How Philippine Start-Ups Can Stay 100 % Compliant With Labor Laws
(Updated to July 31 2025)
1. The Governing Legal Framework
| Layer | Key Statutes / Regulations | Why They Matter to Start-Ups |
|---|---|---|
| Constitutional | 1987 Constitution, Art. III (Bill of Rights) & Art. XIII (Labor) | Enshrines workers’ security of tenure, living wage, and the right to organize. |
| Primary Statutes | ➤ Labor Code of the Philippines (Pres. Decree 442, as amended) ➤ Telecommuting Act (RA 11165) ➤ OSH Law (RA 11058) ➤ Expanded Maternity Leave Act (RA 11210) ➤ Safe Spaces Act (RA 11313) ➤ Solo Parents Welfare Act (RA 11861, 2024 amendment) |
Set fundamental rights and minimum standards for wages, hours, benefits, OSH, special leaves, anti-harassment, flexible work, etc. |
| Special Social Legislation | ➤ SSS Law (RA 11199) ➤ PhilHealth (RA 7875, as amended by UHC Act RA 11223) ➤ Pag-IBIG Fund (RA 9679) |
Create the “three-legged stool” of mandatory social protection. |
| Department Orders & Circulars | ➤ DOLE D.O. 174-17 (contracting) ➤ D.O. 237-22 (digital payment of wages) ➤ Wage Orders of Regional Tripartite Wages & Productivity Boards (RTWPBs) |
Flesh out gray areas, update minimum wages, regulate contracting/sub-contracting, and allow fintech payroll. |
| Local Ordinances | e.g., Quezon City Gender Fair Ordinance | May create extra duties (gender offices, menstrual leave pilots, etc.). Always check LGU where you operate. |
2. Mandatory Registrations & Filings (Pre-Hire Checklist)
| When | What | Where / How |
|---|---|---|
| Before the first hire | 1. BIR Employer TIN (register books + alpha list) 2. SSS Employer ID 3. PhilHealth EMP ID 4. Pag-IBIG Employer ID 5. DOLE Establishment Report (Rule 1020, if ≥ 1 employee & fixed workplace) 6. OSHC Notification (if high-risk industry) 7. Data Privacy Registration (NPC, if processing sensitive employee data) |
Online portals—BIR eREG, SSS ER-2, PhilHealth ER-1, Pag-IBIG ELF. File DOLE Rule 1020 via Bureau of Working Conditions. |
| Monthly/Quarterly | Withhold & remit income tax (BIR 1601C), SSS, PhilHealth, Pag-IBIG; file electronic returns. | |
| Annual | ➤ 13th-Month Pay Report (on or before Jan 15) ➤ Alpha List of Employees (BIR, Jan 31) ➤ OSH Program Review; update DOLE Compliance Certificate for contractors. |
3. Hiring & Contracting—Getting Classification Right
Employee vs. Independent Contractor Use the four-fold test (selection, payment of wages, power of dismissal, control). Misclassification triggers back-wages, benefits, and fines under DO 174.
Regular vs. Probationary vs. Project-Based
- Probationary: max 6 months, must communicate reasonable standards on Day 1.
- Project/Fixed-Term: allowed if truly project-tied and duration is defined; otherwise, risk deemed “regular.”
Gig & Remote Hires
- Telecommuters get the same pay & benefits; written Telecommuting Agreement is mandatory (RA 11165).
- Overseas remote workers may still create an SSS/PhilHealth obligation—evaluate nexus carefully.
