Hiring Filipino talent has never been more attractive. With a highly educated workforce, strong English proficiency, and competitive labor costs, the Philippines remains one of the top destinations for global companies building remote and offshore teams.
However, hiring in the Philippines is not as simple as issuing a contract and paying a salary. Philippine labor laws are employee-protective, compliance requirements are strict, and missteps can expose foreign employers to penalties, back wages, and labor disputes.
This is where an Employer of Record (EOR) becomes the smartest and safest solution in 2026.
In this guide, we explain what an Employer of Record is, how it works in the Philippines, why it is fully legal, and why businesses increasingly rely on Davao Accountants to hire Filipino employees compliantly, without setting up a local company.
What Is an Employer of Record (EOR)?
An Employer of Record is a third-party organization that legally employs workers on behalf of another company.
Under an EOR arrangement:
- The EOR is the legal employer under Philippine law
- The client company manages the day-to-day work and performance
- The EOR handles:
- Employment contracts
- Payroll and taxes
- Statutory benefits
- HR administration
- Compliance with labor laws
In short, you get the talent without the legal and administrative burden.
Why Employer of Record Services Are Growing in the Philippines in 2026
Several trends are accelerating EOR adoption in the Philippines:
1. Stricter Labor Enforcement
The Philippine government continues to strengthen labor inspections and compliance monitoring through the Department of Labor and Employment (DOLE), making informal or non-compliant hiring increasingly risky.
2. Crackdown on Worker Misclassification
Foreign companies hiring “independent contractors” who function as full-time employees face growing exposure to reclassification claims.
3. Remote-First Global Teams
US, Australian, UK, and EU companies are expanding in the Philippines without wanting the cost and rigidity of local incorporation.
4. Rising Expectations from Filipino Employees
Top Filipino professionals now expect full statutory benefits, job security, and lawful employment—not informal arrangements.
Is Employer of Record Legal in the Philippines?
Yes. Employer of Record arrangements are legal and widely used in the Philippines when structured correctly.
An EOR must comply with:
- The Philippine Labor Code
- DOLE regulations
- Registration with the Bureau of Internal Revenue (BIR)
- Mandatory enrollment with:
A compliant EOR, such as Davao Accountants, becomes the registered employer, issues DOLE-compliant contracts, remits taxes, and ensures that all benefits are properly paid.
How Employer of Record Works in the Philippines
Here is how the EOR process typically works in 2026:
Step 1: Talent Selection
You recruit or select your Filipino employee (or Davao Accountants can assist with recruitment).
Step 2: Employment via EOR
Davao Accountants hires the employee as the legal employer and issues a compliant employment contract.
Step 3: Payroll and Benefits Administration
We process:
- Monthly payroll
- Withholding taxes
- Statutory contributions
- 13th-month pay accrual
Step 4: Day-to-Day Management by Client
You retain full control over:
- Tasks
- KPIs
- Work schedule
- Performance reviews
Step 5: Ongoing Compliance
Davao Accountants ensures continued compliance with labor laws, reporting, and HR documentation.
Why Foreign Companies Choose an Employer of Record Instead of Incorporating
1. No Need to Set Up a Philippine Company
Incorporation can take months and requires:
- Capitalization
- Resident directors/officers
- Ongoing corporate filings
With an EOR, you can hire in weeks, not months.
2. Lower Cost and Faster Market Entry
EOR eliminates:
- Legal setup costs
- Office requirements
- Corporate secretarial overhead
3. Reduced Legal and Labor Risk
Employment disputes, DOLE inspections, and termination compliance are handled by the EOR.
4. Scalability and Flexibility
Hire one employee or scale to 50+ without changing your legal structure.
Key Employment Benefits Covered Under an EOR in the Philippines
A compliant Employer of Record must provide all mandatory benefits, including:
- Statutory minimum wage compliance
- Overtime and holiday pay
- Night shift differential (where applicable)
- 13th-month pay
- SSS, PhilHealth, and Pag-IBIG contributions
- Leaves required by law (service incentive leave, special leaves, etc.)
Davao Accountants ensures accurate computation and timely remittance of all benefits.
Common Hiring Mistakes Foreign Employers Make (and How EOR Solves Them)
❌ Misclassifying Employees as Contractors
✅ EOR provides proper employee classification
❌ No statutory benefits
✅ EOR enrolls employees in all government agencies
❌ Illegal termination
✅ EOR ensures due process and labor-law compliance
❌ No local HR support
✅ EOR provides HR, payroll, and compliance experts
Why Choose Davao Accountants as Your Employer of Record in the Philippines
Davao Accountants is not just an EOR provider: we are CPAs and lawyers specializing in Philippine labor, tax, and corporate compliance.
What Sets Us Apart:
- ✅ Lawyer-led EOR structure
- ✅ CPA-managed payroll and tax compliance
- ✅ Full DOLE, BIR, and statutory registration
- ✅ Transparent pricing (no hidden fees)
- ✅ Strong presence in Davao City and nationwide coverage
- ✅ Ideal for US, AU, UK, and EU companies
We design EOR solutions that are defensible, compliant, and scalable.
Employer of Record vs Direct Hiring vs BPO (Quick Comparison)
| Model | Legal Risk | Setup Time | Flexibility |
|---|---|---|---|
| Direct Hiring (No Entity) | ❌ High | Fast | Medium |
| BPO / Staffing | ⚠️ Medium | Fast | Low |
| Employer of Record | ✅ Low | Fast | High |
For companies prioritizing compliance and control, EOR is the clear winner.
Who Should Use an Employer of Record in the Philippines?
EOR is ideal for:
- Foreign startups hiring their first Filipino employee
- SMEs expanding remote teams
- Tech, finance, marketing, and professional services firms
- Companies testing the Philippine market before incorporation
- Businesses transitioning from contractors to employees
Final Thoughts: The Smartest Way to Hire in the Philippines in 2026
The Philippine talent market remains world-class, but compliance is non-negotiable.
An Employer of Record allows you to:
- Hire legally
- Scale quickly
- Reduce risk
- Focus on growth
With Davao Accountants as your EOR partner, you gain peace of mind, regulatory protection, and a trusted local team that understands both Philippine law and global business realities.
Ready to Hire in the Philippines?
📩 Talk to Davao Accountants today and discover how our Employer of Record services can help you build a compliant, scalable Philippine team in 2026.
