Payroll & Statutory Contributions in the Philippines (2026)

Hiring in the Philippines means taking on a set of statutory obligations that go well beyond salary. Philippine law requires employers to enroll employees in three mandatory benefit schemes and to withhold and remit income tax on their behalf. For foreign-owned companies new to the market, understanding the full cost of employment is essential for accurate budgeting and legal compliance.

The four employer obligations

1. SSS (Social Security System)

The SSS provides social insurance — retirement, disability, sickness, maternity, and death benefits — for private-sector employees.

2026 contribution rate: 15% of Monthly Salary Credit (MSC)

• Employer share: 10%
• Employee share: 5%
• MSC range: PHP 5,000 to PHP 35,000

At the maximum MSC (PHP 35,000), the employer’s monthly SSS contribution is PHP 3,500 plus a PHP 10–30 Employees’ Compensation (EC) contribution. At the minimum MSC (PHP 5,000), the employer’s share is PHP 500 plus EC. Employers must register with the SSS and obtain an employer ID before the first payroll run.

2. PhilHealth (Philippine Health Insurance Corporation)

PhilHealth funds the national health insurance programme.

2026 premium rate: 5% of basic monthly salary

• Employer share: 2.5%
• Employee share: 2.5%
• Salary floor: PHP 10,000 (minimum monthly premium: PHP 500 total / PHP 250 each)
• Salary ceiling: PHP 100,000 (maximum monthly premium: PHP 5,000 total / PHP 2,500 each)

3. Pag-IBIG / HDMF (Home Development Mutual Fund)

Pag-IBIG provides housing and provident fund benefits.

2026 contribution rate: 2% of monthly compensation (employer and employee each)

• Monthly compensation ceiling for contribution purposes: PHP 10,000
• Maximum contribution: PHP 200 per month each (employer and employee)
• Employees earning above PHP 10,000 may voluntarily contribute more, but the employer’s mandatory match is capped

4. Withholding tax on compensation

Employers must withhold income tax from employee salaries and remit it to the BIR monthly on behalf of each employee. The amount is computed using the BIR withholding tax tables, applied to the employee’s taxable income after mandatory deductions:

Taxable income = Gross pay − (SSS + PhilHealth + Pag-IBIG contributions) − non-taxable allowances

The Philippines uses a progressive income tax schedule under the TRAIN Law (as amended), with rates ranging from 0% on income up to PHP 250,000 per year to 35% on income above PHP 8,000,000. The 13th month pay and certain de minimis benefits up to statutory thresholds are tax-exempt.

Payroll cycle and remittance deadlines

Philippine employees are typically paid semi-monthly (twice a month). Employer statutory remittances follow separate schedules:

• SSS: remittance due on the last day of the month following the applicable period (exact date varies by employer number per the SSS schedule)
• PhilHealth: due monthly, generally aligned with the SSS schedule
• Pag-IBIG: due by the 10th or 15th of the following month depending on employer classification
• BIR withholding tax on compensation (Form 1601-C): due on the 10th of the following month (eFPS filers) or 15th (others)

Late remittances attract penalties and interest. Company officers can be held personally liable for unremitted contributions under SSS and Pag-IBIG law.

Employer registration checklist

Before running your first payroll, a new Philippine company must:

1. Register with the SSS (obtain Employer ID)
2. Register with PhilHealth (obtain PhilHealth Employer Number)
3. Register with Pag-IBIG/HDMF (obtain Employer ID)
4. Register employees with each agency within 30 days of hiring
5. Set up BIR withholding tax obligations under the company’s existing COR (tax type 1601-C)

Missing any of these registrations before the first payroll creates retroactive liability.

Minimum wage

Minimum wage rates in the Philippines are set by region, not nationally. For Metro Manila (National Capital Region), the current daily minimum wage is set by the Regional Tripartite Wages and Productivity Board — confirm the current rate at DOLE or through your legal advisor, as it is subject to periodic adjustment. Mandatory pay items also include the 13th month pay (equal to one month’s basic salary, payable by December 24 each year) for all rank-and-file employees who have worked at least one month.

How Chamberlain helps

Payroll compliance is one of the most common areas where foreign-owned companies accumulate penalties — usually through late remittances or incorrect contribution amounts rather than deliberate non-compliance. Our corporate compliance service can be extended to cover payroll setup and remittance coordination. See our pricing or book a consultation to discuss what your team headcount requires.