(Comprehensive legal guide in the Philippine context)

Scope. This article covers families and individuals who directly hire private caregivers working in the Philippines—often performing duties similar to “kasambahay” (domestic workers) but focused on care (elderly, persons with disability, post-operative, chronic illness). It explains when paying wages in cash is lawful, the guardrails that apply, and how to stay compliant on payroll, benefits, taxes, and documentation.

1) The short answer

Yes—cash payment of wages to a privately hired caregiver is legal in the Philippines. The law requires wages to be paid in legal tender and directly to the worker, and it allows payment in cash (paper bills) or through other modes with the worker’s consent. What matters is compliance with the Labor Code, the Domestic Workers Act (Kasambahay Law) and its IRR, regional wage orders, and mandatory social protection laws (SSS, PhilHealth, Pag-IBIG). Documentation is essential.

2) Legal bases and key rules

Form of wage payment (legal tender). Philippine labor rules require that wages be paid in legal tender. Promissory notes, merch vouchers, or IOUs are not lawful substitutes for wages. Cash (Philippine peso bills) is the quintessential legal tender. Bank transfer or e-wallet is permitted if voluntarily accepted by the worker and if the worker has reasonable access to withdraw the funds without cost to them.
Direct payment to the worker. Wages must be paid directly to the caregiver. Payment to another person (e.g., a family member or agency) generally requires the caregiver’s written authorization and must still protect the caregiver’s full wage.
Frequency and place/time of payment. Domestic workers (including live-in/live-out caregivers hired by a household) must be paid on time and regularly (commonly at least once a month for kasambahay; many employers pay semi-monthly). Payment should occur at or near the workplace and during working hours, unless the parties agree otherwise and such arrangement does not prejudice the worker.
No wage deductions except those allowed by law. Unlawful deductions (e.g., charging the caregiver for food, lodging, or recruitment/placement) are prohibited. Lawful deductions include government contributions and those authorized in writing (e.g., salary loans) within legal caps.
Record-keeping and payslips. Employers must keep pay records and provide itemized payslips each pay day, even if wages are paid in cash.

3) Are private caregivers “kasambahay”?

Often, yes—especially where the caregiver is hired by a household (not an agency) to provide care in the employer’s home, uses the employer’s tools, and is supervised by the family. In such cases, the Kasambahay Law (R.A. 10361) applies, on top of general labor standards. If the caregiver is instead employed by a licensed agency or facility, the employer of record is the agency/facility; paying the worker directly in cash can conflict with that employment arrangement and should be coordinated with the agency.

Classification tip: The more the family controls hours, methods, and supervision, and the work is performed personally for the household, the more the caregiver is a household employee (kasambahay), not an independent contractor. Misclassification risks penalties and back liabilities.

4) Cash vs. non-cash: what’s allowed?

Cash (bills). Fully lawful. Use count-and-acknowledge practice (see §11).
Bank transfer/e-wallet. Lawful with worker’s consent, and the worker must be able to withdraw without fees or loss. Keep transaction proof.
Checks. Generally allowed if the caregiver agrees and can encash without cost or delay.
In-kind (food, lodging, supplies). Not a substitute for wages. The employer may provide meals and lodging at the employer’s expense; do not deduct these from wages unless the law allows a narrow, agreed deduction.

5) Minimum wage and region-based rules

Domestic worker minimum wages are set by Regional Tripartite Wages and Productivity Boards (RTWPBs) and differ by region (and sometimes by chartered city/first-class municipality). Always check the current regional wage order for domestic workers where the work is performed. Paying in cash below the applicable kasambahay minimum wage is unlawful regardless of mode of payment.

6) Working time, rest, and 13th-month pay

Hours/Rest: Domestic workers must have at least 8 hours of rest per 24 hours and 24 consecutive hours of weekly rest (commonly one day).
Overtime/Night work: If overtime or premium rest-day/night work is agreed or required, the corresponding premium pay applies.
13th-month pay: Domestic workers are entitled to 13th-month pay (at least 1/12 of basic wages earned in the calendar year), payable not later than December 24. Cash payment is allowed; document it.