4. Core Statutory Benefits & Wage Rules
| Subject | Minimum Obligation (NCR figures as of 2025) |
|---|---|
| Daily Minimum Wage | ₱645 (Wage Order NCR-34, effective Jan 2025) |
| Hours/Overtime | 8-hr normal day; OT = 125 %, Night Shift Diff = 110 % |
| Rest Days & Holidays | 1 rest day/week; 100 % pay on special non-working, 200 % on regular holidays |
| 13th-Month Pay | 1/12 of basic annual wage, due on or before 24 Dec |
| SSS Contributions | Shared 55 % ER / 45 % EE up to ₱30 k MSC |
| PhilHealth Premiums | 4 % of monthly basic, shared equally |
| Pag-IBIG Savings | 2 % EE + 2 % ER (max ₱100 each) |
| Leave Benefits | |
| • 5-day Service Incentive Leave if < 10 employees (DO 237 digital payroll exception lifted the exemption). | |
| • 105-day maternity, 7-day paternity, 7-day parental (solo parent: up to 7 WFH days). |
5. Occupational Safety & Health (OSH) for Start-Ups
- OSH Program—crafted by an accredited Safety Officer (SO1 if < 10 workers).
- Mandatory Trainings—Basic OSH, BOSH-SO1 or SO2, first-aid.
- Workers’ OSH Committee—even micro-start-ups need a Committee (owner = chair).
- Annual Medical Exams—at least basic “pre-employment + annual” package.
Non-compliance: ₱40 k–₱100 k administrative fines per day of violation under RA 11058.
6. Anti-Harassment & Equal Opportunity Rules
| Law | Key Compliance Actions |
|---|---|
| Safe Spaces Act (RA 11313) | Draft company policy, designate Officer-on-Duty, conduct seminars twice a year. |
| Anti-Sexual Harassment Act (RA 7877) | Internal Committee (COSH). |
| Anti-Age Discrimination, Anti-Violence vs. Women & Children, PWD Act | Insert equal-opportunity clauses in handbook; provide reasonable accommodation. |
7. Termination & Discipline
Just or Authorized Cause under Labor Code Arts. 297–299.
Twin-Notice Rule:
- Notice to Explain → min. 5 calendar-day reply period
- Notice of Decision with reasoned findings
Separation Pay—½-month to 1-month per year of service (authorized cause).
Redundancy/Closure—30-day notice to DOLE + affected workers.
Failing due process converts dismissal to illegal, exposing founders to personal liability for back-wages + reinstatement.
8. Record-Keeping & Reporting Obligations
| Record | Retention Period |
|---|---|
| Payroll, timecards | 3 years (Art. 306) |
| SSS/Pag-IBIG vouchers | 10 years |
| OSH logs (accident, training) | 5 years |
| Data Privacy consents | As long as retained + 1 yr |
Digital copies are valid if integrity, authenticity, and readability are ensured (E-Commerce Act; DO 237-22).
9. Penalties & Exposure
| Violation | Possible Liability |
|---|---|
| Wage underpayment | Double-indemnity + 1–2 year imprisonment (RA 8188) |
| Failure to remit SSS/PhilHealth/Pag-IBIG | 3–20 % surcharge + criminal prosecution vs. responsible officers |
| Illegal dismissal | Reinstatement + full back-wages + moral damages |
| Contracting abuses (DO 174) | Cancellation of business permit + stop-work orders |
| OSH non-compliance | ₱40 k–₱100 k per day + work stoppage |
10. Compliance Roadmap for Founders & HR Teams
| Stage | Action Items | Tools / Tips |
|---|---|---|
| Seed Stage (≤ 10 staff) | ➤ Register with BIR/SSS/PhilHealth/Pag-IBIG ➤ Draft standard employment contracts (probationary + consultant) ➤ Adopt digital payroll that auto-remits taxes & contributions |
Use DOLE’s BEx templates; fintech payroll apps (SalPay, MyKuya). |
| Growth Stage (11-50) | ➤ Develop Employee Handbook (review by counsel) ➤ Form OSH Committee and Sexual Harassment Committee ➤ Institute performance appraisal policy |
Annual legal audit; enroll managers in Basic Labor Standards course (DOLE-BWSC). |
| Scale-Up (> 50) | ➤ ISO 45001-aligned OSH Program ➤ Automate HRIS (attendance, leave) with audit trail ➤ Engage external labor counsel for quarterly compliance review |
Consider DOLE’s Voluntary Compliance Program to pre-empt inspections. |
11. Best Practices & Common Pitfalls
Best Practices
- “Zero-day” employee orientation covering code of conduct, benefits, privacy, OSH.
