Direct answer: Before an employee signs a Philippine employment contract through an employer of record (EOR), check the identity of the local employing entity, the employee’s role and status, compensation, benefits, working arrangements, and the process for changing terms. Compare that contract with your separate agreement with the EOR. Both should clearly explain what the EOR administers and what your managers decide.
Overview
- Confirm the employer: Identify the Philippine entity signing the employment contract and handling local employment administration.
- Review the terms: Check duties, pay, benefits, working hours, location, probation, confidentiality, and intellectual property.
- Agree on responsibilities: Document how your company and the EOR approve changes, provide payroll information, and respond to employee concerns.
After choosing a Philippine candidate, an overseas team may assume its offer letter covers everything. The EOR then sends a different document for signature. Which sets the salary? Who is named as employer? What happens if the role changes?
Reviewing an EOR employment contract in the Philippines means checking that your promises match what the local entity will administer. DOLE notes that employment documents record roles, status, compensation, and benefits. Clear terms set expectations.
First identify the employer and the documents
In a typical EOR arrangement, the local EOR entity enters into the employment contract with the Philippine employee. The foreign client directs the person’s day-to-day work under a separate service agreement with the EOR. Read the documents together: neither should leave an important task assigned to nobody.
Confirm the employing entity’s legal name, the employee’s name, start date, title, and location. Check that the offer, employment contract, and client–EOR agreement describe the same pay and benefits. Any separate welcome letter should align too.
Who signs the employment contract when using an EOR in the Philippines? Usually the local EOR entity and the employee. Ask which authorized representative signs on the entity’s behalf, and keep the signed version accessible to the people who administer the relationship.
Check the role and employment status
A job title alone may not explain what the employee will do. The contract or a referenced job description should identify core duties, reporting arrangements, and where the work is performed. Your operational manager can set assignments without creating confusion over who holds the formal employer responsibilities.
Review the stated employment status as carefully as the duties. For a probationary employee, reasonable standards for regularization should be communicated at engagement. Philippine Labor Code provisions generally limit probationary employment to six months, subject to the statutory exception for a qualifying apprenticeship agreement. Do not assume a probation label gives managers unlimited discretion over an employment decision.
If the client conducts reviews, agree on how feedback reaches the EOR and who communicates formal decisions.
Make pay and benefits understandable
What should an EOR contract say about salary and benefits? It should identify the agreed pay and distinguish basic salary from allowances or optional benefits. Confirm the currency, payroll schedule, applicable deductions, and method for approving additional payments. An overseas manager’s promise of a bonus is difficult to administer if the EOR has never been told its terms.
Ask how statutory and enhanced benefits are recorded, including applicable contributions, leave, holiday rules, and 13th-month pay. A discretionary perk should not be presented as replacing a statutory entitlement.
The EOR needs accurate information from the client to process payroll. Agree on deadlines for reporting approved overtime, bonuses, salary changes, and leave. Ask what records will be available to confirm calculations and remittances. Philippine employers have duties concerning contributions such as SSS and PhilHealth, as well as applicable withholding tax on compensation.
Spell out hours and location
How should work hours and location appear in an EOR employment contract? State the usual schedule, workplace or remote-work arrangement, and the process for changes. If the employee supports a team in another time zone, discuss night work, holidays, rest days, and approval for extra hours before the person starts.
Clarify who provides equipment and who approves a move to a different work location. A contract might name a Metro Manila or Cebu worksite while a manager expects full-time remote work elsewhere. Resolve that difference before signature, and ensure any related policies given to the employee match the agreed arrangement.
Review confidentiality and work product
Foreign companies often ask, “How are confidentiality and intellectual property addressed in an EOR contract?” Review the clauses covering access to company information, permitted use of systems, return of materials, and rights in work created during employment. Avoid assuming that a confidentiality clause also settles ownership of every deliverable.
Because the EOR is the contracting employer while the client may use the work product, ask how rights and obligations flow through the employee contract and the client–EOR service agreement. Have counsel review terms that matter to your business, especially for software, creative work, or access to sensitive customer information. The employee should also know which company’s security policies apply in daily work.
Plan for changes before they happen
Can the client company change an EOR employee’s salary or role? The client can request or approve a business change, but it should use the agreed process with the employing entity. Check who prepares any amendment, obtains the employee’s acknowledgment where needed, and updates payroll and records.
The same planning helps if you later establish your own Philippine entity. Ask how the parties would assess employment continuity, new documents, accrued benefits, and transfer of records. Avoid promising a seamless automatic transfer before the proposed steps have been reviewed for the particular employees.
Before anyone signs, use this short review list:
- Match the offer letter, local contract, and service agreement on pay and benefits.
- Confirm who manages daily work and who communicates formal employment decisions.
- Document payroll inputs, approval deadlines, and changes to the role.
- Review probation standards, working arrangements, and information protection.
- Keep signed copies and a clear contact for employee questions.
Launchpad supports foreign companies exploring EOR services in Metro Manila and Cebu. Bring the proposed role, offer terms, and questions about local employment administration to the discussion. Launchpad can help you map the responsibilities to the arrangement you need, so the candidate receives clear terms and your managers know when to involve the local employer.
Before making an offer, ask the candidate whether a term differs from what they understood during recruitment, then resolve discrepancies before signature.
Frequently asked questions
1. Who signs the employment contract when a foreign company uses an EOR in the Philippines?
In a typical arrangement, the identified Philippine EOR entity and the employee sign the local employment contract. Confirm the entity’s legal name and its authorized signatory.
2. Is the EOR or the foreign client company the legal employer?
The local EOR entity is intended to be the contracting employer in the EOR arrangement. The foreign client usually directs daily work. Review both agreements and actual practices rather than relying only on the EOR label.
3. What terms should a foreign company review before an EOR employee signs?
Check the employing entity, start date, role, employment status, compensation, benefits, schedule, work location, probation terms, confidentiality, and process for amendments. Reconcile these with the offer and service agreement.
4. Should the contract identify the employee’s role and day-to-day manager?
Yes. The duties and reporting relationship should be understandable to the employee. Clarify which manager assigns work and which EOR contact handles formal employment matters.
5. How should salary, allowances, and payment dates be stated?
State the agreed pay clearly and distinguish salary from allowances or discretionary benefits. Confirm the payroll schedule and how additional payments are authorized and communicated to the EOR.
6. What should the contract say about statutory contributions and benefits?
It should accurately reflect applicable local entitlements and identify additional benefits promised to the employee. Ask the EOR how deductions, employer contributions, and benefit administration will appear in payroll records.
7. Can an EOR employment contract include a probationary period?
Yes, where appropriate under Philippine law. Review the period and ensure reasonable performance standards are made known to the employee at engagement. Coordinate the evaluation process with the EOR.
8. Who sets and communicates the employee’s performance standards?
The client can define job expectations with the EOR, but the employee needs clear standards at the appropriate time. Agree on who communicates them and how assessments are documented.
9. How should work hours, remote work, and work location be addressed?
Record the normal arrangement and any relevant policy. Agree on how schedule or location changes are approved and reported, particularly when overseas time zones or holiday work are involved.
10. What should foreign companies check about confidentiality and intellectual property?
Check what information the employee must protect, who may use their work product, and how those commitments align with the client–EOR agreement. Seek tailored review for important intellectual property.
