6 Essential Considerations for Startups When Building a Remote Team in the Philippines

When expanding your operations into the Philippines, the first hurdle isn’t finding talent—it’s determining the legal “vehicle” you will use to seat that talent. In the world of global hiring, your hiring model refers to the legal and administrative structure that connects your company to your worker.

Choosing the wrong model can lead to permanent establishment risk (where a tax authority decides you are operating a local business without paying local corporate taxes) or misclassification (where a contractor is legally deemed an employee, entitled to years of back-pay and benefits).

Before you post your first job description, you must choose one of the following four pathways:

When building a remote team in the Philippines, compliance is about understanding a labor-centric legal system. Philippine labor law is famously protective of the worker, operating under the principle that “the welfare of the laborer is the supreme law.” For a founder based in New York or Singapore, the most important term to master is Security of Tenure. This means that once an employee becomes “regularized” (usually after a six-month probationary period), they cannot be terminated without “Just Cause” or “Authorized Cause”—and doing so requires a strict, two-notice legal process.

Failing to navigate these waters correctly can lead to costly litigation. To ensure your expansion is sustainable, you must integrate these core pillars into your strategy for building a remote team in the Philippines.

If you are hiring through an Employer of Record (EOR), you are legally obligated to contribute to the three main government funds. These aren’t just perks; they are social safety nets that employees rely on for healthcare and retirement.

• SSS (Social Security System): Provides disability, retirement, and death benefits. In January 2025, the contribution rate officially increased to 15% (split 10% employer / 5% employee) as part of a multi-year hike to ensure the fund’s long-term viability.
• PhilHealth: The national health insurance program. As of 2025, the premium rate has stabilized at 5% of the monthly basic salary, capped at a salary ceiling of ₱100,000.
• Pag-IBIG (HDMF): A mandatory savings fund primarily used for housing loans. Both employer and employee typically contribute 2%, capped at a monthly compensation of ₱10,000.

Unlike a performance bonus, the 13th Month Pay is a non-negotiable legal requirement under Presidential Decree 851. It is calculated as 1/12 of the employee’s total basic salary earned during the year.

• Deadline: It must be paid no later than December 24th.
• 2025 Enforcement: In late 2024 and throughout 2025, the Department of Labor and Employment (DOLE) issued stricter advisories (such as Labor Advisory No. 16-2025) requiring all employers to submit a compliance report through an online portal by mid-January. Failure to pay or report can lead to immediate administrative penalties.

One of the biggest “landmines” when building a remote team in the Philippines is the misclassification of workers. Many startups try to save on taxes by labeling everyone as an “independent contractor.” However, Philippine courts use the Four-Fold Test to determine if a relationship is actually employment:

1. Selection and engagement of the worker.
2. Payment of wages.
3. Power of dismissal.
4. The Power of Control (the most critical factor).

For example, The Pascua v. Doessel Group Precedent (2024-2025), which is a landmark case involving a Filipino remote worker and an Australian firm recently highlighted the risk of “sham contracting.” The tribunal ruled that because the company controlled the worker’s schedule, provided the software, and supervised the daily “means and methods” of work, the worker was an employee—not a contractor—despite what the contract said. This has sparked a wave of audits for remote teams worldwide.

Your remote team will likely handle customer data or backend systems. You must comply with the National Privacy Commission (NPC) regulations.

• Terminology – PIC vs. PIP: Your startup is the Personal Information Controller (PIC) because you decide why data is processed. Your Filipino staff (or their EOR) is the Personal Information Processor (PIP).
• 2025 Compliance Update: The NPC now requires mandatory annual security incident reports. For 2025, the deadline for companies to register their data processing systems has been strictly enforced, with higher fines for “accidental” breaches caused by remote staff using unencrypted personal devices.

Read more about Legal and Compliance Essentials for those building remote Filipino teams here: Legal and Compliance Essentials When Building a Remote Team in the Philippines

When building a remote team in the Philippines, your financial strategy must account for more than just the base salary. You are entering a “dual-currency” environment where the local economy runs on the Philippine Peso (PHP), but the global talent market often thinks in US Dollars (USD).

Understanding the “why” behind these numbers is key. For example, the PHP-USD Exchange Volatility refers to how many Pesos you get for one Dollar—a rate that has seen significant swings in 2024 and 2025. This fluctuation directly impacts your team’s local purchasing power. To manage this, founders must master a few key pieces of jargon:

• Rate-Locking: An agreement to pay a fixed PHP amount regardless of exchange rate changes.
• De-Dollarization: A growing trend where local workers prefer being paid in their home currency (PHP) to avoid the high fees associated with converting foreign currency themselves.

As of late 2025, salaries for remote talent have stabilized after the high inflation of previous years, but specialized roles command a premium.

Recent labor reports in December 2025 show that while underemployment is at a record low, employee attrition is reaching 20%—the highest in Southeast Asia. For founders building a remote team in the Philippines, this means that if your budget is stuck in 2023 rates, you will likely lose your best talent to competitors who offer even a 5% “stability adjustment” to counter local living costs.