- Cloud-based records with time-stamped logs—for easy DOLE inspection.
- Inclusive culture: gender-neutral policies, menstrual hygiene support, WFH flexibility.
Pitfalls to Avoid
- Treating all team members as “freelancers.”
- Granting de facto regular status then enforcing “project-based” termination.
- Missing holiday pay for skeleton-crew start-ups that stay open on legal holidays.
- Forgetting Rule 1020 registration (many tech start-ups get cited here).
12. Practical DOLE Inspection Checklist (2025)
- Employer & Employee Data Sheet (ERDS).
- Copy of latest Regional Wage Order posted on bulletin board.
- Payslips & DTRs for the last 30 days.
- OSH Policy & Risk Assessment.
- Committee Resolutions for Anti-SH & OSH.
- Certificates of SSS/PhilHealth/Pag-IBIG remittance (current month).
- List of Sub-Contractors with DOLE registration.
- Telecommuting Agreements for WFH staff.
Prepare a Corrective Action Plan within 10 days if deficiencies are found.
Conclusion
Compliance is not optional “legal hygiene” but a competitive advantage—regulators, investors, and top talent will scrutinize how you treat your people. By integrating labor-law obligations into your build–measure–learn cycle from Day 1, a Philippine start-up can minimize costly disputes, attract ESG-minded capital, and scale sustainably.
Tip for founders: calendar a half-day labor-law audit every six months; laws change quickly (e.g., new Solo Parents Act amendments in 2024 and RTWPB wage hikes in 2025). Early course-correction is exponentially cheaper than litigating an illegal-dismissal case years later.
How Philippine Start-Ups Can Stay 100 % Compliant With Labor Laws
(Updated to July 31 2025)
1. The Governing Legal Framework
| Layer | Key Statutes / Regulations | Why They Matter to Start-Ups |
|---|---|---|
| Constitutional | 1987 Constitution, Art. III (Bill of Rights) & Art. XIII (Labor) | Enshrines workers’ security of tenure, living wage, and the right to organize. |
| Primary Statutes | ➤ Labor Code of the Philippines (Pres. Decree 442, as amended) ➤ Telecommuting Act (RA 11165) ➤ OSH Law (RA 11058) ➤ Expanded Maternity Leave Act (RA 11210) ➤ Safe Spaces Act (RA 11313) ➤ Solo Parents Welfare Act (RA 11861, 2024 amendment) |
Set fundamental rights and minimum standards for wages, hours, benefits, OSH, special leaves, anti-harassment, flexible work, etc. |
| Special Social Legislation | ➤ SSS Law (RA 11199) ➤ PhilHealth (RA 7875, as amended by UHC Act RA 11223) ➤ Pag-IBIG Fund (RA 9679) |
Create the “three-legged stool” of mandatory social protection. |
| Department Orders & Circulars | ➤ DOLE D.O. 174-17 (contracting) ➤ D.O. 237-22 (digital payment of wages) ➤ Wage Orders of Regional Tripartite Wages & Productivity Boards (RTWPBs) |
Flesh out gray areas, update minimum wages, regulate contracting/sub-contracting, and allow fintech payroll. |
| Local Ordinances | e.g., Quezon City Gender Fair Ordinance | May create extra duties (gender offices, menstrual leave pilots, etc.). Always check LGU where you operate. |
2. Mandatory Registrations & Filings (Pre-Hire Checklist)
| When | What | Where / How |
|---|---|---|
| Before the first hire | 1. BIR Employer TIN (register books + alpha list) 2. SSS Employer ID 3. PhilHealth EMP ID 4. Pag-IBIG Employer ID 5. DOLE Establishment Report (Rule 1020, if ≥ 1 employee & fixed workplace) 6. OSHC Notification (if high-risk industry) 7. Data Privacy Registration (NPC, if processing sensitive employee data) |
Online portals—BIR eREG, SSS ER-2, PhilHealth ER-1, Pag-IBIG ELF. File DOLE Rule 1020 via Bureau of Working Conditions. |
| Monthly/Quarterly | Withhold & remit income tax (BIR 1601C), SSS, PhilHealth, Pag-IBIG; file electronic returns. | |
| Annual | ➤ 13th-Month Pay Report (on or before Jan 15) ➤ Alpha List of Employees (BIR, Jan 31) ➤ OSH Program Review; update DOLE Compliance Certificate for contractors. |
3. Hiring & Contracting—Getting Classification Right
Employee vs. Independent Contractor Use the four-fold test (selection, payment of wages, power of dismissal, control). Misclassification triggers back-wages, benefits, and fines under DO 174.
