Four Ways EOR Services Support Employee Benefits Compliance in the Philippines

Four Ways EOR Services Support Employee Benefits Compliance in the Philippines

The Philippines boasts a skilled and diverse workforce, making it attractive for businesses looking to expand and gain specialized talent. However, navigating the intricacies of the country’s labor laws and employee benefits can be challenging for foreign companies.

This is where employer of record (EOR) services come in. EOR providers have the resources to ensure employee benefits compliance for businesses with a workforce in the Philippines.

If you want to learn how an EOR in the Philippines can help you with this task, this article is for you. It explores the processes covered by providers and how they benefit businesses.

Understanding and keeping up with local employee benefits policies

EOR is a type of business process outsourcing (BPO). Labor laws in BPO require service providers to comply with relevant employee codes.

The legal aspects of employee benefits in the Philippines can be complex for businesses headquartered in other countries. They involve multiple mandatory contributions and regulations, which include, but are not limited to, the following:

• Social Security System (SSS). This system covers retirement, disability, and sickness benefits.
  
• Philippine Health Insurance Corporation (PhilHealth). This benefit provides health insurance coverage.
  
• Pag-IBIG Home Development Mutual Fund (HDMF). This mandatory contribution helps with housing needs.
  
• 13th month pay. This benefit is essentially a bonus equal to one month’s salary. 
• Paid time off (PTO). Labor laws in the Philippines mandate that employees are entitled to and accrue vacation and sick leaves.

Employee benefits in the Philippines differ in rates based on salary brackets and specific remittance deadlines. Constant updates in employee benefits laws and timely application of these changes also add a layer of complexity. In 2024, SSS and PhilHealth premium rates grew to around 4.5%. Meanwhile, Pag-IBIG increased statutory contributions to around 1.5%.

Since EOR firms and employees often share the responsibility for these benefits, compliance with Philippine laws becomes challenging.

Onboarding with employer of record firms presents a viable solution. One of the many benefits of EOR services is gaining access to specialized experts in employment law compliance. Providers have dedicated teams well-versed in the latest regulations, legal interpretations, and government pronouncements.

They continuously monitor compliance requirements for all mandatory benefits programs. They ensure your business adheres to the latest contribution rates, reporting deadlines, and new procedures or regulations.

With their knowledge and resources, an EOR firm can clearly and concisely explain Philippine benefits laws in your desired language. 

Customizing benefits for an edge in the Philippine labor market

In the fierce labor market of the Philippines, a one-size-fits-all approach to employee benefits isn’t practical for attracting and retaining top talent. With their deep knowledge and mastery of local trends, employers of record develop competitive benefits packages to satisfy employees.

Instead of a generic approach, an EOR works closely with you to understand your company goals, budget, and target talent pool. By doing so, they can recommend the following:

Budget-conscious choices

EOR providers let you offer desirable employee benefits while ensuring compliance with your operational budget in the Philippines. First, they optimize your existing programs before recommending new benefits.

Then, they recommend cost-effective strategies that enable you to provide competitive benefits within budget:

• Tiered benefit options (e.g., offering different levels of health insurance coverage or allowing employees to choose between additional benefits)
  
• Cost-sharing strategies (e.g., splitting premiums, flexible spending accounts, and wellness program incentives)
  
• Creative benefit design (e.g., partnering with local wellness programs or exploring discounts on services such as gym memberships)

Market-competitive options

The EOR can advise on benefits that are attractive to Filipino workers in your industry. For example, in the tech industry, flexible work arrangements or professional development opportunities might be highly sought after.

The service provider also considers the preferences of workers with your desired skill set. Young professionals with modern skills might value flexible work arrangements or educational assistance. Conversely, professionals with families might prioritize comprehensive health insurance.

Optional and additional benefits

While mandatory benefits form the foundation of any compensation package for Filipino workforces, you can go further. The EOR can explore more attractive employee benefits options so your business can stand out to local talent while still observing compliance with relevant laws in the Philippines.

Here’s how an EOR facilitates this strategy:

• Enhanced health insurance (e.g., access to a broader network of clinics and hospitals and a more comprehensive medical coverage)
  
• Voluntary retirement savings plans (e.g., allowing employees to contribute more, tailor savings strategies, and gain tax-deductible incentives)
  
• Comprehensive wellness programs (e.g., on-site fitness facilities, health screenings, stress management, nutrition workshops, and discounted gym memberships)
  
• Life insurance and accidental death and dismemberment (AD&D) coverage for employees with dependents and those who face higher risks
  
• Flexible work arrangements (e.g., remote work programs, flexible working hours, compressed work weeks)

Managing comprehensive employee benefits

Handling the different processes involved with employee benefits administration is time-consuming and error-prone. With employer of record services, you can have a dedicated team that ensures accuracy and efficiency when managing related tasks.

