A Guide on How to Hire Employees in the Philippines

The Philippines emerges as a strategic location for businesses primarily due to its fast-growing economy, a blend of Eastern and Western influence, and lucrative labour force. 

Renowned for their exceptional communication skills, strong work ethic, and adaptability, Filipino employees bring significant value to any enterprise. They are not only proficient in English but also culturally adaptable, making them ideal for diverse international teams. 

However, the process of hiring in the Philippines, while rewarding, is far from straightforward. Companies must work through meticulous background checks and compliance with local employment laws to ensure a successful hiring process.

Who Can Directly Hire Employees in the Philippines?

In the Philippines, both local companies and foreign entities with a legal business presence are eligible to directly hire employees. 

Establishing a business in the country typically involves registering with the Philippine Securities and Exchange Commission (SEC) for corporations, or the Department of Trade and Industry (DTI) for sole proprietorships. They must also register with the Bureau of Internal Revenue (BIR) to facilitate taxes. 

Once registered, businesses can fully engage in hiring practices - as long as they follow the Employment Laws. You can also learn more about Company Registration in the Philippines here. 

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Should You Hire a Recruitment Agency in the Philippines?

Some business entities in the country choose to partner with a recruitment agency to leverage their expertise in sourcing and screening candidates. You may need a recruitment agency in the Philippines when your organisation: 

• Lacks internal HR resources
• Needs to fill positions quickly
• Requires specialised talent
• Faces high turnover rates
• Wants to ensure compliance with local hiring laws

How to Hire in the Philippines: Other Options

If there’s still no plan to set up a business in the Philippines, employers still have two other options if they want to bring in Filipino employees. These are to:

• Use an Employer of Record 
• Hire independent contractors 

Using an Employer of Record

An Employer of Record (EOR) is a service used by companies to simplify the process of employing remote staff legally in the Philippines without having to establish a legal entity in the country. 

When you partner with an EOR, they become your employee’s registered employer on paper, hence the name “employer of record.” However, the day-to-day management and operational control of the workforce remain your responsibility. 

How do you hire employees using an EOR? Once you’ve chosen an EOR to partner with, you simply need to coordinate with them. Depending on the terms you decide on, they would take care of the recruitment, hiring, and onboarding process. 

EORs can:

• Ensure all employment practices comply with local laws, helping you avoid legal pitfalls.
• Administer payroll and dispenses employee benefits, ensuring accurate and timely payments.
• Manage tax registration, deductions, and submissions, mitigating the risk of non-compliance penalties.
• Assist with obtaining necessary visas and work permits in the Philippines.

Important: 

It is not the EOR’s responsibility to integrate the employees within the organisation’s culture, hence, you must still pay special attention to onboarding although the EOR can facilitate part of it. 

Read our guides on Effective Employee Onboarding and Must-Have Activities for Onboarding. Are you onboarding employees remotely? Here’s a quick guide for you. 

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Hiring Independent Contractors

Independent contractors are self-employed individuals or entities contracted to perform work for another entity as a non-employee. This means the organisation’s responsibilities to them don’t go beyond what the contract entails.  

Hiring independent contractors allows for flexible workforce management and can be more cost-effective than employing full-time staff, as it reduces overhead related to benefits and compensation and payroll taxes.

Note that misclassifying independent contractors (eg. treating them as employees but paying them as contractors) can have legal implications. 

How to Hire in the Philippines: Understanding the Process

Whether you are directly hiring employees (even via recruitment agency), using an employer of record, or hiring independent contractors, there are key steps involved in the hiring process. These are to:

Below is a more detailed explanation of each step:

Comply with legal requirements

The first, and perhaps most important step on how to hire, is to comply with the legal requirements. 

If you’re establishing an entity (eg. subsidiary), it’s crucial to: 

• Register with the appropriate agencies. 
• Adhere to the national guidelines on minimum wage, statutory benefits, and employment conditions to ensure fair treatment of employees. 
• Comply with payroll taxes and reporting requirements, ensuring all deductions and contributions (e.g., social security, health insurance). Learn more about Setting Up a Payroll here. 

If you’re hiring independent contractors, you need to ensure that the contractual agreement clearly defines the scope of work, payment terms, and other obligations to prevent legal issues related to misclassification.

Identify your organisation needs

Another important step on how to hire is to identify the needs of your organisation. Here are some questions to ask that can help identify these needs:

• Where are the skill gaps in our current team? Determine which areas require additional expertise or support to enhance team performance. Remember that the goal is not to fill desks, but the needs. 
• What are the specific roles and responsibilities we need to fill? Clarify the skills, experience, and qualifications necessary for each position.
• How do our hiring needs align with our long-term business goals? Ensure that the roles you are filling support your strategic objectives, such as expansion, product development, or market penetration.
• What are our projections for future growth? Consider how potential hires might grow or adapt within the organisation as it evolves.
• What type of cultural fit are we looking for? Identify the personality traits and values that align with your organisation’s culture to enhance team cohesion and employee satisfaction.

These questions help you form a comprehensive view of your hiring needs, ensuring that your recruitment efforts are both strategic and effective.

Craft a job description

Now that you have an idea on what your organisation needs for the hiring and recruitment process, it’s time to write a detailed job description. Learn more about the components and best practices in writing a job description here. 