Regular vs. Probationary vs. Project-Based
- Probationary: max 6 months, must communicate reasonable standards on Day 1.
- Project/Fixed-Term: allowed if truly project-tied and duration is defined; otherwise, risk deemed “regular.”
Gig & Remote Hires
- Telecommuters get the same pay & benefits; written Telecommuting Agreement is mandatory (RA 11165).
- Overseas remote workers may still create an SSS/PhilHealth obligation—evaluate nexus carefully.
4. Core Statutory Benefits & Wage Rules
| Subject | Minimum Obligation (NCR figures as of 2025) |
|---|---|
| Daily Minimum Wage | ₱645 (Wage Order NCR-34, effective Jan 2025) |
| Hours/Overtime | 8-hr normal day; OT = 125 %, Night Shift Diff = 110 % |
| Rest Days & Holidays | 1 rest day/week; 100 % pay on special non-working, 200 % on regular holidays |
| 13th-Month Pay | 1/12 of basic annual wage, due on or before 24 Dec |
| SSS Contributions | Shared 55 % ER / 45 % EE up to ₱30 k MSC |
| PhilHealth Premiums | 4 % of monthly basic, shared equally |
| Pag-IBIG Savings | 2 % EE + 2 % ER (max ₱100 each) |
| Leave Benefits | |
| • 5-day Service Incentive Leave if < 10 employees (DO 237 digital payroll exception lifted the exemption). | |
| • 105-day maternity, 7-day paternity, 7-day parental (solo parent: up to 7 WFH days). |
5. Occupational Safety & Health (OSH) for Start-Ups
- OSH Program—crafted by an accredited Safety Officer (SO1 if < 10 workers).
- Mandatory Trainings—Basic OSH, BOSH-SO1 or SO2, first-aid.
- Workers’ OSH Committee—even micro-start-ups need a Committee (owner = chair).
- Annual Medical Exams—at least basic “pre-employment + annual” package.
Non-compliance: ₱40 k–₱100 k administrative fines per day of violation under RA 11058.
6. Anti-Harassment & Equal Opportunity Rules
| Law | Key Compliance Actions |
|---|---|
| Safe Spaces Act (RA 11313) | Draft company policy, designate Officer-on-Duty, conduct seminars twice a year. |
| Anti-Sexual Harassment Act (RA 7877) | Internal Committee (COSH). |
| Anti-Age Discrimination, Anti-Violence vs. Women & Children, PWD Act | Insert equal-opportunity clauses in handbook; provide reasonable accommodation. |
7. Termination & Discipline
Just or Authorized Cause under Labor Code Arts. 297–299.
Twin-Notice Rule:
- Notice to Explain → min. 5 calendar-day reply period
- Notice of Decision with reasoned findings
Separation Pay—½-month to 1-month per year of service (authorized cause).
