Employment Contract Philippines Foreign Employer: Rules Filipino Workers Must Know

The Philippine rules on employment contracts with a foreign employer depend on where the Filipino will actually work. If the worker is hired in the Philippines by a foreign company but will render services locally, the arrangement is generally governed by domestic labor law and the employer may need an employment permit. If the worker will be deployed abroad, the Labor Code and its implementing rules require that hiring pass through authorized recruiters, and that the written contract meet minimum standards. Direct hiring by a foreign employer is restricted, and the contract must not fall below the protections set by Philippine labor and social legislation.

Who may hire a Filipino worker for a foreign employer

Under the Omnibus Rules Implementing the Labor Code, no employer may hire a Filipino worker for overseas employment except through the persons or entities authorized by law, such as private employment agencies, private recruitment entities, shipping or manning agents, or as authorized by the Secretary of Labor. This is the ban on direct hiring.

The exemption is narrow. Direct hiring by members of the diplomatic service, officials and employees of international organizations, and such other employers as may be authorized by the Secretary is exempt, and those hirings are processed by the Overseas Employment Development Board.

For local recruitment and placement, only private employment agencies, private recruitment entities, shipping or manning agents, and other entities authorized by the Secretary may participate. Only Filipino citizens, or corporations or partnerships at least seventy-five percent (75%) of the authorized and voting capital stock of which is owned and controlled by Filipino citizens, may engage in recruitment and placement.

The contract must meet minimum standards

The Omnibus Rules provide that employment contracts shall in no case provide for terms of employment below the standards established by the Department, which shall not be below the basic requirements of Philippine labor and social legislation or practices.

The contract should include guaranteed wages for regular working hours and overtime pay for excess hours, free transportation from the point of hire to the site of employment and back, adequate board and lodging, free emergency medical and dental treatment, just causes for termination, workmen's compensation benefits and war hazard protection including life and accident insurance, arrangements for the transport of the worker's remains and property in case of death, and remittance of salaries and allowances to beneficiaries through the Philippine banking system.

Every private employment agency must submit the master employment contract to the Bureau for evaluation and approval. The Bureau adopts a standard format for the service agreement and employment contract, and all employers must adopt the model contract for the hiring of overseas workers.

If the foreign employer hires an alien to work in the Philippines

The reverse situation is also regulated. Under the Labor Code, any alien seeking admission to the Philippines for employment, and any domestic or foreign employer who desires to engage an alien for employment in the Philippines, must obtain an employment permit from the Department of Labor.

The permit may be issued to the nonresident alien or to the applicant employer after a determination that no person in the Philippines is competent, able, and willing at the time of application to perform the services for which the alien is desired. Once a permit is issued, the alien may not transfer to another job or change employer without the prior approval of the Secretary of Labor.

Fees, remittances, and prohibited practices

The Labor Code makes it mandatory for contract workers abroad to remit a portion of their foreign exchange earnings to their families, dependents, or beneficiaries under rules prescribed by the Secretary of Labor.

On fees, an applicant for employment assistance cannot be charged any fee until employment has been obtained through the agency's efforts or the worker has actually commenced employment, and every payment must be covered by an approved receipt. The Omnibus Rules also prohibit charging other fees against the worker, and provide that processing fees and welfare fund contributions shall in no case be charged to the worker, except the contributory Seafarers' Welfare Fund.

The Labor Code lists prohibited practices, including charging amounts beyond the allowable schedule, furnishing false notices or documents in relation to recruitment or employment, and substituting or altering employment contracts approved by the Department without its approval.

Frequently asked questions

Can a foreign employer hire a Filipino directly without an agency? Generally no, for overseas employment. The Omnibus Rules impose a ban on direct hiring, with limited exemptions such as members of the diplomatic service, officials and employees of international organizations, and employers authorized by the Secretary of Labor.

What must an overseas employment contract contain? It must meet the minimum standards set by the Department and include items such as guaranteed wages and overtime pay, free transportation, board and lodging, medical treatment, just causes for termination, insurance coverage, and remittance of salaries through the Philippine banking system.

Can a foreign company employ an alien in the Philippines? Yes, but an employment permit from the Department of Labor is required, issued after determining that no competent, able, and willing person in the Philippines is available to perform the services.

Practical takeaways

• Overseas hiring of Filipino workers generally must go through authorized recruiters; direct hiring is the exception, not the rule.
• The written contract must not fall below Philippine labor and social legislation standards and should follow the Department's model contract.
• Employment contracts for overseas workers are submitted to the Bureau for evaluation and approval.
• Foreign employers bringing aliens into the Philippines must secure an employment permit from the Department of Labor.
• All doubts in the interpretation of the Labor Code and its implementing rules are resolved in favor of labor.

Primary sources

The rules discussed above are drawn from the following primary sources, as published in the Official Gazette and the national statute book.

• OMNIBUS RULES IMPLEMENTING THE LABOR CODE - OMNIBUS RULES IMPLEMENTING THE LABOR CODE

• Labor Code of the Philippines (Presidential Decree No. 442)

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.