Expatriate Secondment in the Philippines: Contracts and Compliance Rules

An expatriate secondment in the Philippines involves a foreign employer assigning an employee to work for a Philippine affiliate or host entity. Under Philippine law, the arrangement is not self-executing. Article 39 of the Labor Code requires 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, to obtain an employment permit from the Department of Labor. The permit may be issued to the nonresident alien or to the applicant employer, but only 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.

Who Is a Nonresident Alien Under the Rules

The Omnibus Rules Implementing the Labor Code define a non-resident alien as any alien already in the Philippines, or seeking admission to the Philippines, to obtain employment in any public or private enterprise. The same Rules define an employment permit as the authority issued by the Secretary of Labor and Employment to a non-resident alien to work in the Philippines, or to an employer engaged in business in the Philippines to employ such alien.

This matters for secondment because the permit is not tied solely to the individual. Either the expatriate or the Philippine host entity may hold it, which gives structuring flexibility — but the labor authorities must still be satisfied that the role cannot be filled locally.

The Employment Permit Requirement

Article 39 of the Labor Code sets out the core rule. Before an alien may be admitted for employment purposes, or before an employer may engage an alien for employment in the Philippines, an employment permit must be secured from the Department of Labor.

The law conditions issuance on a non-availability determination: the authorities must find 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. For an enterprise registered in preferred areas of investments, the permit may be issued upon the recommendation of the government agency charged with supervising the registered enterprise.

In practice, this means the secondment contract and the permit application should describe the role with enough specificity to justify why an expatriate, rather than a local hire, is needed.

No Transfer Without Prior Approval

Article 40 of the Labor Code provides that after the issuance of an employment permit, the alien shall not transfer to another job or change his employer without prior approval of the Secretary of Labor.

This is a common compliance gap in secondment arrangements. If the expatriate is initially seconded to one affiliate and later moved to another entity within the group, or reassigned to a different role, prior approval must be obtained. A secondment contract that contemplates multiple host entities should therefore build in a mechanism for securing approval before any transfer takes effect.

Reporting Requirements for Employers

Article 41 of the Labor Code requires any employer employing nonresident foreign nationals on the effective date of the Code to submit a list of such nationals to the Secretary of Labor within thirty (30) days, indicating their names, citizenship, foreign and local addresses, nature of employment, and status of stay in the country. The Secretary then determines whether they are entitled to an employment permit.

While this provision addresses employers existing at the time of the Code's effectivity, it reflects the broader regulatory posture: Philippine authorities expect visibility over the foreign nationals working within an enterprise and the basis for their employment.

Structuring the Secondment Contract

A secondment arrangement typically involves at least three parties: the foreign employer, the Philippine host entity, and the expatriate. The contract should address:

• Which entity is the legal employer. The expatriate usually remains employed by the foreign principal, while the Philippine host entity directs day-to-day work.
• Who holds the employment permit. Under Article 39, the permit may be issued to the nonresident alien or to the applicant employer.
• Duration and scope of the assignment, described consistently with the non-availability determination supporting the permit.
• Approval for transfers. Any change in job or employer requires prior approval under Article 40.
• Compliance with Philippine labor standards applicable to the work performed in the Philippines.

Because all doubts in the interpretation of the Labor Code and its implementing rules are resolved in favor of labor under Article 4, contracts should not be drafted to minimize the expatriate's protections below Philippine standards.

Frequently asked questions

Does an expatriate need a work permit to be seconded to a Philippine company?

Yes. Under Article 39 of the Labor Code, an alien seeking admission to the Philippines for employment, and any employer who desires to engage an alien for employment in the Philippines, must obtain an employment permit from the Department of Labor.

Can a seconded expatriate be transferred to another role or affiliate?

Not without prior approval. Article 40 of the Labor Code states that after an employment permit is issued, the alien shall not transfer to another job or change employer without the prior approval of the Secretary of Labor.

Who applies for the employment permit — the expatriate or the company?

Either may hold it. Article 39 allows the permit to be issued to the nonresident alien or to the applicant employer, provided the required non-availability determination is made.

Practical takeaways

• Secure an employment permit before the expatriate begins work; Article 39 of the Labor Code makes this mandatory for both the alien and the engaging employer.
• Document why no local candidate is competent, able, and willing to perform the role, since this is the statutory basis for issuance.
• Obtain prior approval from the Secretary of Labor before any transfer to a different job or employer, as required by Article 40.
• Draft the secondment contract to identify the legal employer, the permit holder, and the scope of the assignment clearly.
• Remember that doubts in the Labor Code and its implementing rules are resolved in favor of labor under Article 4.

Primary sources

The rules discussed above are drawn from the following primary sources. Where the firm's library holds the document as a PDF it is embedded here in full; the rest are cited by title.

RR No. 16-2005 — Prescribes the Consolidated Value-Added Tax Regulations of 2005 superseding RR No. 14-2005 (Published in Manila Times on Oct. 21, 2005) Digest | Full TextOpen in Law LibraryDownload PDF

• 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.