Companies hiring in the Philippines may consider an Employer of Record arrangement or a freelancer arrangement, depending on the role, working relationship, level of control, duration and business requirements.
This guide compares the two models across employment structure, cost, administration, flexibility and responsibilities.
Discuss your Philippines hiring requirements ↗A freelancer arrangement and an EOR arrangement serve different purposes.
A freelancer may suit defined, independent work where the individual operates with greater autonomy. An EOR may suit a company that wants to employ a worker in the Philippines through a local employment structure while continuing to manage the employee’s daily work.
The appropriate model depends on the actual working relationship and the company’s requirements.
This page provides general information and is not a substitute for legal or tax advice based on the specific facts of an arrangement.
| Consideration | Employer of Record | Freelancer |
|---|---|---|
| Relationship | Employment relationship through a local EOR | Independent service relationship |
| Legal employer | The EOR employs the worker in the Philippines | The freelancer provides services independently |
| Daily work | Managed by the customer | Depends on the agreed arrangement |
| Payroll | Administered through the EOR | Freelancer manages their own invoicing and payment arrangements |
| Statutory administration | Supported through the employment structure | Depends on the freelancer’s status and obligations |
| Benefits | Employment benefits may apply | Usually governed by the service agreement |
| Control | Customer directs the employee’s work | Freelancer may operate with greater independence |
| Flexibility | May suit an ongoing employee role | May suit defined or project-based work |
| Provider fee | US$190 per employee per month for the standard SOS EOR management fee | No SOS EOR management fee applies |
| Other costs | Salary and employee-specific costs are separate | Costs depend on the freelancer’s agreement |
An Employer of Record is a service arrangement in which a local provider employs a worker on behalf of another company.
Smart Outsourcing Solution acts as the legal employer in the Philippines and manages employment administration, payroll administration, employee records, statutory processes and HR support where applicable.
The customer continues to manage the employee’s daily work, including tasks, objectives, workflow, schedules and performance.
Learn how to hire in the Philippines without setting up a company ↗A freelancer arrangement is a service relationship in which an individual provides work under agreed terms. Depending on the arrangement, the freelancer may have more control over how, when and where the work is performed.
The agreement should clearly describe the services, deliverables, payment terms, ownership of work, confidentiality requirements and expected communication.
The label “freelancer” does not by itself determine how a working relationship should be treated. The actual facts of the arrangement should be reviewed.
An EOR may be considered when a company:
A freelancer arrangement may be considered when:
These are general considerations, not a legal classification test. The specific working relationship should be reviewed before choosing an arrangement.
When comparing an EOR and freelancer arrangement, review:
A written agreement should reflect the actual working relationship. Companies should obtain professional advice where the classification or tax treatment depends on the specific facts.
Smart Outsourcing Solution charges a flat EOR management fee of US$190 per employee per month.
This is the standard fee, not a starting price or price range.
Separate EOR costs may include:
Freelancer costs are generally based on an agreed fee, hourly rate, project rate or deliverables. The arrangement may not include the same employment administration or benefits structure as an employee arrangement.
The final amount depends on the employee’s compensation package and applicable requirements.
The standard EOR management service includes support for:
Salary, employer statutory contributions, 13th-month pay, benefits, allowances, equipment and other employee-specific costs are separate where applicable.
Under the standard EOR pricing structure, there is no onboarding fee, exit or termination fee, FX markup or separate provider charge.
Recruitment support is included in the standard EOR management fee. No separate recruitment charge applies.
View the Philippines EOR pricing guide ↗A company engages an independent designer to complete a defined project with agreed deliverables and deadlines. The designer controls how the work is completed and invoices according to the service agreement.
A freelancer arrangement may be considered, subject to review of the actual relationship.
A company wants a Filipino professional to work as part of its internal team, follow company processes and receive ongoing direction from a manager.
The company may review whether an employment structure is appropriate and consider direct employment, entity setup or an EOR.
A company has worked with a Filipino contractor on an ongoing basis and wants to move the person into an employee role.
The company should review the working relationship, final contractor payment, employment start date, salary, benefits and payroll setup.
Before choosing an arrangement, consider:
Obtain legal or tax advice when the classification, employment structure, tax treatment or statutory obligations depend on the specific facts of the engagement.
Employment and payroll requirements may change. Use current official sources when reviewing an arrangement or estimating employment costs.
Tell us whether you are comparing an EOR and freelancer arrangement, reviewing an existing contractor or preparing to employ someone in the Philippines.
