I got an email last week from someone who’d just hired their first Filipino contractor.
“Do I need to pay SSS? What about PhilHealth? And what’s this 13th-month pay thing everyone keeps talking about?”
Valid questions.
And the answers matter because getting this wrong can cost you good people.
Things Are Changing Fast
The upcoming House Bill 6718 just passed third and final reading from the Philippines Congress and is awaiting consideration from the Senate.
The Freelance Workers Protection Act.
When it becomes law, it’s going to change how payment works for Filipino contractors.
Basically here’s what’s gonna happen:
Mandatory 30% down payment upfront upon hiring a contractor.
Written contracts required.
10% night differential for overnight work.
This means you as the employer/client needs clear payment terms from day one.
For the Filipino freelancer it weeds out the clients who were never serious in the first place.
The Four Benefits Everyone Asks About
SSS. PhilHealth. Pag-IBIG. 13th-month pay.
These are mandatory benefits for employees in the Philippines.
Everyone talks about them.
And here’s what you need to know: Contractors don’t get them.
Not automatically. Let me explain why.
Contractors Handle Their Own Benefits
Contractors can choose to enroll in SSS, PhilHealth, and Pag-IBIG as self-employed individuals.
When they do, they get the exact same coverage as employees.
Same benefits. Same maternity coverage. Same retirement pension.
They just pay both portions themselves. The employee portion and the employer portion.
Most contractors already do this.
It’s how the system works.
What About 13th-Month Pay?
13th-month pay is essentially a mandatory Christmas bonus for employees.
Equal to one month’s salary.
Contractors aren’t entitled to this unless you specifically negotiate it into your agreement.
Which is rare.
I’ve worked with dozens of Filipino contractors over the years. Maybe two or three have ever asked about it.
What Contractors Are Actually Entitled To
Fair payment for work completed think something like $5 an hour or $600 a month minimum.
Safe working conditions (yes, even for remote work).
A clear, written contract.
That’s the baseline.
Everything else is negotiable.
The contract should spell out scope, deliverables, payment terms, timelines.
And it needs to make crystal clear that this is an independent contractor relationship.
Not an employment relationship.
Benefits That Stand Out
Private health insurance or HMO access makes a real difference.
The public system through PhilHealth works. But private coverage expands options significantly.
Professional development budgets hit differently.
Access to courses, certifications, training shows you’re invested in a long-term partnership.
I had a contractor once tell me that her previous client paid for her to take an advanced Excel course.
That client got her best work for three years.
Because she felt valued beyond just the transaction.
What Competitive Rates Actually Look Like
Filipino contractor rates vary wildly based on skills, experience, and specialization.
Entry-level positions should start $5 per hour and $600 a month at the minimum
Experienced specialists in technical roles might command $10-15+ per hour.
The market has matured.
Filipino contractors increasingly understand their value and can compare opportunities across platforms.
Rate compression is happening at the lower end. Specialized skills continue to command premium pricing.
Finding your rate sweet spot where you’re getting great work and the contractor feels properly compensated?
That pays dividends over time.
You know what’s more expensive than paying competitive rates?
Constant recruiting. Constant onboarding. Constant knowledge loss.
The Written Contract Is Non-Negotiable
Every single contractor relationship should start with a written contract.
I don’t care if it’s a simple Google Doc.
It needs to exist.
That contract should specify:
- Scope of work
- Deliverables
- Payment terms and schedule
- Explicit confirmation of the independent contractor relationship
It should clarify that you’re not providing employee benefits.
That the contractor handles their own taxes.
That they maintain control over how and when they complete the work.
This protects both parties.
Skipping this step is penny wise and pound foolish.
The contract doesn’t need to be 50 pages. But it needs to cover the essentials.
Why This Actually Matters
Look, I’m making this sound simpler than it sometimes feels in practice.
There are edge cases. There are gray areas.
The Philippine labor code is complex.
But the upside of getting it right?
Building remote teams with incredible Filipino talent who feel properly valued and genuinely invested in your success.
That’s worth figuring out.
Start with a clear contract. Pay fair rates. Be upfront about what you’re offering and what you’re not.
The rest usually works itself out.
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