They delivered the goods. They completed the hours. They did as they were instructed.
Now, it’s time for you to pay them. The question is how.
We know that this is a super elementary topic for some of you, especially if you already outsourced to the Philippines in the past. However, this is a must-read for first-time outsourcers. In fact, even if you have experience in paying Filipino remote workers in the past, you will learn a few tips here.
How Much Should You Pay Filipino Remote Workers?
This is a topic that outsourcers can’t seem to agree on. In order for you to gauge a “fair wage” for your Filipino employees, you have to understand the local context.
Currently, the minimum wage in the Philippines is 466 Philippine Pesos (PhP), approximately $10.83 per day or $1.35 per hour. This is six times cheaper than the minimum wage in the United States. Now, the question is this –
Is it fair to pay your Filipino employees just the minimum wage?
The first step to answering this question is knowing who gets paid the minimum wage in the local employment context. Filipinos who receive the minimum wage are those who are working in construction, in factories, as messengers – essentially those who are involved in manual and physical labor. In the BPO industry, the average salary is PhP 15,000, plus night pay (for those who work at night), non-taxable food and transportation allowances and health benefits.
When deciding the fair salary to give your employees, your peg should be the BPO industry.
But That Would Mean Less Savings For Me, Right?
The answer is yes and no. Yes, because you wouldn’t get the savings as opposed to when you’d follow the prescribed minimum wage. No, because you would still bank savings as opposed to when you hire someone in-shore.
However, when deciding how much you should invest on your Filipino workers salary, you should not solely base it on the money you’re spending, but more importantly, the quality of the people you’re getting.
What a lot of savings-focused virtual employers don’t realize is the fact that when hiring virtual Filipino employees, you only get what you pay for. Low quality comes with a low price tag. Experienced and talented Filipino employees know their worth and they wouldn’t settle for anything less than what they think they deserve.
But let’s say someone extremely competent and talented took your low ball job offer. Human instinct dictates that when you’re not earning enough, you look for greener pastures. What do you think will happen when one day, another virtual employer approaches your worker and offers a higher salary commensurate to his or her talent?
Your Filipino employee will leave you without thinking twice.
To be perfectly honest, Filipino virtual employees have had their fair share of virtual employers who milk their employees up to the last drop and pay extremely low salaries. At this point, it’s no longer a matter of savings on your end, but an issue of ethics. Do you want to be the employer that is known for paying a fair wage that can be relied on or the employer who is known for pinching pennies and expecting results that exceed what you are paying for?
Remember, if you pay peanuts, you get monkeys.
So, How Much Should You Pay Your Filipino Employees?
Here are some baseline figures for full time (40 hours per week) work, culled from successful outsourcers:
– General Virtual Assistant – $350
– Article Writer – $600
– SEO Specialist – $600
– Junior Web Developer – $700
– Senior Web Developer – $1,200
– Junior Video Editor – $450
– Senior Video Editor – $700
– Junior Graphic Designer – $450
– Senior Graphic Designer – $800
– Project Manager – $700
Take note that these rates are just baseline numbers. There are employees who are more experienced and demand higher salary while there are less experienced employees who are willing to work for less.
So, what if you can’t afford these rates? This is a tricky question to answer because we are strong believers that outsourcing to the Philippines is a great way to take your business to the next level. However, you also have to confront the reality that you have not yet reached that point that you can actually hire staff – offshore or inshore.
You should also consider less experienced employees who can grow with you and your company. You’ll pay slightly lower salaries, but at least the commitment from your employees is there because they see the growth of your business as their growth as well. Just make sure that you stay true to your promise of financial growth as your business progresses.
Another option is for you not to hire full-time. You can hire part-time or freelance. Another trick is to hire employees who live outside of Metro Manila, the country’s capital. Hiring from other cities may mean spending less because the living expenses in these places are lower, hence the lower salary requirements.
Should You Pay Your Employees Additional Benefits?
Technically, you’re not required to follow the country’s labor code, so the technical answer is you don’t have to. However, as more employers are looking to the Philippines to get offshore employees, the job offers are getting more competitive as well.
Now, you don’t have to compete with these employers head-on but we just want you to know what you’re up against. Also, expect that job applicants will ask you about these things and you should have an answer for them.
Here’s our tip. If you can’t afford these additional benefits, don’t give them. As long as you’re paying your Filipino staff a fair salary, you’re good. They won’t bug you about these benefits either when you already made it clear that you can’t afford these extra benefits – at least not yet.
