Employee Outsourcing Agreement Template for Philippines

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Employee Outsourcing Agreement

"I need an Employee Outsourcing Agreement for my tech company to engage 50 IT support staff through a Manila-based service provider, starting March 2025, with strong data protection clauses and provisions for remote work arrangements."

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What is a Employee Outsourcing Agreement?

The Employee Outsourcing Agreement is essential for businesses operating in the Philippines that wish to engage external workforce through legitimate contracting arrangements. This document is particularly relevant in light of strict Philippine regulations on labor-only contracting, as outlined in Department Order No. 174-17. The agreement covers all aspects of the outsourcing relationship, including employee rights, benefits, and protections required under Philippine law, while clearly delineating the responsibilities of both the service provider and the client company. It's designed to ensure compliance with local labor standards, social security requirements, and data privacy regulations while providing a framework for sustainable workforce solutions. The document is crucial for companies seeking to optimize their workforce management while maintaining legal compliance in the Philippine jurisdiction.

What sections should be included in a Employee Outsourcing Agreement?

1. Parties: Identifies the outsourcing service provider and the client company

2. Background: Explains the context of the agreement, including the client's need for outsourced employees and the provider's capabilities

3. Definitions: Defines key terms used throughout the agreement, including 'Outsourced Employees', 'Services', 'Service Levels'

4. Scope of Services: Details the outsourcing services to be provided, including recruitment, employment, and management of outsourced employees

5. Service Provider Obligations: Specifies the responsibilities of the service provider, including compliance with labor laws, payment of wages, and provision of benefits

6. Client Obligations: Outlines the client's responsibilities, including workplace safety, supervision, and payment terms

7. Employment Terms: Details the terms of employment for outsourced employees, ensuring compliance with Philippine labor laws

8. Compensation and Payment Terms: Specifies service fees, payment schedule, and terms for both provider fees and employee compensation

9. Statutory Benefits and Compliance: Addresses mandatory benefits under Philippine law (SSS, PhilHealth, Pag-IBIG, etc.)

10. Term and Termination: Specifies the duration of the agreement and conditions for termination

11. Confidentiality and Data Protection: Addresses confidentiality obligations and compliance with the Data Privacy Act

12. Indemnification and Liability: Outlines liability allocation and indemnification obligations between parties

13. Dispute Resolution: Specifies procedures for resolving disputes, including jurisdiction and governing law

14. General Provisions: Includes standard clauses such as force majeure, notices, and amendments

What sections are optional to include in a Employee Outsourcing Agreement?

1. Non-Competition: Include when there's a need to restrict the service provider from providing similar services to competitors

2. Intellectual Property Rights: Include when outsourced employees will be creating or handling intellectual property

3. Performance Metrics: Include when specific KPIs or service levels need to be measured and monitored

4. Insurance Requirements: Include when specific insurance coverage is required beyond statutory requirements

5. Transition Services: Include when there's a need to detail the process of transitioning employees in or out

6. Business Continuity: Include when service continuity is critical and backup procedures need to be specified

7. International Data Transfer: Include when employee data will be transferred across borders

What schedules should be included in a Employee Outsourcing Agreement?

1. Schedule 1 - Service Description: Detailed description of outsourcing services and specific roles to be filled

2. Schedule 2 - Fee Schedule: Detailed breakdown of service fees, employee costs, and payment terms

3. Schedule 3 - Service Levels: Specific performance metrics and service level requirements

4. Schedule 4 - Statutory Benefits: Details of mandatory benefits and calculations under Philippine law

5. Schedule 5 - Data Processing Agreement: Detailed terms for handling employee personal data in compliance with privacy laws

6. Appendix A - Employee Handbook: Reference to or inclusion of applicable workplace policies

7. Appendix B - Required Reports: Templates and schedules for required reporting between parties

8. Appendix C - Key Personnel: List of key contacts and responsible personnel from both parties

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions
Relevant Industries

Information Technology

Business Process Outsourcing

Manufacturing

Customer Service

Healthcare

Financial Services

Retail

Telecommunications

E-commerce

Professional Services

Relevant Teams

Human Resources

Legal

Procurement

Operations

Compliance

Finance

Risk Management

Vendor Management

Facility Management

Relevant Roles

Human Resources Director

Legal Counsel

Procurement Manager

Operations Manager

Compliance Officer

Chief Financial Officer

HR Business Partner

Contracts Manager

Outsourcing Manager

Facility Manager

Risk Manager

Chief Operating Officer

Industries
Labor Code of the Philippines (Presidential Decree No. 442): Primary legislation governing employment relationships, including working conditions, benefits, termination, and other labor standards
Department Order No. 174-17: Implements regulations on contracting and subcontracting arrangements, defining legitimate contracting and prohibited labor-only contracting
Republic Act No. 11165 (Telecommuting Act): Provides framework for telecommuting arrangements which may be relevant for outsourced employees working remotely
Republic Act No. 8282 (Social Security Act): Mandates social security coverage and benefits for employees, including those in outsourcing arrangements
Republic Act No. 10173 (Data Privacy Act): Regulates the collection, handling, and protection of personal information, relevant for managing employee data
Republic Act No. 8424 (Tax Code): Governs taxation of employment income and benefits, including withholding tax obligations
Republic Act No. 7875 (National Health Insurance Act): Requires PhilHealth coverage for employees, including those under outsourcing arrangements
Republic Act No. 9679 (Home Development Mutual Fund Law): Mandates Pag-IBIG Fund coverage and contributions for employees
Department Order No. 18-A: Provides rules implementing Articles 106-109 of the Labor Code on contracting and subcontracting
Republic Act No. 11058 (Occupational Safety and Health Standards): Sets standards for workplace safety and health that apply to all employment arrangements
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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