Compliance Requirements for Companies Hiring Foreign Nationals with AEP

Hiring foreign nationals can provide businesses in the Philippines with the global talent needed for specialized roles or executive positions. However, companies employing foreign nationals must comply with a range of legal requirements to ensure both the company and the foreign employee are working within the bounds of Philippine labor law. In particular, employers need to be aware of the obligations related to the Alien Employment Permit (AEP) issued by the Department of Labor and Employment (DOLE).

Here’s a comprehensive guide on the compliance requirements for companies hiring foreign nationals with an AEP in the Philippines:

1. Ensure AEP Issuance Before Employment

Before a foreign national can legally start working in the Philippines, the company must ensure that the AEP is secured. An AEP must be obtained before the foreign worker starts performing duties within the company. The AEP serves as proof that the foreign national is authorized to work in the Philippines and that there is no qualified Filipino available for the role.

Key Steps:

• File the AEP application with the DOLE Regional Office where the employer is located.
• Ensure that the job vacancy is advertised in a local newspaper for at least 15 days before submitting the AEP application to DOLE.
• Obtain the AEP before the foreign national begins employment. Working without an AEP is illegal and can lead to penalties for both the employer and the employee.

2. Comply with Employment and Labor Laws

Once the AEP is secured, companies must comply with all applicable Philippine labor laws when employing foreign nationals. This includes providing the same benefits, protections, and working conditions afforded to Filipino employees. Compliance with labor laws helps ensure that foreign employees are treated fairly and avoids disputes with DOLE or other government agencies.

Key Compliance Areas:

• Minimum wage and salary structure: Ensure that foreign nationals are paid at least the minimum wage or higher based on industry standards and the specifics of their job role.
• Working hours and overtime pay: Comply with the standard working hours (8 hours per day or 48 hours per week) and provide appropriate compensation for overtime work.
• Employee benefits: Foreign nationals with an AEP must be enrolled in PhilHealth, SSS (Social Security System), and Pag-IBIG just like local employees. These are mandatory contributions that the company must facilitate.

3. Follow the AEP Reporting and Renewal Process

The AEP is valid for a specific period, typically aligned with the employment contract, but no more than five years. Employers are responsible for monitoring the expiration date of the AEP and ensuring it is renewed on time. Failure to renew the AEP on time can result in the foreign national working illegally, leading to penalties.

Key Requirements:

• Renew the AEP at least 60 days before it expires. Submit the renewal application along with an updated employment contract or appointment letter.
• If the foreign employee’s role changes significantly or they move to a different employer, a new AEP is required.

4. Notify DOLE of Employment Changes

If there are any significant changes in the foreign national’s employment status, the company is required to notify DOLE. These changes may include a change in job position, a change in salary or benefits, or the termination of employment. Companies must report such changes within 15 days to avoid penalties.

Common Changes to Report:

• Promotion or transfer to a different position within the company.
• Salary adjustments that affect the employment terms in the AEP.
• Termination of the employment contract, whether due to resignation, end of contract, or dismissal.

5. Ensure Validity of Visa and Other Work Permits

In addition to the AEP, foreign nationals working in the Philippines typically require a 9G Working Visa issued by the Bureau of Immigration (BI). Companies must ensure that the foreign employee’s visa is valid and corresponds to their AEP. Any discrepancy between the AEP and the visa could result in legal issues.

Key Visa Compliance Steps:

• Apply for the 9G Working Visa once the AEP is issued. This visa allows the foreign national to stay in the Philippines for the duration of their employment.
• Monitor the visa’s expiration date and ensure that it is renewed in line with the AEP.

6. Adhere to the Filipino-to-Foreign Worker Ratio

The Philippine government places a strong emphasis on ensuring that qualified Filipino workers have access to local jobs. Employers are encouraged to hire Filipino workers whenever possible. While hiring foreign nationals is allowed, companies must be mindful of maintaining an appropriate ratio of Filipino workers to foreign nationals in their workforce.

DOLE Guidelines:

• Priority should be given to Filipino workers unless the foreign worker has specialized skills that are not readily available in the local labor market.
• Certain industries may have specific guidelines or quotas regarding the ratio of foreign to Filipino workers, which companies should follow.

7. Handle Potential Labor Disputes

As an employer, it’s important to ensure that foreign nationals are treated fairly in the workplace and that they are protected under the same labor laws that apply to local employees. However, if a labor dispute arises, companies must follow proper legal procedures for resolving issues, which may involve DOLE, labor courts, or arbitration.

Common Issues:

• Unlawful termination: Foreign workers with AEPs are entitled to the same due process rights as Filipino workers. Employers must follow proper termination procedures to avoid legal complications.
• Non-payment of wages or benefits: Ensure that foreign employees receive their full salary and benefits as stated in their employment contract and under labor law.

8. Avoid Penalties for Non-Compliance

Failure to comply with the AEP requirements can result in penalties, including fines, business sanctions, and even deportation of the foreign employee. Repeated violations may lead to the suspension or revocation of the company’s License to Operate, making it critical for businesses to stay compliant.

Potential Penalties for Non-Compliance:

• Fines: Companies may face monetary penalties for failing to secure an AEP or for employing foreign workers without proper permits.
• Deportation: Foreign workers caught working without an AEP may be deported, and the company may be blacklisted from hiring foreign employees in the future.
• Suspension of business operations: Repeated violations can lead to more severe penalties, such as the suspension of the company’s operations by DOLE.

9. Consult with Legal Experts

Given the complexity of hiring foreign nationals in the Philippines, it is advisable for companies to consult with legal experts or immigration consultants who specialize in labor and immigration laws. These professionals can guide businesses through the AEP application process, compliance requirements, and ensure that all legal obligations are met.

Benefits of Legal Assistance:

• Accurate guidance on labor laws and DOLE regulations.
• Assistance with the AEP application process, including preparing the necessary documents and ensuring timely submissions.
• Representation in case of labor disputes or if there are challenges in the AEP approval process.

Conclusion

Hiring foreign nationals in the Philippines involves compliance with several legal and regulatory requirements, particularly concerning the Alien Employment Permit (AEP). Employers must ensure that they secure the AEP before the employee starts working, comply with local labor laws, monitor the permit’s expiration, and keep DOLE informed of any changes in the employment arrangement. Failure to comply with these requirements can result in legal penalties and disruptions to business operations.