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Why Outsourcers Should Respect the Philippine Labor Law

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There is an unwritten rule when it comes to home-based Filipino workers, in that they understand that they are not a regular employee. So unless an actual contract binding them to a company exists, you aren’t legally required to give a virtual assistant any perks.

After all, isn’t that the advantage of hiring a freelancer?

You don’t have to pay for sick days or vacation. There’s no need to offer health benefits, or contribute to a retirement plan. You just pay for the hours they put in, because they are temporary workers.

But here’s the thing: you can’t have your business, which you’ve worked so hard on, completely nannied by temporary workers. You have to at least have one or two workers who share the same kind of passion in growing your business as you do. And as much as we would like to will it, temporary freelancers will rarely provide you with that same kind of passion and energy.

You’ll need linchpin employees, and for that, they need to be permanent.

If you’re thinking of establishing an office in the Philippines, then absolutely, you need to follow the labor code for every permanent hire you make: paid holidays, health benefits, paid leaves, etc. Otherwise, you’re at risk of being dinged by the Philippine government.

But even if you are thinking of just outsourcing, it might make sense for you to offer the same package. Why? It makes for a great incentive.

VA’s rarely get paid holidays and vacations, never mind 13th month bonuses. To reward them with the same benefits package that they would get working for a brick and mortar company is excellent motivation. It not only shows them that you value their work, but they’ll appreciate you following their local rules.

It doesn’t even have to be a whole package: you can choose to pay for certain holidays, like Holy Week. Offer a Christmas bonus, or a health plan, and local health plans can be very cheap.

MUST-VISIT LINK: Virtual Staff Finder ‘Health Benefits’ Guide

Payment Schedules

While it isn’t written in the labor code, Filipino employees have certain expectations when it comes to their payment schedules.

Always pay your Filipino VA’s on the agreed upon payment schedule. This is a no brainer. Of course, everyone wants to get paid on time, on the agreed upon schedule.

But when it comes to start up businesses, the money doesn’t always follow the same set schedules. So if you’re running low on cash, your freelancers might not appreciate holding up their paychecks. 

First, VA’s on monthly salaries expect to be paid every two weeks or semi-monthly. You can negotiate paying every month, but the standard generally is every two weeks/semi-monthly.

Paydays are normally the 15 or the 30/31st of the month. If either dates fall on a Saturday or Sunday, the expectation is that they will get paid on a Friday. Likewise, if payday falls on a holiday, the expectation is to get paid a day ahead.

This does not mean much for regular pay days, but can wreak havoc on your books when it comes to major holidays. More specifically: Christmas holiday.

As mentioned earlier in this chapter, Filipino employees will typically go on vacation during the holidays, filing for their leave as early as the 23rd and often not returning until January 2nd or 3rd. But even if the 26th until the 29th are considered working days, most companies will release the second week paycheck on the 23rd, including the requisite 13th month pay.

Which means, employees who haven’t filed or aren’t eligible for leave, can get their pay a whole week earlier. What may come as a surprise to some Western companies makes perfect sense to Filipino’s: a) you’ll need money to buy gifts, and to prepare Christmas and New Year’s dinner; b) banks will be closed for most of the holidays; and c) after the 23rd, there’s usually no one around to manage the payroll.

Being a major holiday, accounting has probably filed for their leave well in advance, and has been crunching numbers early on in December to meet payroll. While this isn’t something that’s required, it is a courtesy that a lot of Filipino’s count on, and really appreciate.

For freelancers who do not expect any benefits, getting paid on the 29th or 30th is completely appropriate. But getting paid early is considered a great courtesy (whether the employee is a casual, or full-time one) and not to mention a major convenience.

Simple rule of thumb – if in doubt, just be a nice guy – it’s Christmas after all!,

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