Employee benefits in the Philippines

Employee benefits in the Philippines come in two layers: benefits the law requires, which every employer must give, and benefits an employer chooses to add. The table sorts the common ones.

Scroll the table sideways for more

Required by law, in brief

• SSS, PhilHealth and Pag-IBIG. The employer registers employees, pays its share and sends the employee’s share it deducts from pay.
• 13th month pay. At least one-twelfth of the basic salary earned in the year, for all rank-and-file employees, by 24 December (PD 851).
• Holiday, overtime and night shift pay, and rest days, under the Labor Code.
• Leave. Five days of service incentive leave a year after one year of service (Labor Code Art. 95, with exemptions), and leave for maternity, paternity, solo parents, victims of violence and women after gynecological surgery.
• Retirement pay under RA 7641, for employees retiring at 60 to 65 with at least five years of service, unless a company plan pays more.

The rates, days and exemptions are in mandatory employee benefits.

Common voluntary benefits

• HMO plan. Pays for employees’ consultations, tests and hospital care in the HMO’s network, up to a yearly limit. Dependants can often be added. See HMO for a small business.
• Group life insurance. One policy that pays a set amount to an employee’s beneficiary if the employee dies while covered. See group life insurance.
• A company retirement plan that pays more than the RA 7641 minimum, or starts earlier.
• Allowances such as rice, clothing, medical or laundry allowances.
• Extra leave beyond the legal minimum, such as more vacation or sick days, or birthday leave.

How tax treats benefits

• De minimis benefits are small benefits on a closed BIR list, each tax-free up to its own ceiling (BIR Revenue Regulations 29-2025). The list and ceilings are in de minimis benefits.
• 13th month pay and other benefits are tax-free up to PHP 90,000 a year in total (NIRC Sec. 32(B)(7)(e) as amended by RA 10963), and de minimis amounts above their ceilings count toward that limit (BIR Revenue Memorandum Circular 50-2018, Q5).
• Group insurance premiums an employer pays for its employees are left out of fringe benefit tax (BIR Revenue Regulations 3-98, Sec. 2.33). That does not by itself make them free of income tax for the employee: a benefit exempt from fringe benefit tax may still form part of taxable pay (RR 3-98, Sec. 2.33(C)).
• Other fringe benefits for managers and supervisors can be subject to fringe benefit tax, paid by the employer.

These are general points. Check how a benefit is taxed in your case with an accountant or your Revenue District Office.

Choosing what to add

Questions that help an owner decide:

• What can the business pay every year, including in a slow year? A benefit that is later taken away hurts more than one never given.
• Who are your staff? Ages, families and where they live change what is useful: dependants’ cover matters to parents, and an HMO’s hospital network matters where staff live.
• What do your staff say they value? Ask them. A short anonymous survey of your own team tells you more than any general list.
• What is tax-efficient? Benefits within the de minimis ceilings cost the employee no tax.
• Who will run it? Each benefit needs someone to enrol new staff, remove leavers and answer questions.

Retirement pay obligations

Employers have a retirement pay obligation under RA 7641 unless a company plan or agreement pays more: at least half a month’s salary for each year of service, for employees who retire at 60 to 65 with at least five years of service. Small retail, service and agricultural businesses with not more than ten employees are exempt. Plan for it early, because it falls due when long-serving staff retire. See the retirement pay law guide. The retirement pay calculator works out an estimate.

This page is general information, not legal or tax advice. For your own case, check with DOLE, the BIR or an accountant.