Redundancy/Closure—30-day notice to DOLE + affected workers.
Failing due process converts dismissal to illegal, exposing founders to personal liability for back-wages + reinstatement.
8. Record-Keeping & Reporting Obligations
| Record | Retention Period |
|---|---|
| Payroll, timecards | 3 years (Art. 306) |
| SSS/Pag-IBIG vouchers | 10 years |
| OSH logs (accident, training) | 5 years |
| Data Privacy consents | As long as retained + 1 yr |
Digital copies are valid if integrity, authenticity, and readability are ensured (E-Commerce Act; DO 237-22).
9. Penalties & Exposure
| Violation | Possible Liability |
|---|---|
| Wage underpayment | Double-indemnity + 1–2 year imprisonment (RA 8188) |
| Failure to remit SSS/PhilHealth/Pag-IBIG | 3–20 % surcharge + criminal prosecution vs. responsible officers |
| Illegal dismissal | Reinstatement + full back-wages + moral damages |
| Contracting abuses (DO 174) | Cancellation of business permit + stop-work orders |
| OSH non-compliance | ₱40 k–₱100 k per day + work stoppage |
10. Compliance Roadmap for Founders & HR Teams
| Stage | Action Items | Tools / Tips |
|---|---|---|
| Seed Stage (≤ 10 staff) | ➤ Register with BIR/SSS/PhilHealth/Pag-IBIG ➤ Draft standard employment contracts (probationary + consultant) ➤ Adopt digital payroll that auto-remits taxes & contributions |
Use DOLE’s BEx templates; fintech payroll apps (SalPay, MyKuya). |
| Growth Stage (11-50) | ➤ Develop Employee Handbook (review by counsel) ➤ Form OSH Committee and Sexual Harassment Committee ➤ Institute performance appraisal policy |
Annual legal audit; enroll managers in Basic Labor Standards course (DOLE-BWSC). |
| Scale-Up (> 50) | ➤ ISO 45001-aligned OSH Program ➤ Automate HRIS (attendance, leave) with audit trail ➤ Engage external labor counsel for quarterly compliance review |
Consider DOLE’s Voluntary Compliance Program to pre-empt inspections. |
11. Best Practices & Common Pitfalls
Best Practices
- “Zero-day” employee orientation covering code of conduct, benefits, privacy, OSH.
- Cloud-based records with time-stamped logs—for easy DOLE inspection.
- Inclusive culture: gender-neutral policies, menstrual hygiene support, WFH flexibility.
Pitfalls to Avoid
- Treating all team members as “freelancers.”
- Granting de facto regular status then enforcing “project-based” termination.
- Missing holiday pay for skeleton-crew start-ups that stay open on legal holidays.
- Forgetting Rule 1020 registration (many tech start-ups get cited here).
12. Practical DOLE Inspection Checklist (2025)
- Employer & Employee Data Sheet (ERDS).
- Copy of latest Regional Wage Order posted on bulletin board.
- Payslips & DTRs for the last 30 days.
- OSH Policy & Risk Assessment.
- Committee Resolutions for Anti-SH & OSH.
- Certificates of SSS/PhilHealth/Pag-IBIG remittance (current month).
- List of Sub-Contractors with DOLE registration.
- Telecommuting Agreements for WFH staff.
Prepare a Corrective Action Plan within 10 days if deficiencies are found.
Conclusion
Compliance is not optional “legal hygiene” but a competitive advantage—regulators, investors, and top talent will scrutinize how you treat your people. By integrating labor-law obligations into your build–measure–learn cycle from Day 1, a Philippine start-up can minimize costly disputes, attract ESG-minded capital, and scale sustainably.
Tip for founders: calendar a half-day labor-law audit every six months; laws change quickly (e.g., new Solo Parents Act amendments in 2024 and RTWPB wage hikes in 2025). Early course-correction is exponentially cheaper than litigating an illegal-dismissal case years later.