Operating a Business

Philippines (the): Operating a Business

In this page: Legal Forms of Companies | The Active Population in Figures | Working Conditions | The Cost of Labour | Management of Human Resources

Legal Forms of Companies

The Corporation is a joint-stock company.: Number of partners: Minimum 5 shareholders, at least 3 shareholders must be Philippine.
Capital (max/min): PHP 5,000.
Click here for details.
Shareholders and liability: Liability is limited to the amount contributed.
Sole Partnership is a single-member company: Number of partners: Only 1 person
Capital (max/min): No minimum capital.
Shareholders and liability: Liability is unlimited.
General Partnership: Number of partners: Minimum 2 partners
Capital (max/min): PHP 3,000.
Shareholders and liability: Liability is unlimited.
Limited Partnership: Number of partners: Minimum 2 partners
Capital (max/min): PHP 3,000.
Shareholders and liability: Liability is limited to the amount contributed.

Business Setup Procedures

Setting Up a Company	Philippines (the)	East Asia & Pacific
Procedures (number)	13.00	7.25
Time (days)	33.00	29.73

Source: Doing Business - Latest available data.

The Competent Organisation: The Securities and Exchange Commission (SEC).
For Further Information: Consult Doing Business Website, to know about procedures to start a Business in Philippines.
Department of Trade and Industry (DTI

Financial Information Directories

Dun & Bradstreet - Worldwide directory with financial information on businesses

Recovery Procedures

Principle: The recovery of companies in difficulty allows them to maintain their activities and return to a viable situation. The Securities Regulation Code specifies that regular tribunals are competent.
Minimum Debt-to-Capital Ratio Triggering Liquidation: No legal minimum.
Bankruptcy Laws: Legislation on bankruptcy includes the Insolvency Law and many regulations and decrees, which make up an out of date and sometimes incoherent framework. In July 2010, the Philippine Congress passed a new bankruptcy and insolvency law that provides a more predictable framework for the rehabilitation and liquidation of distressed companies.
Reorganization and Rehabilitation Laws: The Rules on Corporate Rehabilitation define the conditions for restructuring.

The Active Population in Figures

	2018	2019	2020
Labour Force	43,868,087	45,122,827	43,719,193

Source: International Labour Organization, ILOSTAT database

	2017	2018	2019
Total activity rate	61.87%	61.77%	62.30%
Men activity rate	76.12%	75.38%	75.24%
Women activity rate	47.39%	47.94%	49.13%

Source: International Labour Organization, ILOSTAT database

Employed Persons, by Occupation (% of Total Labour Force)	2015
Agriculture, forestry and fishing	29.2%
Wholesale and retail trade; repair of motor vehicles and motorcycles	18.9%
Manufacturing	8.3%
Transportation and storage	7.2%
Construction	7.0%
Public administration and defence; compulsory social security	5.4%
Accommodation and food service activities	4.4%
Education	3.3%
Administrative and support service activities	2.9%
Financial and insurance activities	1.3%
Human health and social work activities	1.3%
Information and communication	1.0%
Arts, entertainment and recreation	0.9%
Mining and quarrying	0.6%
Professional, scientific and technical activities	0.5%
Real estate activities	0.5%
Electricity, gas, steam and air conditioning supply	0.2%
Water supply; sewerage, waste management and remediation activities	0.1%

For Further Statistics: Philippine Labor Market Information.
For Further Information About the Labour Market: Department of Labor and Employment

Working Conditions

Opening Hours
Legal Weekly Duration: 8 hours/day, 40 or 48 hours/week.
Night Hours: Between 10 pm and 6 am the next day.

Working Rest Day: One day of rest every seven consecutive days worked.
Paid Annual Vacation: 5 days of paid vacation a year after one year's work.
Retirement Age: 60
Child Labour and Minimum Age For Employment: Work is forbidden under 15 years of age, unless it is carried out in the family and does not interfere with school activities.
Informal Labour Market: The low official unemployment rate does not take into account the extent of under-employment and the informal sector.