Attract job seekers

The next step on how to hire is to attract job seekers, particularly top talents that would be assets to your company. Here are some strategies you can incorporate in your hiring and recruitment process:

• Leverage Social Media: Use platforms like LinkedIn, Facebook, and Instagram to showcase company culture and post job opportunities. Learn more about social media recruiting here. 
• Optimise Job Listings: Create clear, compelling job listings that detail the roles, benefits, and growth opportunities. Remember to go back to your job description. 
• Engage in Industry Networking: Participate in industry events and online forums to connect with potential candidates and promote your brand.

It’s also important to highlight your competitive compensation and benefits package. Nowadays Filipino employees not only pay attention to a high basic salary, they are also seeking benefits, such as health insurance coverage, remote work arrangement, and other company perks. For this reason, experts recognise that companies must expand what they offer to attract top talents. 

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Screen and evaluate candidates

The job market in the Philippines is highly competitive, so once you’ve posted your job details in the right channels, expect to receive huge numbers of applications. In fact, in recent years there's been a surge in the country’s hiring activities. 

For this reason, your organisation needs a solid strategy to narrow down the candidate pool to eventually hire the talent best suited for the role. Hence you need to screen and evaluate the talents. 

In the Philippines, usually, the first step is to inspect the key documents the candidates submitted during the application process. Are their details consistent with the documents? Do they satisfy your job requirements? Questions like these further help you choose the candidates who would advance to the next stage of the hiring process. Of course, don’t forget to verify the authenticity of their documents. Learn more about how to conduct this verification here. 

Besides checking the papers, employers can also screen and evaluate candidates through interviews and skills tests. 

Conduct pre-employment background checks 

Background checks in the Philippines are typically conducted once a candidate has passed the initial interview stages and before a formal job offer is made. In many cases, too, employers conduct them once they have their top 5 or 3 candidates for one role.  

The most common background checks conducted include:

• Criminal Records Check
• Employment History Check 
• Reference Checks 
• Education Verification
• Professional Qualifications Check
• Credit Checks
• Social Media Checks 

What red flags can employers identify with background screening?

With the above checks, you may identify the following red flags. These might stop you from hiring a candidate:

• Prior convictions, ongoing legal issues.
• Inconsistencies in employment dates, frequent job changes, misrepresentation of position or responsibilities.
• Negative feedback, lack of specificity or enthusiasm from referees.
• False educational claims, lack of accreditation.
• Invalid professional licences, misrepresentation of certifications.
• Poor credit history, bankruptcies.
• Inappropriate behaviour, discrepancies with official information, indications of  unreliable character.

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How do employers conduct background checks?

Some larger organisations might have the capabilities to conduct these checks in-house, but in many cases, employers outsource background checks to specialised agencies, such as Veremark, that have the resources and legal access to conduct thorough screenings. For more information, read Everything Your Need to Know About Background Checks in the Philippines. 

Why is it imperative to conduct the checks?

Skipping on conducting background checks can lead to significant risks, such as hiring individuals who may falsify their qualifications or have a problematic history, jeopardising workplace safety and integrity. Comprehensive checks are crucial to validate the trustworthiness and reliability of potential employees, thus safeguarding your organisation against fraud and legal issues.

Make the job offer

Once you’ve screened and evaluated the candidate, and even before you receive the results of background screening, the next step on how to hire is to make the offer. Remember the following steps:

• Prepare and present the offer: Draft a detailed offer letter that includes job title, salary, benefits, work schedule, and other employment terms, and deliver it personally, whether by phone, video call, or email. This approach allows for immediate clarification and discussion, and shows your commitment to the candidate.
• Respond to counteroffers: Be prepared for the candidate to negotiate aspects of the offer, such as salary or benefits. Have clear policies on what is negotiable and respond promptly and diplomatically to any counteroffers, maintaining a positive and respectful tone throughout.
• If needed, make the offer conditional: Remember that you can make the offer conditional, contingent upon the successful completion of background checks. However, clearly state this in the offer letter, specifying which checks are pending and the conditions for employment.

By carefully managing these steps, you ensure a professional and effective finalisation of the hiring process, securing top talent in alignment with the norms and expectations of the Philippine job market.

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The Importance of an Effective Hiring Process

An effective hiring process is a streamlined and strategic approach to recruitment that ensures the timely acquisition of high-quality candidates while enhancing candidate experience and minimising hiring risks. Having an effective hiring process helps in:

• Securing Top Talent: Streamlining the recruitment process ensures that businesses do not miss out on exceptional candidates who can help drive exponential growth.
• Avoiding Costly Mistakes: A structured hiring approach minimises the risk of bad hires, which can be expensive in terms of both financial resources and negative impacts on organisational morale.
• Enhancing Candidate Experience: A well-defined recruitment strategy improves the overall candidate experience, reflecting positively on the company’s brand and attracting more high-quality applicants.

Ultimately, investing in a robust hiring process aids in building a reliable, skilled workforce that drives business success and sustainability.

Transform Your Hiring Process with Veremark

Veremark transforms hiring in the Philippines with its comprehensive background check packages, ensuring you have all the information needed for informed decisions. Our scalable solutions cater to businesses of all sizes, eliminating the need for long-term contracts and providing flexibility in your hiring process. Fully compliant with the Data Protection Act, Veremark guarantees that personal data is handled legally and securely, protecting your company and building candidate trust. With fast turnaround times, you can quickly identify and onboard the best talent, minimising workflow disruptions.

Learn more about our packages here. 

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