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USAEmployment Guide to Hiring in the Philippines and India
The Philippines and India have been offshoring and outsourcing pioneers since the 1980s. Their respective unique approaches make them a cut above the rest.
If you struggle to fill positions due to limited local options, it might be time to explore the global talent pool. India and the Philippines are among the top offshoring destinations for your organisation. Examine the employment practices you need to consider in these countries below!
Employment Practices in the Philippines and India
1. Probationary Period
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When hiring employees from these countries, you must consider their respective employment regulations and how they differ, such as the length of probationary periods.
Philippines
Article 281 of the Philippine Labour Code states that the maximum duration of a probationary period is six months from the employee's start date unless an apprenticeship agreement specifies a longer term.
An employee on probation may be terminated for valid reasons or if they do not meet the employer's standards for regular employment. If they continue working after probation, they will be considered a regular employee.
India
Probationary periods generally allow employers to assess an employee's performance before confirming permanent employment.
While probation is common, it is not directly defined by the Industrial Employment (Standing Orders) Act of 1946.
The length of the probationary period can vary depending on company policy, industry, or specific labour laws in different Indian states.
2. Leave Entitlements
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Encouraging leaves is essential for business success. Employees who take time off enjoy better well-being and job satisfaction, while employers benefit from higher retention, improved morale, and increased productivity.
Government agencies from the Philippines and India have mandates on the minimum entitlements employers should provide to ensure that all team members have job security and reasonable compensation should they require time off.
Philippines
Philippine laws provide for various statutory leaves, including service incentives, sickness, maternity, paternity, special leave for women, solo parents, and those granted by the employer under company policy.
Common Types of Employee Leaves in the Philippines
| Types of Leave | Description | Duration and Applicability |
| Sick Leave | Private-sector companies usually offer paid sick leave to their employees upon hire or regularisation. However, this is not a statutory requirement and is instead part of the company’s employment policy or contractual agreement. | The number of paid sick leave days may vary from one company to another, and some may offer less than or more than 12 days, depending on the company's policies. Employers have the sole discretion to set the number of sick leave days. |
| Service Incentive Leave (SIL) | Employees with at least one year of service are entitled to Service Incentive Leave (SIL) for personal reasons, including rest or emergencies. | The Philippine government mandates 5 days of paid leave annually and any unused can be carried over or converted to cash, depending on company policy. However, some workers may be exempt from this benefit. |
| Maternity Leave | The Expanded Maternity Leave under R.A. No. 11210 grants time off and compensation to female employees who have given birth, had a miscarriage, or undergone emergency termination of pregnancy (ETP), regardless of civil status. | Female employees receive 105 days of paid maternity leave for live childbirth. Solo parents get an additional 15 days, totaling 120 days. For miscarriages or stillbirths, the entitlement is 60 days. |
| Paternity Leave | The Paternity Leave Act enables married fathers to support their partners during childbirth and recovery. | Fathers can use 7 days of paid leave for the first four deliveries or miscarriages of their legitimate spouse. |
| Parental Leave for Solo Parents | Parental leave for solo parents granted under Republic Act No. 8972 to individuals solely responsible for parenting. | Solo parents can take 7 days of paid parental leave annually under the Solo Parents' Welfare Act, requiring a Solo Parent ID from the Department of Social Welfare and Development (DSWD). |
| Special Leave for Women | Female employees with gynecological disorders requiring surgical procedures including, but not limited to, dilation, curettage, myomectomy, hysterectomy, ovariectomy, and mastectomy are entitled to paid leave for recuperation. | Female employees in the private and public sectors can take leave for gynecological disorders surgery, provided they have been with the company for at least 12 months and have at least 6 months of continuous service for a maximum of 60 days. |
| Leave for Victims of Domestic Violence | Female employees who have been victims of domestic abuse are allowed to take paid absence for legal issues, medical care, or emotional healing under the Anti-Violence Against Women and Their Children Act. | Due to the physical, psychological, and emotional effects of domestic violence, the law grants 10 days of paid leave for qualified female employees. |
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India
While laws vary between states and company policies, employees in India often get sick, casual, maternity, paternity, privilege, bereavement, childcare, compensatory, marriage, compassionate, and loss of pay (LOP) leaves.
Common Types of Leaves in India
| Types of Leave | Description | Duration and Applicability |
| Sick Leave | Paid leave for employees when they are ill or injured, allowing them to recover and return to work in good health. | Sick leave entitlements vary by company, but the Government of India mandates a minimum of 12 days per year for all employees. |
| Casual Leave | A discretionary time off granted by employers that can be used by employees for personal reasons including illness or unforeseen circumstances. It is commonly utilised by government employees, although some private companies also adopt it. | Casual leave durations can range from a few hours to several days according to the employer's company policy. |
| Privilege Leave (Earned Leave) | Under the Factories Act, employees who have worked for a certain number of days (usually 240 days a year) are entitled to privilege leave. Similarly, most state Shops and Establishments Acts require employers to provide paid leave days to employees, including earned leave, in recognition of an employee's continuous service and subject to the company's leave policy and operational requirements. | Privilege leave is usually accrued over time, and the number of days granted can vary depending on the company or state law. It is often calculated pro-rata, and employees are generally entitled to 12 to 30 days of earned leave per year. |
| Maternity Leave | Paid leave provided to pregnant employees, ensuring they have time to recover and bond with their newborn child. | The Maternity Benefit Act of 1961 grants female employees maternity leave of up to 26 weeks for their first two children, with a maximum of 8 weeks allowed before the due date. For a third child, the leave is limited to 12 weeks. |
| Paternity Leave | Paternity leave is paid leave for male employees after the birth or adoption of a child, allowing them to help care for the child. Although the Labor Department has yet to pass the bill, many companies in India have already implemented paternity leave. This leave can be used within 3 months. | Paternity leave is currently not mandatory in India, unlike maternity leave. The Paternity Benefit Bill introduced in 2017 allows eligible fathers to take up to 15 days of paid paternity leave. Once enacted, all organisations must provide this benefit. |
| Compensatory Off (Comp Offs) | Employees required to work on weekends or holidays for priority deliverables are entitled to compensatory leave on another workday, as stated in employer policies. There are no specific rules regarding compensatory time off. | While not legally required, comp offs are common in many companies. It allows employees to receive time off instead of overtime pay, benefiting employers by lowering costs and providing employees with greater scheduling flexibility. |
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3. Mandated Benefits
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Government agencies manage federal benefits like social security, universal healthcare, and savings, but employers can also offer additional benefits such as health insurance, extended time off, and more. India and the Philippines are no exceptions to these mandates.
