The Philippines has a large pool of talented English-speaking workers, which makes the country very appealing to foreign companies looking to work with global talent. Companies interested in hiring workers from the Philippines have several options: establishing an entity in the country, working with an employer of record (EOR) in the Philippines, or hiring independent contractors rather than full-time employees.
Companies are increasingly opting to hire international independent contractors to supplement their workforce, especially for short-term projects or specific needs. If you’re considering hiring contractors in the Philippines, here’s what you need to know.
How to hire contractors in the Philippines
In order to hire a remote independent contractor in the Philippines, you’ll need to not just find the right candidate, but also familiarize yourself with the relevant legal and tax requirements to ensure compliance.
Review laws governing independent contractors in the Philippines and your business’ country of operation
Before you start engaging contractors, start by reviewing the relevant laws governing independent contractors in the Philippines and in your home country (or the country where your company is based). The Philippines’ Department of Labor and Employment (DOLE) issues guidelines for employment arrangements involving Filipino residents, including independent contracting. Your company’s home country of operation may also have laws governing the use of independent contractors. Review applicable labor laws before moving forward so you don’t inadvertently create legal trouble for your business.
Find and select candidates
Once you’re familiar with the applicable labor laws for independent contractors, you can begin your search for the ideal candidate. As in any hiring search, you can rely on referrals, use a recruitment service, or find candidates yourself. It’s increasingly popular to find foreign candidates through online job boards. Some options where you can find excellent Filipino independent contractors include:
- Onlinejobs.ph
- EasyOutsource
- Jobstreet.com
- Virtualstaff.ph
International websites like Indeed and ZipRecruiter may also offer promising leads to Filipino independent contractors.
When assessing candidates, you may have to adapt your process somewhat for international contractors. For example, if language fluency is a concern, make sure to conduct virtual video interviews so you can hear candidates speak naturally. Be aware that resumes and other documents from candidates may not follow the same conventions as those you’re used to in your part of the world.
Determine payments and taxes
Like most countries, the Philippines does not require hiring companies to withhold taxes from payments to independent contractors. Instead, Filipino independent contractors must manage their own tax payments.
When it comes to paying the independent contractor, you’ll need to decide on an appropriate method for converting the currency and delivering the payment. Some contractors may already have a preferred digital payment platform they use, while others will defer to your platform of choice. Make sure to establish which currency you will make the payment in, so that there are no misunderstandings later.
Draft a contractor agreement
To finalize the engagement, you’ll need to draft an independent contractor agreement and have it signed by both parties. This agreement outlines the contractor’s responsibilities and the business’ obligations to them. Include the scope of the contractor’s work, their payment rate and invoicing terms, and any other relevant details. Drafting and signing the contractor agreement is a crucial step in the contractor onboarding process.
Challenges of hiring contractors from the Philippines
Hiring independent contractors in any foreign country comes with risks and potential disadvantages. Here are some of the potential challenges to be aware of:
- Risk of employee misclassification: Whenever a company hires independent contractors, there’s the risk that a relevant government body might reclassify them as employees. Employee misclassification can lead to legal consequences for the hiring company as well as new, costly obligations toward the employee.
- Less control over methods and schedule: Unlike full-time employees, contractors are more autonomous, meaning the hiring company has less control over their processes and work schedules. Less control in these areas creates a risk of lower-quality performance.
- International barriers: If you’re not familiar with the culture and standards in the Philippines, you may face some roadblocks when working with a new Filipino independent contractor. You’ll need sensitivity and a willingness to adapt at times.
Benefits of hiring Filipino contractors
The Philippines is one of the best countries to hire independent contractors from, and doing so can offer a variety of benefits to your business. Here are some of the top advantages of hiring Filipino contractors:
- Improved service: Improving service is just one reason to hire contractors in other countries. Hiring international contractors helps businesses ensure they always have company representatives available to help clients, regardless of the time of day. For reference, the time zone in the Philippines is GMT+8.
- Cost savings: Working with international contractors, including those in the Philippines, is often a cost-effective alternative to hiring full-time employees for specific tasks. You can use Oyster’s employee cost calculator to estimate the cost of hiring an employee in a given country and see the difference. Just be aware of conversion rates when comparing prices from different contractors.
- Access to specialized skill sets: Needing talent for short-term projects is one of the signs you should hire a foreign independent contractor. If you have a specific project that requires a specialized skill set, hiring an independent contractor from the Philippines is a great way to fill that gap without a long-term commitment.
- A more diverse workforce: Hiring from the Philippines can help you build a more diverse, inclusive workforce. Diverse teams are more creative, make better decisions, and boost employee morale.
Use Oyster to engage and pay contractors in the Philippines
Expanding your workforce with qualified, cost-effective independent contractors from the Philippines can push your company to greater success. If you’re interested in hiring from the Philippines but still not sure where to start, Oyster can help.
As a leading global employment platform, Oyster eliminates the hassle of hiring, compliance, onboarding, and making payments to your international workers, including independent contractors. Learn more about our global contractor management platform to see the difference Oyster can make for your team.
About Oyster
Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.
Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.
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