay computed?
At minimum one twelfth of total basic salary earned in the calendar year; overtime, premiums, holiday pay and unused leave conversions are excluded from the base unless agreement or company practice includes them.
Can a US company run Philippine payroll without a local entity?
No; the statutory registrations and remittances require a Philippine employer. Companies without an entity typically use an employer of record whose local entity employs the staff and runs the full contribution stack.