How to Convert Contractors to Employees in the Philippines: A Complete Guide
Table of Contents
Key Takeaways:
- Clear distinction between contractors and employees under Philippine law
- Key steps to convert contractors into employees
- Employer of Record (EoR) solutions for companies without a local entity
We’re here to help you on your journey to hire, manage and pay.
Without a Local Entity: Using an Employer of Record (EoR)
If your business does not have a legal entity in the Philippines, converting contractors to employees can seem like a complex and time-consuming task. This is where an Employer of Record (EoR) comes in as an ideal solution for businesses looking to expand without establishing a local entity.
How an Employer of Record Works
An Employer of Record acts as the legal employer for your workers in the Philippines, managing payroll, taxes, social security contributions, and compliance with local labor laws on your behalf. While the EoR handles these administrative tasks, your company maintains full control over the day-to-day operations and responsibilities of the employees.
Benefits of Using an EoR in the Philippines
- Faster Onboarding: An EoR can help your business convert contractors to employees quickly, eliminating the need to navigate the lengthy process of setting up a local entity.
- Compliance with Local Laws: The EoR ensures that all employees are fully compliant with Philippine labor laws, including payroll, taxes, and benefits.
- Reduced Administrative Burden: By outsourcing employment management to an EoR, your business can focus on core operations without the hassle of managing payroll and benefits compliance.
- Risk Mitigation: Using an EoR reduces the legal and financial risks associated with employee misclassification, ensuring that your business complies with all local regulations.
For companies without a presence in the Philippines, partnering with an EoR offers a practical and compliant way to convert contractors into full-time employees, allowing for seamless business expansion.
How AYP Can Help
AYP’s Employer of Record (EoR) services in the Philippines provide businesses with a comprehensive and compliant solution for converting contractors to employees. Our EoR services include:
- Managing payroll and taxes in accordance with Philippine labor laws
- Handling social security contributions (SSS, PhilHealth, and Pag-IBIG)
- Ensuring that employees receive all statutory benefits, including paid leave and 13th-month pay
- Mitigating the risk of employee misclassification by ensuring full compliance with local employment regulations
Whether you have an existing local entity or are looking to expand your operations without one, AYP’s EoR services help you streamline the process of converting contractors to employees, enabling you to focus on growing your business in the Philippines.
