If you’ve started researching how to legally hire Filipino remote workers, you’ve probably encountered the term “Employer of Record” — often marketed as the easiest way to hire internationally without setting up a local entity.
Here’s an honest look at what an EOR actually does, when it makes sense, and when it’s overkill for your situation.
What an EOR Does
An Employer of Record is a Philippine-registered company that becomes the legal employer of your worker on paper. You direct the day-to-day work; the EOR handles everything on the employment side:
- Issues the employment contract under their Philippine entity
- Registers the employee with SSS, PhilHealth, and Pag-IBIG
- Runs monthly payroll with all statutory deductions and employer contributions
- Remits income taxes to the BIR
- Provides payslips, leave tracking, and HR record-keeping
- Files the DOLE Establishment Report
- Handles separation pay and due process if you need to let someone go
From your end, you sign a commercial agreement with the EOR, define the job scope, set the salary, and pay a consolidated monthly invoice (salary + EOR service fee).
What an EOR Costs
EOR fees in the Philippines typically run ₱8,000–₱20,000 per employee per month on top of the employee’s salary. Some providers structure it as a percentage (often 15–25% of the monthly salary package). Most include all statutory benefits in the fee; some charge 13th month separately.
You’ll also usually pay a one-time onboarding fee of ₱3,000–₱8,000 per employee.
When an EOR Makes Sense
- You want to hire full-time workers and provide proper employment benefits without the complexity of setting up a Philippine company
- You need to be operational quickly — EOR can onboard a new employee in 3–7 business days
- You’re hiring 1–10 employees and the monthly fee is cheaper than the cost of maintaining a local entity
- You’ve had a contractor-to-employee situation flagged and want to clean it up fast
When an EOR Is Overkill
- You need part-time help or project-based work — a contractor agreement is simpler and cheaper
- Your workers genuinely prefer to be self-employed and manage their own taxes — many experienced Filipino VAs do
- You’re scaling to 15+ employees — at that point, setting up your own OPC or domestic corporation becomes cost-competitive
EOR vs. Contractor: A Simple Decision Guide
Ask yourself: do I need this person to have employment protections and full statutory benefits? If yes, and you don’t want to set up a Philippine company — EOR.
If your VA is experienced, prefers to work as a freelancer, and you can structure the engagement as genuinely project-based output work — a contractor agreement with optional voluntary contribution allowances is simpler and gives the VA more take-home pay.
There’s no one-size-fits-all. The right structure depends on the role, the relationship, and your risk tolerance.
🧰 Ready to Get Compliant?
The HappyHive Remote Team Compliance Kit gives you every document, checklist, and template you need — starting from ₱15,000.