I. Introduction

In the Philippines, consulting and recruiting companies operate within a highly regulated environment governed primarily by the Labor Code of the Philippines (Presidential Decree No. 442, as amended), the Migrant Workers and Overseas Filipinos Act of 1995 (Republic Act No. 8042, as amended by Republic Act Nos. 9422 and 10022), the Department of Migrant Workers Law (Republic Act No. 11641), and various Department Orders issued by the Department of Labor and Employment (DOLE) and the Department of Migrant Workers (DMW).

The regulatory framework distinguishes sharply between:

Pure management/HR consulting (generally not subject to recruitment licensing);
Executive search, headhunting, and recruitment placement activities (require DOLE or DMW licensing); and
Recruitment process outsourcing (RPO) or manpower supply that involves employer-employee relationship with deployed workers (treated as permissible job contracting under DOLE D.O. 174-17 or prohibited labor-only contracting).

Failure to obtain the correct license when required constitutes illegal recruitment under Article 38 of the Labor Code and Section 6 of RA 8042 (as amended), which is punishable by imprisonment of 6–12 years (or life imprisonment and fines up to ₱5 million for large-scale or syndicated cases).

II. General Business Registration Requirements (Applicable to All Consulting and Recruiting Companies)

Every consulting or recruiting company, regardless of specialization, must comply with the following:

Securities and Exchange Commission (SEC) registration (for corporations/partnerships) or Department of Trade and Industry (DTI) registration (for single proprietorships).
Bureau of Internal Revenue (BIR) registration and issuance of Certificate of Registration (COR).
Mayor’s Permit / Business Permit from the local government unit (LGU) where the principal office is located.
Social Security System (SSS), PhilHealth, and Pag-IBIG Fund employer registrations.
Barangay clearance and BIR-registered books of account.

These are mandatory under the Corporation Code, Tax Code, and Local Government Code. Non-compliance prevents lawful operation.

III. Pure Consulting Companies (No Recruitment or Placement Activity)

Companies engaged exclusively in management consulting, HR advisory, organizational development, training, compensation studies, or similar services that do not involve referral, placement, or deployment of workers are not required to secure a recruitment license.

Examples of permitted activities without recruitment license:

Salary benchmarking and compensation advisory
Organizational diagnosis and restructuring design
Leadership training and coaching
HR policy formulation
Culture surveys and employee engagement programs

Such companies only need the general business registrations listed in Section II. However, if the consulting contract includes “sourcing,” “shortlisting,” or “referral for possible employment,” the activity may be construed as recruitment, requiring a license.

IV. Domestic Recruitment and Placement Agencies (Local Employment)

Any entity that recruits, refers, or places workers for Philippine-based employers must obtain a Private Recruitment and Placement Agency (PRPA) License from the DOLE Regional Office having jurisdiction over the principal place of business.

Legal Basis

Articles 13(b), 25–39, Labor Code of the Philippines
DOLE Department Order No. 141-14 (as amended by D.O. 198-18 and subsequent issuances)

Types of License

Regular License – valid for four (4) years
Provisional License – valid for one (1) year (issued to new applicants)

Documentary Requirements (as of 2025)

SEC/DTI registration with primary or secondary purpose including “recruitment and placement”
Mayor’s Permit expressly indicating recruitment and placement activity
Proof of financial capacity (₱5 million paid-up capital for corporations; ₱2 million for single proprietorships using escrow account)
Surety bond of ₱500,000 (regular) or ₱200,000 (provisional)
NBI clearance and medical certificate of responsible officers
Office photos, lease contract, and DOLE inspection report
Skills registry system (PhilJobNet registration)

Fees (2025 rates)

Filing fee: ₱10,000
License fee: ₱50,000 (regular) / ₱25,000 (provisional)
Annual report fee: ₱10,000

Prohibited Acts and Fees

Charging placement fees from applicants is strictly prohibited for domestic recruitment (DOLE D.O. 198-18, Rule II, Section 4).
All recruitment costs must be shouldered by the employer/principal.
Recruitment via electronic means (online job platforms) must still be covered by a PRPA license if the operator earns from the placement.

Executive search and headhunting firms that charge success fees from employers (typically 20–33% of annual salary) must possess a PRPA license if they actively refer or endorse candidates for employment.

