Most foreign employers budget for the VA’s rate and stop there. Then compliance questions come up — taxes, government contributions, contract templates, maybe an employment setup — and the real cost turns out to be 20–40% higher than expected.
Here’s an honest breakdown of what legal hiring actually costs, by setup type.
Setup 1: Independent Contractor (Most Common Starting Point)
Base cost: just the contractor’s agreed monthly rate.
Additional one-time costs:
- Contractor Agreement drafting or template: ₱0 (if DIY with a template) to ₱5,000 (if done with a lawyer)
- BIR registration for contractor: ₱500–₱2,000 (their cost, but you may want to absorb it to speed things up)
Optional ongoing add-ons (per contractor per month):
- SSS equivalent contributions: ~₱4,200
- PhilHealth equivalent: ~₱1,350
- Pag-IBIG equivalent: ~₱400
- Tax gross-up (8% CWT): ~₱2,608
If you offer none of the above: zero additional cost. If you offer the full package: budget ~28% above the base rate.
Setup 2: Employer of Record (EOR)
Ongoing monthly cost per employee (on top of their salary):
- EOR service fee: typically ₱8,000–₱20,000/month depending on the provider and salary level
- This covers employer SSS, PhilHealth, Pag-IBIG shares, BIR withholding, 13th month accrual, and HR admin
There’s usually no setup fee, but some EOR providers charge a one-time onboarding fee of ₱3,000–₱8,000 per employee.
Best for: full-time hires where you want zero in-house compliance work. Total cost per employee is typically 15–25% above base salary.
Setup 3: Domestic Corporation (OPC or Regular Corp)
One-time setup costs:
- SEC registration and notarial fees: ₱10,000–₱30,000
- BIR registration: ₱5,000–₱15,000
- Mayor’s/Business Permit: ₱5,000–₱20,000 depending on LGU
- Professional fees (lawyer/accountant): ₱20,000–₱50,000
- Total setup estimate: ₱40,000–₱115,000
Ongoing annual compliance costs:
- Bookkeeping / payroll service: ₱5,000–₱15,000/month
- Annual SEC filings (GIS + AFS): ₱10,000–₱30,000/year
- BIR filings (monthly, quarterly, annual): included in bookkeeping service
The Hidden Cost Most Employers Miss: Non-Compliance
What’s more expensive than setting up correctly? Getting it wrong.
A single misclassification case before DOLE or the NLRC can result in back payment of statutory benefits going back to the start of the working relationship — often 2–5 years. Add SSS, PhilHealth, and Pag-IBIG employer share penalties, 13th month pay, and legal fees, and a ₱30,000/month “contractor” arrangement can turn into a ₱500,000+ liability overnight.
The cost of getting a proper contract and setup done correctly is a fraction of what a single dispute costs. Don’t skip it.
🧰 Ready to Get Compliant?
The HappyHive Remote Team Compliance Kit gives you every document, checklist, and template you need — starting from ₱15,000.