You hired someone in the Philippines.
They’re doing great work. You’re paying them monthly through Wise or PayPal.
Everything feels fine until you start wondering: Am I doing this right?
The answer depends on whether your remote worker is truly a contractor or actually your employee in disguise. And that distinction matters more than you think.
Let’s walk through or better yet here’s an easy check list.
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Your compliance checklist
Here’s the actual checklist you can use to audit your current setup or onboard new team members correctly.
Before hiring
☐ Decide on employment model: contractor, employee via EOR, or direct employee
☐ Review US/UK/AU worker classification rules for your jurisdiction
☐ Draft appropriate contract (contractor agreement or employment contract)
☐ Include clear IP assignment and confidentiality clauses
☐ Add data privacy and monitoring disclosure sections
☐ Specify jurisdiction and dispute resolution terms
For contractor relationships
☐ Confirm they operate as a business (sole proprietor or registered)
☐ Require invoices for all payments with their tax information
☐ Collect W-8BEN form (for US entities) or equivalent tax documentation
☐ Document that they control work methods and timing
☐ Ensure they use their own equipment or reimburse clearly
☐ Verify they have or can have multiple clients
☐ Set project-based scope rather than ongoing employment language
☐ Make payments via business transfer (Wise, PayPal, etc.)
☐ Keep records of all invoices and payment confirmations
For employee relationships (via EOR or direct)
☐ Register worker with SSS, PhilHealth, and Pag-IBIG
☐ Calculate and remit monthly contributions (employer + employee portions)
☐ Set up BIR withholding tax system
☐ Issue monthly payslips showing gross pay, deductions, and net pay
☐ Track and pay overtime, holiday, and night differential rates
☐ Calculate and pay 13th month pay by December 24
☐ Issue BIR Form 2316 annually (certificate of compensation and tax withheld)
☐ File BIR Form 1604-C annually (information return on compensation)
☐ Maintain payroll records per DOLE requirements
☐ Set up PTO/leave tracking system
☐ Confirm regional minimum wage compliance
Time tracking and monitoring setup
☐ Choose time tracking tool (simple timer vs. screenshot monitoring)
☐ Configure frequency and intrusiveness settings appropriately
☐ Draft clear monitoring policy explaining what’s tracked
☐ Obtain written consent for any monitoring or data collection
☐ Add data privacy clauses to contracts covering cross-border transfers
☐ Set up daily or weekly standup/recap collection system
☐ Establish “on the clock” vs “off the clock” boundaries
☐ Review vendor agreements for data processing and security
☐ Document who has access to monitoring data internally
Payment and banking
☐ Set up Wise or PayPal business account for transfers
☐ Collect correct banking details from worker (for contractor payments)
☐ Or route payments through EOR system (for employees)
☐ Establish regular payment schedule (weekly, bi-weekly, monthly)
☐ Set up approval workflow for invoices or timesheets
☐ Create system for tracking payment history and receipts
☐ Factor in currency conversion and transfer fees
Ongoing compliance
☐ Review worker classification quarterly (are they still truly a contractor?)
☐ Audit time tracking data for unusual patterns
☐ Confirm statutory contributions are current (for employees)
☐ Keep employment contracts and amendments updated
☐ Review data privacy practices annually
☐ Check for changes in Philippine labor law (DOLE updates)
☐ Verify tax withholding calculations are current
☐ Maintain organized records for potential audits
Offboarding checklist
☐ Process final timesheet or invoice
☐ Calculate and pay any unused PTO (for employees)
☐ Issue final pay including 13th month pay proration (for employees)
☐ Complete BIR Form 2316 for the partial year (for employees)
☐ Deactivate system access (time tracker, tools, communications)
☐ Collect any company equipment or provide final reimbursement
☐ Confirm final SSS/PhilHealth/Pag-IBIG remittances (for employees)
☐ Archive all employment and payment records per retention requirements
What actually matters
Here’s what this all boils down to:
If you’re treating someone like an employee, make them an employee. Don’t hide behind contractor paperwork when you’re setting their schedule, providing their tools, and expecting full-time availability.
If you want true contractor flexibility, structure it that way. Project-based scope. They control methods. Multiple clients. Clear business-to-business terms.
Track time without being invasive. Simple logging plus daily recaps beats surveillance every time.
Don’t skip tax documentation. Whether it’s BIR forms for Philippine payroll or W-8BEN for US records, get the paperwork right.
The goal isn’t to scare you away from hiring Philippine remote workers. They’re skilled, reliable, and often a perfect fit for distributed teams.
The goal is to set things up correctly from the start so you’re not scrambling to fix classification issues, back taxes, or privacy complaints two years in.
Most of this is just choosing the right model and sticking to it. Once you’ve made that decision, the daily operations are straightforward.
Get the foundation right, and everything else gets easier.