Philippines
The Philippine Labour Code mandates that businesses join the Social Security System (SSS), PhilHealth, and Pag-IBIG Fund and send monthly contributions to these government agencies on behalf of their workers. This guarantees that workers have access to government-mandated benefits like social security, health insurance, and reasonably priced home financing.
India
Indian employees receive mandatory benefits such as medical insurance, disability coverage, unemployment benefits, pension funds, paid parental leave, and retirement provisions, with employers having the option to offer more.
4. Taxation Policies
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Another critical area to consider when hiring offshore employees is how you pay them. Taxes can vary differently depending on where your business and offshore employees are. Employee taxes in the Philippines and India depend on their income brackets.
Philippines
Filipino employee taxes depend on their income tax brackets and can be as high as 35%. Employers must withhold a portion of employee income for taxes, known as withholding tax. This amount is deducted from each paycheck and acts as an advance payment on their income tax liability.
| If Annual Taxable Income Is: | Income Tax Rates |
Not over Php 250,000 | 0% |
Over Php 250,000 but not over Php 400,000 | 15% of the excess over Php 250,000 |
Over Php 400,000 but not over Php 800,000 | Php 22,500 + 20% of the excess over Php 400,000 |
Over Php 800,000 but not over Php 2,000,000 | Php 102,500 + 25% of the excess over Php 800,000 |
Over Php 2,000,000 but not over Php 8,000,000 | Php 402,500 + 30% of the excess over Php 2,000,000 |
Over Php 8,000,000 | Php 2,202,500 + 35% of the excess over Php 8,000,000 |
Source: Philippine Bureau of Internal Revenue (BIR)
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India
Taxes in India can go as high as 30% for employees under 60 years of age, depending on their income. However, the filing varies based on the taxpayer category.
Employers deduct payroll and income tax at the source (TDS) based on the employee salary and tax slab rates. They are responsible for ensuring the correct amount is remitted to the government. The revised tax slabs under the new regime for FY 2025-26 (AY 2026-27) are as follows:
| Annual Income Tax Slabs | Income Tax Rates |
Up to Rs. 4,00,000 | NIL |
Rs. 4,00,001 - Rs. 8,00,000 | 5% |
Rs. 8,00,001 - Rs. 12,00,000 | 10% |
Rs. 12,00,001 - Rs. 16,00,000 | 15% |
Rs. 16,00,001 - Rs. 20,00,000 | 20% |
Rs. 20,00,001 - Rs. 24,00,000 | 25% |
Above Rs. 24,00,000 | 30% |
Source: ClearTax
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5. Regulations and Terminations
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As much as retaining talent is crucial for any organisation, turnover is normal and inevitable. However, for offshore employees, you must also consider the proper process of their respective local legislations for employment contract termination, whether voluntary or other causes.
Philippines
In the Philippines, the law distinguishes an important difference between an authorised cause dismissal and a just cause dismissal. Authorised cause is based on economic or health reasons, and just cause is based on blameworthy actions such as misconduct, disobedience, neglect, fraud, or crime.
There is no notice period required by an employer for a just cause dismissal.
A 30-day notice is needed from employers who dismiss employees for authorised causes and employees who want to terminate their employment contracts.
India
In India, the law on employment termination is a combination of statutory provisions, the application of case laws, and the contracts of employment.
An employee may be terminated according to the employment contract terms signed between the employee and the employer.
Labour laws in India take precedence over labour contracts. Employers should ensure that any termination policies or clauses in their contracts comply with these laws by consulting a professional. When there is no labour contract, or the contract does not specify a termination method, state labour laws apply.
The notice period an employee must provide when resigning varies based on the employment contract, company policy, or the employer's terms. Generally, notice periods can range from 15 to 90 days. The duration of the notice period is often related to the employee's seniority, with those in higher positions typically required to give a longer notice period, such as 90 days.
Employees on probation usually face shorter notice requirements than regular employees, and in some cases, they may not need to provide any notice at all. However, this can differ depending on the company's policies or the specifics outlined in the employment contract.
Make Unient Your Offshoring Partner
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With Unient as your offshoring partner, you can easily hire, manage, and pay for the talents you need. Own your team’s day-to-day tasks as you source top talent and build your dream team in the Philippines and India.
Are you ready to make India and the Philippines your next talent hub? Talk to our Solutions Experts today to get started!