Philippines Approves Phased Minimum Wage Increase

The Philippines has approved a two-stage minimum wage increase for workers in the National Capital Region (NCR), commonly known as Metro Manila (a metropolitan region comprising 16 cities and one municipality, including Manila, Quezon City, Makati, Taguig, and Pasig). The increase follows a decision by the Regional Tripartite Wages and Productivity Board and is intended to help workers manage rising living costs while giving employers additional time to prepare for higher labour costs. This will require payroll teams to prepare for separate rate changes in July 2026 and January 2027.

What's Changing and When

Workers in the NCR region will receive an increase of 100 Philippine pesos (₱ or PHP) in the daily minimum wage, implemented in two stages. The first increase of PHP 60 is effective on 25 July 2026, with the additional PHP 25 taking effect on 20 January 2027. This raises the daily minimum wage from PHP 695 to PHP 780 once fully implemented.

Workers in agriculture, service, and retail businesses with 15 or fewer employees, and in manufacturing businesses with fewer than 10 regular workers will receive a daily minimum wage of PHP 743 once both stages have been applied.

The phased implementation is intended to provide additional financial support to workers while giving employers time to manage the resulting increase in labour costs.

Practical Implications for Payroll Teams

For payroll teams, the change requires two separate payroll updates rather than a single one. Employers must ensure that the correct rate is applied from each effective date and that employees are assigned to the appropriate wage category.

Payroll teams should prepare for the increase by:

• Updating payroll systems, potentially in partnership with their payroll providers, for the PHP 60 increase effective 25 July 2026 and the additional PHP 25 increase effective 20 January 2027.
• Confirming which employees fall under the non-agricultural rate and which are covered by the lower rate for specified smaller businesses and sectors.
• Reviewing overtime, holiday pay, and other calculations related to the daily minimum wage.
• Assessing the broader impact on salary structures and on employees earning just above the new statutory rates.
• Coordinating with HR and finance on employee communications, budgeting, and operational readiness.

For payroll teams, the priority is to confirm employee coverage, ensure both effective dates are configured correctly, and assess the impact on related pay calculations. The phased approach also demonstrates why minimum wage monitoring must extend beyond headline increases to include worker categories, regional rules, and implementation schedules.

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Max van der Klis-Busink, MCIPP, RPP, is the Founder and Global Payroll Consultancy Lead of Passion For Payroll.