The Cost of Labour

Pay

Minimum Wage: The minimum wage varies according to the type of activity. The full list from the National Wages and Productivity Commission can be consulted here.
Average Wage: Gross average monthly wage : PHP 16,486 (source: PSA, 2020, latest available data, selected occupations).
Other Forms of Pay
Pay For Overtime: Overtime is paid 125% of the normal hourly rate.
Pay For Rest Days Worked: Work on a public holiday is paid 130% of the normal remuneration, or 150% if this holiday was supposed to be a rest day.
Pay For Night Hours: Hours of night work (between 10 pm and 6 am) must be paid at least 10% more than the normal rate.
Pay For Overtime at Night: Overtime at night is paid 110% of the hourly overtime rate.

Social Security Costs

The Areas Covered: Sickness, disability, maternity, retirement, death and funerals.
Contributions: Contributions Paid By the Employer: Employers’ maximum contribution for each employee is PHP 2,155 per month for Social Security System (SSS), varying according to the income class of the employee.
For Home Development Mutual Fund (HDMF) and Philippine Health Corporation (PHIC), the maximum monthly deductions are PHP 100 and PHP 900, respectively.
Contributions Paid By the Employee: Employees are required to make monthly contributions to the Social Security System (SSS) based on their salary bracket, ranging from PHP 135 to PHP 1,125.

They are also required to make monthly contributions to Philippine Health Corporation (PHIC) and Home Development Mutual Fund (HDMF) based on their salary bracket, ranging from PHP 150 to PHP 900 for PHIC and PHP 100 (where monthly compensation is at least PHP 5,000) for HDM.
Competent Organization: Philippine Social Security System
Philippine Health Insurance Corporation

Management of Human Resources

Recruitment

Method of Recruitment: Internet is used more and more, and an interview is generally planned.
Recruitment Agencies: A list of recruitment agencies is available on PhilRecruit Online.
Recruitment Websites: Better Team

The Contract

Type of Contract: Employment contracts are regulated by legal clauses and to a lesser degree by collective agreements and individual negotiations.
The terms of employment contracts are extremely rigid.

Breach of Contracts

Retirement: Retirement age appears in the collective agreement or the hiring contract.
Dismissals: Dismissal can be decided if it is justified by: serious misconduct or a refusal to obey the orders of a superior, growing habitual negligence towards the employee's responsibilities, fraud or voluntary breach of the established contract of trust, a crime or offense against one's employer, his family or his representatives. Redundancy is also allowed (staff restrictions, etc.).
Other Possible Methods: A contract can be terminated if it arrives at term, if the employee resigns, or retires.
Labour Laws: Labor Code
Consult Doing Business Website, to obtain a summary of the labor regulations that apply to local entreprises.

Dispute Settlement

Conciliation Process

Cases of Dispute: Not observing the minimum wage, not paying social contributions, or bonuses and overtime, dangerous working conditions, forced labor
Legal Framework: The Constitution and the Philippine Labor Code.
Procedure: The parties can have recourse to mediation, conciliation or arbitration provided for in the Labor Code, or submit a written request for intervention (AIDA) to the office of the Secretary of Labor and Employment.

Judicial Structures

Legal Framework: The Constitution (en anglais) and the Philippine Labor Code.
Competent Legal Body: The National Labor Relations Commission, attached to the Ministry of Labor

Social Partners

Social Dialogue and Involvement of Social Partners: The two main groups of trade unions are TUCP and FFW. They are affiliated to the international Confederation of Free Trade Unions (ICFTU) and to the Worldwide Confederation of Labor ( WCL).
In 2012, there were 135 registered labor federations and 16,647 private sector unions. The 1.38 million union members represented approximately 3.4 percent of the total workforce of 40.4 million. Mainstream union federations typically enjoy good working relationships with employers.
Unionisation Rate: 3,4 % of workers are unionized.
Labour Unions: Federation of Free Workers
Kilusang Mayo Uno
Regulation Bodies: Bureau of Labor and Employment Statistics (BLES)
Department of Labor and Employment

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