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Understanding Payroll for EOR Staff

Managing payroll for employees hired through an Employer of Record (EOR) can be complex, especially when ensuring compliance with local labor laws. At VirtualStaff.ph, we simplify payroll processing for businesses hiring in the Philippines by handling all payroll-related responsibilities, including salary disbursement, tax withholding, and government-mandated benefits. This article explains how payroll works for EOR staff and what employers need to know.

How Payroll Works for EOR Staff

1. Salary Processing and Disbursement

When you hire employees through VirtualStaff.ph’s EOR service, we ensure that their salaries are processed and disbursed on time. The payroll cycle typically follows these steps:

  • Employers provide VirtualStaff.ph with the agreed-upon salary for each employee.
  • We calculate the net pay after deducting applicable taxes and contributions.
  • Salaries are disbursed directly to employees through secure and timely payment methods.

2. Tax Withholding and Compliance

One of the primary responsibilities of an EOR is to ensure proper tax compliance. In the Philippines, the following taxes apply to employee salaries:

  • Withholding Tax: We deduct the required income tax based on the Bureau of Internal Revenue (BIR) tax brackets.
  • Social Security System (SSS) Contributions: Employees and employers contribute to SSS for retirement and disability benefits.
  • PhilHealth Contributions: This provides healthcare benefits to employees.
  • Pag-IBIG Fund Contributions: Employees contribute to this fund, which offers housing and loan benefits.

VirtualStaff.ph ensures that all tax withholdings and contributions are processed correctly and submitted to the relevant government agencies on behalf of both the employer and employee.

3. Government-Mandated Benefits Management

Filipino employees are entitled to government-mandated benefits, which are automatically deducted and contributed as part of the payroll process. These include:

  • SSS (Social Security System) – Retirement, disability, and maternity benefits.
  • PhilHealth (Philippine Health Insurance Corporation) – Medical and hospitalization coverage.
  • Pag-IBIG (Home Development Mutual Fund) – Housing loan and savings benefits.

As part of our EOR service, we handle the entire benefits administration, ensuring compliance with labor laws and timely remittances.

4. Payroll Reports and Transparency

We provide employers with detailed payroll reports that outline salary breakdowns, deductions, and contributions. These reports offer transparency and help businesses track labor costs efficiently.

5. Paid Leaves, Bonuses, and Additional Compensation

Philippine labor laws mandate certain employee benefits beyond regular salary payments:

  • 13th-Month Pay: A mandatory year-end bonus equivalent to one month’s salary, provided to all full-time employees.
  • Paid Leave Entitlements: Employees may be entitled to paid vacation and sick leaves based on company policy and labor law requirements.
  • Overtime Pay and Holiday Pay: If employees work beyond standard hours or during public holidays, they may receive additional compensation in accordance with labor laws.

Our EOR solution ensures that all these payments are calculated and disbursed accurately.

6. Handling Payroll Adjustments and Compliance Updates

Payroll regulations in the Philippines are subject to periodic updates. VirtualStaff.ph stays up to date with any changes in labor laws, tax regulations, and benefit contributions to ensure continued compliance. If there are any adjustments required due to salary changes, deductions, or compliance updates, we manage these seamlessly to avoid disruptions.

Benefits of Using VirtualStaff.ph for Payroll Management

✅ Full Compliance: We ensure compliance with all Philippine labor laws, preventing potential legal risks. 

✅ Time-Saving Payroll Processing: Employers save time by outsourcing payroll and compliance management to our experienced team. 

✅ Accurate and On-Time Payments: Employees receive their salaries and benefits without delays, fostering trust and job satisfaction. 

✅ Transparent Reporting: Detailed payroll reports give businesses full visibility into salary disbursements, taxes, and contributions.

For more information or to get started with our EOR service, Book a Demo today!