How Much Does It Really Cost to Hire in the Philippines?
Base Salary Is Just the Starting Point
When Australian businesses first look at hiring in the Philippines, they focus on the salary figure. And yes — the salary is significantly lower than an equivalent Australian hire. But the real question isn’t “what’s the salary?” It’s “what’s my total cost of employment?”
This post breaks down every cost line item — in AUD — so you can budget accurately before making your first hire.
1. Base Salary Ranges by Role (AUD/month)
Philippine salaries vary by role, experience level, and location (Metro Manila tends to run slightly higher than provincial cities). The figures below reflect current Metro Manila market rates, converted at AUD 1 = PHP 38.
| Role | Junior (AUD/mo) | Mid-Level (AUD/mo) | Senior (AUD/mo) |
|---|---|---|---|
| Software Developer | AUD 1,100–1,500 | AUD 1,800–2,600 | AUD 2,800–4,200 |
| Customer Support Specialist | AUD 700–1,000 | AUD 1,000–1,400 | AUD 1,400–2,000 |
| Accountant / Bookkeeper | AUD 900–1,200 | AUD 1,400–2,000 | AUD 2,100–3,200 |
| Digital Marketer | AUD 900–1,300 | AUD 1,400–2,100 | AUD 2,200–3,500 |
| Virtual Assistant / Admin | AUD 600–900 | AUD 900–1,300 | AUD 1,300–1,900 |
These figures represent take-home salary for the employee. Your actual cost as the employer is higher once statutory contributions are added.
2. Mandatory Government Contributions
Philippine law requires employers to contribute to three government agencies on behalf of every employee. These are non-negotiable — failure to remit is a criminal offence under Philippine law.
| Contribution | Purpose | Employer Rate (approx.) | Example (AUD 2,100/mo salary) |
|---|---|---|---|
| SSS (Social Security System) | Social security & disability | ~9.5% | ~AUD 200/mo |
| PhilHealth | National health insurance | ~5% (shared equally) | ~AUD 105/mo |
| Pag-IBIG (HDMF) | Housing fund | 2% (AUD 42 cap) | ~AUD 42/mo |
On a AUD 2,100/month salary, mandatory employer contributions add approximately AUD 347/month — around 16.5% on top of base salary.
3. 13th Month Pay
13th month pay is not a bonus — it’s a legal requirement under Presidential Decree No. 851. Every rank-and-file employee is entitled to receive an additional month’s salary, paid on or before December 24 each year.
Formula: Total Basic Salary Earned in Calendar Year ÷ 12
For an employee earning AUD 2,100/month for a full year, that’s an additional AUD 2,100 due in December. When budgeting annually, treat this as an 8.33% loading on top of monthly salary — or simply divide your annual salary budget by 11 instead of 12 to account for it.
New hires mid-year receive a pro-rata amount. An employee who starts in July and earns AUD 2,100/month receives AUD 1,050 in December (6 months ÷ 12).
4. Leave Entitlements
Philippine law mandates a minimum of 5 days Service Incentive Leave (SIL) per year for employees who have completed one year of service. In practice, most professional roles offer 10–15 days of combined annual and sick leave to remain competitive.
Paid leave is a direct cost: if an employee takes a paid day off, you still pay their salary. Budget for 10 days of paid leave per year as a conservative standard — roughly 3.8% of annual salary.
5. Total Cost-of-Employment: A Worked Example
Let’s put it all together for a mid-level Software Developer earning AUD 2,100/month in base salary.
| Cost Item | Monthly (AUD) | Annual (AUD) |
|---|---|---|
| Base Salary | AUD 2,100 | AUD 25,200 |
| SSS Contribution | AUD 200 | AUD 2,400 |
| PhilHealth | AUD 105 | AUD 1,260 |
| Pag-IBIG | AUD 42 | AUD 504 |
| 13th Month Pay | — | AUD 2,100 |
| Paid Leave (10 days) | — | AUD 970 |
| Total Cost of Employment | ~AUD 2,447 | ~AUD 32,434 |
Compare that to the Australian equivalent: a mid-level developer in Australia costs AUD 95,000–120,000 in base salary alone — before superannuation (11.5%), leave loading, and recruitment fees. The total annual cost in Australia easily exceeds AUD 115,000.
The Philippine hire costs roughly 28% of the Australian equivalent. On a team of five, that’s over AUD 400,000 in annual savings.
6. What EOR Fees Cover — and Why They’re Worth It
If you hire through an Employer of Record (EOR), there’s an additional monthly service fee. This fee covers:
- Employment contract drafting and management
- Monthly payroll processing
- Statutory contribution remittance (SSS, PhilHealth, Pag-IBIG)
- 13th month pay calculation and disbursement
- HR support and compliance advisory
- BIR (Bureau of Internal Revenue) tax filing on behalf of the employee
The alternative — setting up your own Philippine entity — involves incorporation costs, a local HR hire, ongoing legal and accounting fees, and months of setup time. For most Australian businesses hiring fewer than 20 people in the Philippines, EOR is significantly more cost-effective.
Want an Exact Number for Your Role?
Every hire is different — salary depends on the role, experience level, and what the market is paying right now. Our team can give you a precise cost breakdown for the specific role you’re looking to fill, including our EOR fee, within 24 hours.