However, if you can afford to give additional monetary benefits and you want to be extra competitive in terms of landing top notch Filipino talents, we recommend that you start with the following:
– 13th Month Pay – This is an equivalent of one month’s worth of salary given every December, sort of like a Christmas bonus. If you can’t afford to give an entire month’s worth of salary as a bonus, just offer any amount you can.
– Paid leaves – Your Filipino employees are not machines (and even machines break down from time to time). Expect that they will get sick and would love to take a vacation a few times per year. Give them the perk of having paid leaves. The standard is 10 paid days per year. This is not a direct monetary compensation, which means that there’s no direct cash out involved, but Filipinos find this benefit very appealing.
– Performance-based incentives. In order to keep your staff motivated, you have to reward good work. Offer monthly or quarterly bonuses for those who exceed monthly performance targets.
Again, you’re not pressured to give your Filipino staff these added benefits, but if you can afford it and you’re willing to do so, there have been many case studies wherein rewarding virtual employees have boosted productivity and company loyalty. Filipinos are known to have a strong sense of debt of gratitude (or utang na loob in the local vernacular). They pay high regard to those who show them generosity and treat them well, and in the virtual workplace setting, this translates to better performance and inspired delivery of work.
How Should You Pay Your Filipino Employees?
The easiest way to pay your Filipino employees is through PayPal. It’s secure, it’s hassle free and it’s tried and tested. In fact, if you believe that PayPal will be your exclusive payment method, it’s wise to put it in your job ad (i.e. Applicants should be able to receive PayPal payments).
However, there will be times that applicants won’t have a PayPal account because they don’t have the necessary requirements to open a bank account that they can use with electronic transactions. Other methods include Remithome and you can even send the money electronically through couriers such as Western Union. There are also payment services that allow the employer to actually issue your staff or your team cards that they can use to withdraw their salary using ATMs in the Philippines.
One quick note when paying your Filipino employees using PayPal. As you know, PayPal charges a certain fee when you’re sending money. Many employers actually charge this fee against their employees’ salary. You will rarely see Filipino employees complain about this, but it’s definitely an issue.
First, why are you charging them these fees when it should be part of your operational expense? At the end of the day, why are Filipino employees paying to get paid? Also, the amount being deducted is not that huge, but it’s not pennies as well. For instance, for a $250 dollar transaction, PayPal would charge around $10, so your employee would receive $240. For you, $10 might not be a big deal, but for your employees, it may be.
Let’s put this into context. $10 is roughly equivalent to PhP 420. Your employees could have used this money to pay for their water bill for the month. This is equivalent to approximately 20% of a household’s electric bill for a month. It’s equivalent to three days-worth of groceries for a small family. It can be used to pay half of an internet subscription fee.
At face value, $10 might be Starbucks money for you, but in the local context, it’s actually money that could have been spent for a lot of things.
When Should You Pay Your Filipino Employees?
Filipinos usually get paid every 15th and 30th of the month, or essentially, every two weeks. This is why it would be difficult for them to adjust to a once a month payment schedule. If you can pay them every 15th and 30th or any iteration of such as long as the payments are two weeks apart, you would have no problem. But some Filipino virtual workers have actually turned down jobs because of a once-a-month payment schedule.
During the 30-Day Trial Period, we suggest you pay your worker weekly. This is because the relationship is still brand new and many workers may not feel comfortable working two weeks for a new employer without receiving a paycheck.
No matter what payment schedule you agreed on with your Filipino staff, there’s only one golden rule –
Pay on time.
There’s nothing that worries Filipinos more than an employer who sends their paycheck late. It raises a lot of red flags when you pay your staff late including:
– “Is this person scamming me?”
– “Will this person always pay late?”
– “Is he paying late now and won’t pay at all in the future?”
– “Is his business not earning enough so he can’t pay me on time?”
– “Will I still have a job tomorrow?”
You also have to understand that most Filipinos don’t have cash stashed away. Financial literacy is not that great in the country and most people are living paycheck to paycheck. Pay them late and it might mean they don’t have money for food for the day or even miss their rent payment.
Also, take into consideration that if you’re paying them using PayPal, it will take three to four days for the money to get transferred to their account. If you pay late, it can set back their finances and budgets by several days.
Most importantly, paying late will cause distrust between you and your Filipino employees. This increases the chances that the first opportunity that they get to leave you, they’ll take it without thinking twice.
Pay on time – we can’t emphasize this enough.