7) Social protection: SSS, PhilHealth, and Pag-IBIG

Mandatory coverage applies to kasambahay/caregivers:

Registration: Employer and worker must be registered with SSS, PhilHealth, and Pag-IBIG.
Contributions: Shared by employer and worker per agency schedules (with thresholds where the employer shoulders the full contribution for very low wages). Remit on time using the correct payment channels.
Cash wages do not excuse non-registration or non-remittance. Keep official receipts and contribution reports.

8) Taxes and withholding

Minimum Wage Earner (MWE) status: Domestic workers commonly qualify as MWEs, making their basic statutory minimum wage (and certain pay premiums) exempt from income tax.
If pay exceeds MWE conditions: Employers of household workers who pay taxable compensation are generally withholding agents for compensation tax, with registration and reporting obligations.
Practical approach:
- Determine if the caregiver qualifies as an MWE under current thresholds/rules.
- If yes: no withholding on exempt pay, but keep documentation (contract, payslips, proof of regional minimum).
- If no: register as a withholding agent, apply withholding tables, file withholding returns, and issue BIR Form 2316 at year-end.
Independent contractor scenario: If the caregiver truly operates as a self-employed professional (rare for household arrangements), cash payments remain lawful, but the caregiver must be BIR-registered and issue official receipts; the payer may have expanded withholding obligations depending on status and thresholds.

(When in doubt on tax characterization, treat the caregiver as an employee if the household controls the means and methods of work.)

9) Deductions, advances, and loans

Permissible deductions include SSS/PhilHealth/Pag-IBIG contributions and lawful, written salary deductions (e.g., SSS salary loan amortizations, judicial orders).
Prohibited deductions include recruitment or placement fees, breakages not attributable to the worker’s willful act, or charging for basic necessities normally shouldered by the employer.
Salary advances/loans must be documented in writing, with clear schedules, interest (if any) within legal limits, and deductions capped so take-home pay isn’t unlawfully diminished.

10) Termination, final pay, and certificates

Grounds and notice: Follow the Kasambahay Law and Labor Code standards (just/authorized causes, procedural due process).
Final pay: Settle accrued wages, 13th-month proportional pay, unused rest-day premiums (if applicable), and return of any worker property in cash (or agreed mode) with a final payslip.
Certificates: Provide a Certificate of Employment upon request.

11) How to pay cash correctly (practical checklist)

Written employment contract. Use a kasambahay-compliant contract covering wage rate, schedule, rest days, 13th-month pay, benefits, SSS/PhilHealth/Pag-IBIG, and mode of payment (cash).
Wage schedule. Set a clear pay date (monthly or semi-monthly).
Count-and-acknowledge.
- Count cash in the caregiver’s presence.
- Issue an itemized payslip (date, period covered, basic pay, overtime/premiums, 13th-month accrual or payment, government deductions, net pay).
- Obtain the caregiver’s signature/thumbmark on:
  - Payslip or a Wage Receipt Acknowledgment stating: “Received in full the net cash wage of ₱___ for the period ___.”
- Optionally video or double-witness the count (with consent) for high-trust documentation.
Keep records for at least 3–4 years: contracts, time/rest logs, payslips and wage receipts, SSS/PhilHealth/Pag-IBIG contribution receipts, and any written authorizations.
Government remittances. Remit contributions on time and file any required reports/updates (change of wage, separation, etc.).
Audit trail. Consider supplementing cash with a photo/scan of the signed payslip and, if feasible, occasional partial bank transfer for traceability (with the worker’s consent).