Here’s how an EOR’s employee benefits management services can help you maintain compliance with relevant Philippine laws:

Complete enrollment

The EOR provider handles the entire enrollment process for your Filipino employees in all chosen benefits programs. It ensures compliance through the following methods:

• The service vendor has established procedures for collecting necessary information, completing paperwork, and registering with relevant agencies.
• The EOR verifies all employee data to determine whether it aligns with government agency records or insurance provider requirements.
• The employer of record completes the necessary paperwork and submits it to appropriate agencies within the designated deadlines.

These processes minimize the risk of errors or missing information, which could lead to issues such as incorrect contribution rates and salary discrepancies.

Accurate contribution calculations

Calculating employee benefit contributions can be complex, especially when dealing with multiple mandatory and optional benefit programs. EOR firms are crucial in ensuring these computations are accurate based on employee salaries and current contribution rates.

Here’s how employer of record teams ensure your employee benefits contributions comply with Philippine regulations:

• Benefits administration software keeps EOR providers updated with the latest mandatory contribution rates and data on optional benefits.
• Automated systems use pre-programmed formulas to calculate benefits based on salary brackets, employer contribution rates, and individual benefit choices.
• Expert review and oversight promote accuracy and identify inconsistencies, adding security to the automated process.

These prevent unintended deductions or underpayments for your company and employees.

Timely remittances

As with contribution calculations, EOR firms use automated systems that generate accurate remittance reports for all benefits programs. They also preprogram these tools to initiate payments electronically on designated dates.

Their systems could also integrate with government agency portals or insurance provider platforms, allowing for electronic submissions. This automation eliminates the need for manual submission and reduces the risk of errors or delays.

Transparent compliance reporting and auditing

EOR firms can manage potential employee benefits compliance audits initiated by Philippine agencies. They can help you navigate the process efficiently and ensure proper documentation is readily available through:

• Digital records management systems. These use cloud computing to store benefits data, contribution records, communication logs, and claims documentation.
• Automated reporting. This helps generate real-time reports on employee benefits data, contribution history, and enrollment details.
  
• Audit readiness. EOR providers maintain organized and readily accessible records, minimizing stress and time spent during compliance audits conducted by government agencies.

Offering responsive employee support

One significant advantage of partnering with an EOR for benefits administration is having a dedicated support team for your Filipino workforce. It promotes clear communication, addresses employee concerns promptly, and fosters a positive experience with benefits programs.

Let’s discuss the different ways responsive employee support contributes to this:

Culturally aware and multilingual support

An EOR provider that offers services for Philippine workforce management will likely be staffed with Filipino representatives. This arrangement allows them to understand the cultural nuances and communication preferences of your local employees.

They also often offer Filipino and English resources to inform hired employees about your business’s benefits programs. This strategy allows your workers to easily access and understand your policies and their rights regardless of their English proficiency.

Multiple support channels

EOR firms often establish dedicated channels specifically for inquiries about employee benefits, compliance, and updates on Philippine labor laws. These channels include phone hotlines, email, live chat, text messaging, social media platforms, mobile applications, and ticketing systems.

They might also utilize online portals where workers can submit questions, access prepared answers to frequently asked questions (FAQs), and schedule chats with support representatives.

This omnichannel approach to support allows employees to reach the right agents quickly for assistance. It offers flexibility and lets workers utilize their preferred communication channel.

Efficient resolution and follow-up

Employer of record teams understand and master all aspects of your company’s benefits programs. They also go beyond answering basic questions and work toward effective resolution by demonstrating active listening and troubleshooting concerns.

EOR teams also use internal systems, such as ticket tracking, to monitor employee inquiries and ensure timely resolution. As such, no question or concern gets lost in the shuffle, and employees receive follow-up communication.

The bottom line

EOR services are invaluable in adhering to employee benefits laws in the Philippines.

The service providers’ expertise in local employment regulations and access to resources allow them to easily navigate compliance complexities. It empowers them to deeply understand and keep up with changing regulations.

This allows them to offer customization operations, streamline benefits management, and provide proactive employee support, ultimately helping your business.

Let’s connect if you want to learn more about EOR services in the Philippines.