How you send money is just as important as how much you send. Filipino workers prioritize two things: speed and local integration (specifically with “e-wallets”).

• Wise (formerly TransferWise): Remains the “gold standard” for its low fees and mid-market exchange rates. Most Filipino banks now support instant “Real-Time” transfers from Wise.
• Payoneer: Popular among freelancers, though users often complain about higher currency conversion fees.
• E-Wallet Integration (GCash & Maya): In the Philippines, e-wallets are more popular than traditional bank accounts for daily spending. Platforms that allow direct transfers to GCash or Maya are highly valued by staff.

The Philippine Peso has hovered near the 58–59 PHP per 1 USD mark throughout December 2025. This volatility can be a double-edged sword.

Throughout 2025, a major trend has emerged where senior Filipino professionals are requesting USD-pegged contracts. This protects them from a weakening Peso. However, for you as a founder, this makes your monthly burn rate unpredictable. Many successful startups now use a “Band System,” where the salary is fixed in PHP but adjusted once a year if the exchange rate moves by more than 10%.

You may find that your team addresses you as “Sir [Name]” or “Boss.” This is a deeply ingrained sign of respect. While many founders try to “flatten” this hierarchy immediately by insisting on first names, doing so can actually make some employees feel uncomfortable or “rudderless.”

The “Quiet Quitting” vs. “Quiet Loyalty” Trend of 2025. As of late 2025, global workplace studies show that Filipino remote workers have the highest “engagement scores” in Asia when they feel a personal connection to their leader. Unlike the “Quiet Quitting” trend seen in the US and Europe, the Philippine market is seeing “Quiet Loyalty”—where workers stay with a company despite better salary offers elsewhere because they feel their manager truly cares about their family’s well-being.

In the Philippines, family is the ultimate “why.” Holidays, birthdays, and family emergencies are handled with a level of gravity that might surprise Western founders.

In response to the worsening traffic in Manila and Cebu, the Philippine government recently strengthened the Telecommuting Act of 2025. This has reinforced the cultural expectation that “work-from-home” should be truly flexible. Founders building a remote team in the Philippines who honor this flexibility—allowing a parent to pick up a child or attend a family event—find that employee retention rates skyrocket compared to rigid “9-to-5” monitoring.

Managing a Filipino team isn’t about lowering your standards; it’s about changing your delivery. If you lead with empathy and respect the local “social fabric,” you will unlock a level of loyalty and hard work that is rare in the global marketplace.

As you build a team, success often depends less on your technical stack and more on your “Cultural Quotient” (CQ). Managing a Filipino team requires a shift from Western-centric, “radical candor” styles toward a more nuanced, relationship-driven approach.

In the Philippines, the workplace is viewed as an extension of the family. To navigate this successfully, founders must understand three core sociopsychological concepts:

• Pakikisama (Social Harmony): The act of yielding to the will of the group or the leader to maintain a smooth relationship.
• Hiya (Shame/Saving Face): A deep sense of social propriety. Causing someone “Hiya” is a major professional transgression.
• Utang na Loob (Debt of Gratitude): A system of reciprocal loyalty. When you treat an employee well during a personal crisis, they often repay it with years of dedicated service.

One of the biggest challenges when building a remote team in the Philippines is misinterpreting the word “Yes.” In a culture that prioritizes Pakikisama, a direct “No” is considered rude.

• The Reality: A “Yes” might actually mean “I hear you,” “I will try my best but I’m not sure it’s possible,” or even “I am confused but I don’t want to look incompetent.”
• The Strategy: Transition from “Yes/No” questions to open-ended “How” questions. Instead of asking, “Can you finish this by Friday?” ask, “What challenges might prevent us from hitting the Friday deadline?”

In many Western startups, “failing fast” and “brutal honesty” are celebrated. In the Philippines, public criticism—even if constructive—can lead to a total shutdown of productivity.

• The Concept of “Saving Face”: If a developer makes a mistake, calling it out in a Slack channel with five other people can cause intense Hiya. The employee may disengage or even resign rather than face the perceived humiliation.
• The Strategy: Always deliver critical feedback in a 1-on-1 setting. Frame the feedback around the process rather than the person. Balance the critique with genuine praise for their strengths to maintain their sense of belonging.

Expanding a business globally requires more than just finding talent; it requires building a reliable operational backbone. When you begin building a remote team in the Philippines, you are entering a market with high rewards but specific logistical nuances.

Before we dive into the strategy, let’s clarify two key terms that are essential for this stage of growth:

• Redundancy: In a technical context, this refers to having a backup system in place (like a secondary internet service provider) to ensure that work doesn’t stop if the primary system fails.
• BPO (Business Process Outsourcing): A method of subcontracting various business-related operations to a third-party service provider, a model that has historically defined the Filipino labor market.