12) Special topics

Large cash payments. There is no general cap that bans paying salaries in cash, but practical and safety issues arise. For unusually large sums, prefer bank transfer with the worker’s consent to minimize risk and to create a clear audit trail.
Coins as wages. Avoid paying significant amounts in coins; coin legal-tender limits exist and paying wages with excessive coin is considered bad-faith payment.
Accommodation and meals. These are typically for the employer’s account and should not reduce the cash wage below the legal minimum.
Privacy. Keep the caregiver’s personal data and medical information confidential; only collect what is necessary for payroll and statutory registration.
Minors. Child labor prohibitions apply. Do not hire caregivers below permissible age or in hazardous conditions.
Foreign caregivers. Ensure the worker has the legal right to work in the Philippines; immigration status does not negate wage protections and lawful payment rules.

13) Common compliance pitfalls (and how to avoid them)

Paying below regional kasambahay minimums → Verify the current domestic worker wage order for your region and adjust promptly.
No proof of cash payment → Always issue payslips and secure signed receipts.
Skipping SSS/PhilHealth/Pag-IBIG → Register and remit; cash wages do not excuse non-compliance.
Improper deductions → Deduct only what the law allows and with written consent where required.
Misclassification as contractor → If you control schedule and methods, treat the caregiver as an employee.
Late or irregular pay → Establish and follow a fixed pay calendar.

14) Templates (ready to adapt)

A) Payslip essentials (cash wage)

Employer: [Name & Address]
Employee: [Name], Position: Caregiver (Kasambahay)
Period Covered: [From–To] | Pay Date: [Date]
Basic Wage: ₱[ ]
Premiums/OT/Rest-day/Night Diff: ₱[ ]
13th-Month (accrual or paid): ₱[ ]
Less: SSS ₱[ ] | PhilHealth ₱[ ] | Pag-IBIG ₱[ ] | Other lawful deductions ₱[ ]
Net Cash Pay: ₱[ ]
Employer Rep: [Signature/Name]
Employee Acknowledgment (Cash Received): [Signature/Thumbmark], Date/Time: [ ]

B) Wage Receipt Acknowledgment “I, [Worker’s Name], acknowledge receipt in cash of ₱[amount] as my wages for [period], fully corresponding to the attached payslip. Signature/Thumbmark, Date.”

C) Written authorization for deductions “I voluntarily authorize deduction of ₱[amount] per [pay period] to cover [lawful purpose], not to exceed legal limits, effective [date].”

15) Frequently asked questions

Q1: Is paying cash illegal if we also provide meals and lodging? No. Meals and lodging are generally on the employer’s account and do not replace cash wages. Keep the cash wage at or above the regional minimum and document everything with payslips and receipts.

Q2: Can we switch from cash to bank transfer later? Yes, with the caregiver’s consent. Update the contract or execute a short written addendum noting the new mode, bank/e-wallet details, and that withdrawals will be fee-free to the worker.

Q3: Must we issue an official receipt (O.R.) for wages paid in cash? No. Payslips and wage acknowledgments are the standard documents for employee wages. O.R.s are for business income collections, not for paying household employees.

Q4: Are cash advances allowed? Yes, if documented and repaid through lawful, agreed deductions that don’t reduce take-home pay below legal limits.

Q5: What happens if we underpay or miss SSS/PhilHealth/Pag-IBIG? Expect assessments, surcharges, penalties, and potential labor complaints. You can correct prospectively and settle arrears with the agencies.

16) Compliance roadmap (one-page)

Identify classification (household employee vs. agency worker).
Check regional domestic-worker minimum wage.
Execute kasambahay-compliant employment contract.
Register both parties with SSS/PhilHealth/Pag-IBIG; set up remittance schedule.
Choose payment mode (cash is fine); set fixed pay dates.
Implement payslips + signed cash receipts every pay day.
Observe rest days, working time, and 13th-month.
Keep records 3–4 years; update wages and contributions when rates change.
On separation, pay final pay in cash (or agreed mode) with final payslip and certificate of employment.

17) Bottom line

Paying a private caregiver in cash is perfectly legal in the Philippines. Compliance turns on what you pay (not below the regional minimum and with all mandated benefits), how you pay (legal tender, on time, with payslips and receipts), and what you document (contracts, records, and government remittances). Follow the steps above and you’ll be on solid legal ground.