V. Overseas Recruitment Agencies (Land-Based and Sea-Based)

All agencies recruiting Filipino workers for employment abroad must be licensed by the Department of Migrant Workers (DMW), formerly the Philippine Overseas Employment Administration (POEA).

Legal Basis

RA 8042 as amended
RA 11641 (DMW Law)
DMW Memorandum Circular No. 08, series of 2023 (latest consolidated rules as of 2025)

Types of License

Regular License – 4 years
Provisional License – 2 years (new applicants)

Capitalization Requirements (2025)

Single proprietorship: ₱5 million escrow deposit
Corporation/partnership: ₱10 million paid-up capital

Additional Requirements

Accreditation of foreign principals (Job Order/Employment Contract authenticated by Philippine Embassy/Consulate)
Special Recruitment Authority (SRA) for job fairs or direct hiring
Attendance of responsible officers in Pre-Licensing Orientation Seminar (PLOS)
Escrow deposit of ₱1 million (joint and solidary liability fund)
Comprehensive surety bond of ₱5 million

Allowable Fees (Land-Based Workers)

Maximum placement fee: one (1) month salary, except for domestic workers (prohibited)
Processing fees for seafarers: prohibited (all costs borne by principal/employer)

Agencies recruiting professional workers (nurses, engineers, IT) on a “no placement fee” basis are increasingly common due to competition and DMW policy direction.

VI. Recruitment Process Outsourcing (RPO) and Permissible Job Contracting

Companies that take over the entire recruitment process of another company but do not become the employer of record are generally treated as recruitment agencies requiring PRPA license.

However, if the company assumes employer status over the deployed workers (pays salaries, remits SSS/PhilHealth, exercises control), the arrangement is job contracting, governed by DOLE Department Order No. 174-17 (as amended by D.O. 238-24).

Requirements for Legitimate Job Contracting (Service Contractors/Subcontractors)

DOLE Registration as Contractor/Subcontractor (valid 3 years)
Minimum substantial capital of ₱5 million (net worth)
Proof of ownership/lease of equipment/tools (if necessary for the service)
Control over workers’ method and means

Labor-only contracting is strictly prohibited and carries criminal liability under Article 106–109 of the Labor Code.

Many BPO and IT consulting firms that deploy workers to clients register as contractors rather than recruitment agencies.

VII. Professional Firm Registration (When Applicable)

If the consulting company is composed of professionals in regulated professions (accountants, engineers, architects, lawyers, etc.), the firm itself must be registered with the Professional Regulation Commission (PRC) and the relevant Professional Regulatory Board (APO accreditation for accounting firms, etc.).

HR consulting firms led by licensed psychologists offering psychometric testing must ensure testers are PRC-licensed psychologists or registered psychometricians.

VIII. Voluntary Certifications (Common in the Industry)

While not legally required, the following certifications enhance credibility:

ISO 9001:2015 (Quality Management System) – very common among top recruiting firms
Investors in People (IiP) accreditation
POEA/DMW “Award of Excellence” or “Top Performer” seal
Membership in reputable associations:
- People Management Association of the Philippines (PMAP)
- Personnel Management Association of the Philippines (for domestic)
- Philippine Association of Legitimate Service Contractors (PALSEC)
- Philippine Staffing Federation (PSF)

IX. Penalties for Illegal Recruitment

Simple illegal recruitment: 6 years and 1 day to 12 years imprisonment + fine ₱1M–₱5M
Large-scale or syndicated: life imprisonment + fine ₱2M–₱5M
Economic sabotage provisions apply when committed against three or more persons

The DMW and DOLE maintain public lists of licensed agencies and blacklisted entities at dmw.gov.ph and dole.gov.ph.

X. Conclusion

Consulting companies that limit themselves to advisory services face only ordinary business registration requirements. The moment the company engages in any form of candidate sourcing, referral, shortlisting, or placement—whether domestic or overseas—the appropriate DOLE PRPA license or DMW license becomes mandatory.

The Philippine regulatory regime is one of the strictest in the world, designed to protect workers from exploitation. Companies are well-advised to consult competent labor counsel before commencing operations to determine the correct licensing pathway and avoid criminal liability for illegal recruitment.