The Philippines is an archipelago, which presents unique challenges for internet stability compared to landlocked regions. However, the urban hubs of Manila and Cebu offer world-class fiber-optic connectivity. The first step in building a remote team in the Philippines is ensuring your staff has the hardware and bandwidth necessary to maintain “uptime”—the time a computer system is operational.

To mitigate risks, many companies provide their remote employees with:

1. Noise-canceling peripherals: Essential for maintaining professionalism in diverse environments.
2. Back-up Power (UPS): Uninterruptible Power Supplies help bridge the gap during “brownouts” or brief power fluctuations.

Read more about Zero-Ten Philippines’ 24/7 Workspace Options here.

Success in building a remote team in the Philippines also depends on how you manage time zones. While the Philippines is roughly 12 to 13 hours ahead of Eastern Standard Time, the workforce is highly adaptable. Many Filipino professionals are accustomed to “graveyard shifts” to align with North American business hours.

By prioritizing these logistical foundations early on, you transform a group of distant contractors into a cohesive, high-performing extension of your local office.

You can read more about carefully navigating infrastructure & connectivity issues as a startup founder with a Remote Filipino Team here: How to Manage Infrastructure and Connectivity Hurdles with a Remote Filipino Team

While providing hardware is a great first step, the most resilient remote teams are built on a proactive maintenance model. Instead of waiting for a connection to fail, formalize your infrastructure expectations through a dedicated stipend and a “Connectivity SLA” (Service Level Agreement).

• The “Dual-ISP” Requirement: Require your core team members to have two different internet service providers (e.g., a primary Fiber line and a secondary 5G/LTE backup from a different carrier). 
• The Power Audit: Before onboarding, have your IT team or hiring manager conduct a “Home Office Tech Check.” Verify that the employee has a dedicated workspace and a functional UPS (Uninterruptible Power Supply) capable of powering both their laptop and router for at least 4 hours.
• The “Co-working” Safety Net: Maintain a budget or a corporate account with a co-working space aggregator. If a local substation goes down or a typhoon causes an extended outage, your team has a pre-approved, “work-ready” destination to maintain operations without financial friction.

 Treat connectivity not as an “employee responsibility,” but as a business-critical utility. By subsidizing the cost of redundancy, you eliminate the most common cause of remote downtime and demonstrate a high level of investment in your team’s professional success.

When you have finished the work of building a remote team in the Philippines, your focus must shift immediately from acquisition to preservation. As of late 2025, the Philippine labor market is experiencing a “Retention Crisis.” While employment is high, specialized talent is moving faster than ever between roles.

To keep your “rockstars,” you need to understand the Employee Experience (EX). This isn’t just a buzzword; it refers to the entire journey an employee takes with your company—from their first interaction on LinkedIn to their final exit interview. In a remote setting, where you lack a physical office to foster a sense of belonging, your EX must be intentionally designed.

The Philippines is currently facing a projected 20% attrition rate—one of the highest in Southeast Asia.

• Terminology – Attrition Rate: The pace at which employees leave a company and are not immediately replaced.
• The “Job-Hopping” Reality: Because underemployment has hit record lows, skilled workers have more leverage. They no longer feel “lucky” to have a job; they are actively looking for the best job. For founders, this means that even a 5–10% salary increase from a competitor can trigger a resignation if the employee doesn’t feel a deep connection to your mission.

In the age of AI, the most ambitious Filipino professionals are looking for “Future-Proofing.” They want to know that working for you will make them more valuable in three years, not just pay today’s bills.

• Terminology – Upskilling: Providing training that teaches new skills to help an employee perform better in their current or future role.
• The “AI-Resilience” Push (2025). Major 2025 reports from the World Economic Forum and local firms like Sprout Solutions show that 83% of Filipino workers are willing to sacrifice existing benefits for better learning and development opportunities. Founders who provide access to platforms like Coursera, LinkedIn Learning, or internal “AI-literacy” workshops are seeing much higher loyalty than those who offer only cash bonuses.

Because Filipino culture values Pakikisama (harmony), remote workers may be hesitant to tell you when they are burning out or when a process is broken.

• The Strategy: You must “ritualize” feedback. Move away from scary annual reviews and toward Ongoing Feedback—low-stakes, weekly 1-on-1s where the goal isn’t “criticism” but “alignment.”
• Implementation: Use anonymous suggestion boxes or “Pulse Surveys” to gauge morale. If your team feels safe enough to disagree with you, you have achieved Psychological Safety, which is the single greatest predictor of team longevity.
• The “Work-Life Harmony” Standard (Late 2025): Following the 2025 HR Summits in Manila, the conversation has shifted from “Work-Life Balance” to “Work-Life Harmony.” This acknowledges that remote work blurs lines. Companies that have successfully retained talent in 2025 are those implementing “No-Meeting Fridays” or “Recharge Days,” recognizing that the heavy mental load of “Full-Time Precarity” (working full-time but still feeling financial stress) requires intentional rest periods.