A ₱1,200,000 salary costs a Philippine employer about ₱1,374,760 a year, or 14.6% on top of base pay. What surprises most first-time employers is the split. Statutory contributions account for only ₱74,760 of that. The bigger line, at ₱100,000, is 13th-month pay.
That matters because the two behave in opposite directions. SSS, PhilHealth and Pag-IBIG all hit their ceilings early, so they shrink as a share of a professional salary. Thirteenth-month pay is a fixed one twelfth of basic salary that never stops scaling. Budget from a single blended percentage and you will misprice both ends of your salary band.
Total add-on at ₱1.2m
14.6%
contributions plus 13th month
Statutory share alone
6.2%
and falling as salary rises
Employer SSS ceiling
₱42,000/yr
fixed above about ₱840,000
Price a specific salary, with or without 13th-month pay.
Open the Philippines employer-cost calculatorThe statutory bill stops growing almost immediately
Philippine contribution ceilings are low by international standards, and a mid-level technology salary clears all of them. Once an employee is above roughly ₱840,000 a year, the employer's SSS contribution is frozen at ₱42,000 no matter how much more you pay. PhilHealth freezes at a ₱100,000 monthly salary ceiling, and Pag-IBIG is effectively a flat ₱200 a month.
So the statutory percentage falls away sharply, while 13th-month pay holds at a constant 8.33% of basic salary. At the top of a senior band, almost the entire employer add-on is the 13th month.
| Salary | Statutory | As % of pay | 13th month | Total cost | On top |
|---|---|---|---|---|---|
| ₱480,000 | ₱56,760 | 11.8% | ₱40,000 | ₱576,760 | 20.2% |
| ₱900,000 | ₱67,260 | 7.5% | ₱75,000 | ₱1,042,260 | 15.8% |
| ₱1,200,000 | ₱74,760 | 6.2% | ₱100,000 | ₱1,374,760 | 14.6% |
| ₱2,400,000 | ₱74,760 | 3.1% | ₱200,000 | ₱2,674,760 | 11.4% |
PayMetric's own modelled figures from the Philippines employer-cost engine at 2026 contribution rates, including 13th-month pay. SSS is capped at every salary shown here.
What each contribution actually is
| Contribution | Employer share | Ceiling | At ₱1.2m |
|---|---|---|---|
| SSS | 10% of salary credit | ₱35,000 monthly credit | ₱42,000 |
| PhilHealth | 2.5% of basic | ₱100,000 a month | ₱30,000 |
| Pag-IBIG | 2% of fund salary | ₱200 a month in practice | ₱2,400 |
| Employees' compensation, employer only | ₱10 or ₱30 a month | Flat | ₱360 |
| 13th-month pay (PD 851) | One twelfth of basic | None | ₱100,000 |
Thirteenth-month pay is a law, not a bonus policy
Presidential Decree 851 requires it for rank-and-file employees, payable on or before 24 December, at one twelfth of the basic salary earned during the calendar year. It is not conditional on performance, company results or an employee still being in post at year end: someone who resigns in August is owed the portion they earned.
For the employee, 13th-month pay and other benefits are income tax exempt up to a combined ₱90,000 a year. That does not change your cost, but it does change the take-home figure a candidate compares against another offer, so it is worth stating explicitly when you present the package.
Model a real Philippine offer
Enter the salary, decide whether to include 13th-month pay, and add equipment and recruitment as their own lines. Then check the employee's side so you can explain the package accurately.
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Frequently asked questions
What does a ₱1,200,000 employee cost an employer in the Philippines?
About ₱1,374,760 a year, which is 14.6% on top of salary. Only ₱74,760 of that is statutory contributions: ₱42,000 of SSS, ₱30,000 of PhilHealth, ₱2,400 of Pag-IBIG and ₱360 of employees' compensation. The larger piece is 13th-month pay at ₱100,000, which is a legal entitlement rather than a discretionary bonus.
Why do the statutory contributions stop growing?
Because every one of them caps, and they cap early. SSS is calculated on a monthly salary credit that tops out at ₱35,000, so the employer's 10% share is fixed at ₱3,500 a month, or ₱42,000 a year, for anyone earning above roughly ₱840,000. PhilHealth stops at a ₱100,000 monthly ceiling. Pag-IBIG is a flat ₱200 a month for almost everyone. The practical result is that statutory cost as a share of salary falls from 11.8% at ₱480,000 to 3.1% at ₱2,400,000.
Is 13th-month pay optional if we already pay a bonus?
No. Presidential Decree 851 makes it a legal entitlement for rank-and-file employees, payable on or before 24 December, equal to one twelfth of the basic salary earned during the calendar year. A discretionary performance bonus does not replace it, though an employer already paying an equivalent or better guaranteed annual benefit may be able to credit it. Budget it as a fixed 8.33% of basic salary, not as a bonus you can skip in a bad year.
Is 13th-month pay taxable?
Only above the cap. Thirteenth-month pay and other benefits are exempt from income tax up to a combined ₱90,000 a year, with anything above that amount taxable in the employee's hands. It does not change the employer's cost either way, but it changes what the employee actually receives, which matters when you are explaining the package.
How does the Philippines compare with other offshore hiring markets?
On statutory employer contributions alone, it is the cheapest market PayMetric models: about 6.2% at ₱1,200,000, against roughly 15.7% in Japan, 23.5% in Vietnam, 24.8% in Mexico, 31.4% in Sweden and 34.8% in Brazil. Adding mandatory 13th-month pay takes the Philippine figure to 14.6%, which is still at the low end. The comparison changes again once you add the cost of the employment structure itself, whether that is a local entity or an employer of record.
What is the employees' compensation contribution?
A small employer-only levy funding work-related injury and illness benefits, at ₱10 a month for employees with a monthly salary credit below ₱15,000 and ₱30 a month above it. It is ₱360 a year for most professional hires. It is easy to forget precisely because it is small, but it is genuinely employer-funded with no employee share.
Does the employee pay these same contributions too?
Yes, on a different split. SSS is 15% in total, 10% from the employer and 5% from the employee. PhilHealth is 5% split evenly at 2.5% each. Pag-IBIG is 2% each, with the employee's share capped at ₱200 a month on the standard fund salary. Only the employees' compensation levy is employer-only. See the Philippines take-home calculator for the employee's side of the same payslip.
What is not included in these figures?
Service incentive leave, any HMO or private medical cover (near-universal for professional roles and often the largest voluntary cost), rice or meal allowances, night differential, overtime and holiday premiums, and the cost of the employing entity itself. The calculator has separate equipment and recruitment inputs so those stay visible rather than disappearing into a single multiplier.
General information only. Contribution rates are the 2026 figures used by PayMetric's Philippines employer-cost engine, last checked against SSS, PhilHealth and Pag-IBIG schedules. Check current official guidance and take professional advice before a decision affecting your payroll, tax or employment position.