Employment of Non-Resident Aliens in the Philippines under Department Order No. 221-2021

(Revised Rules and Regulations for the Issuance of Alien Employment Permits to Foreign Nationals)

The Department Order No. 221-2021 issued by the Department of Labor and Employment (DOLE) governs the employment of non-resident aliens in the Philippines. It aims to regulate the issuance of Alien Employment Permits (AEPs) and ensure that the employment of foreign nationals is consistent with national laws and policies. Below are the key provisions and principles:

I. Coverage

Who Needs an AEP
Any foreign national seeking to engage in gainful employment in the Philippines must secure an AEP, except those exempted under the order.
Gainful employment includes both physical and digital presence within the country, whether directly or through remote arrangements.
Exemptions
The following are exempt from securing an AEP but must secure a Certificate of Exemption (COE) or Certificate of Exclusion (COX) as applicable:
- Members of the diplomatic corps;
- International organizations staff entitled to privileges and immunities;
- Foreign nationals providing consultancy services for government projects under international agreements;
- Permanent residents under RA 7919 (Alien Social Integration Act of 1995) or EO 324; and
- Others as determined by DOLE.

II. Requirements for Issuance of an AEP

Application Documents
Employers of foreign nationals must submit the following to the DOLE Regional Office:
- Duly accomplished application form;
- Photocopy of the foreign national’s passport (bio page with visa);
- Proof of tax identification number (TIN);
- Employer’s affidavit confirming the necessity of hiring the foreign national and efforts to hire a Filipino first;
- Copy of the employment contract or appointment letter specifying the job, salary, and duration of employment;
- Payment of prescribed fees.
Additional Requirements
- If the employer is a corporation, a valid business permit and proof of SEC registration must be submitted.
- Positions covered by the “regulated professions” must present special permits or licenses from the Philippine Regulatory Commission (PRC).

III. Grounds for Denial of an AEP

An AEP may be denied in the following circumstances:

The foreign national lacks the required skills or qualifications for the position;
The position applied for could be filled by a competent and able Filipino;
The employer has not complied with labor laws, including non-payment of fees or filing incomplete documentation.

IV. Validity and Renewal

Validity Period
- AEPs are valid for the duration of the employment contract or a maximum of three (3) years, whichever is shorter.
Renewal
- Applications for renewal must be filed at least fifteen (15) days before the expiration of the permit, following the same procedures and requirements as the initial application.

V. Fees and Processing Time

Application Fees
- Processing fees for AEPs vary by region and are determined by DOLE.
- Fees are non-refundable, even in cases of denial.
Processing Time
- DOLE is mandated to process and issue AEPs within ten (10) working days from the receipt of complete requirements.

VI. Duties and Obligations of Employers

Labor Market Test (LMT)
Employers must undertake efforts to prioritize Filipino workers by posting job vacancies in a manner prescribed by DOLE for at least fifteen (15) days before hiring a foreign national.
Record-Keeping and Reporting
Employers must maintain records of all foreign nationals employed and submit periodic reports to DOLE on their status and employment.
Transfer or Termination
Employers must report to DOLE any transfer, resignation, or termination of a foreign national within thirty (30) days.

VII. Compliance and Monitoring

Inspections
DOLE Regional Offices conduct random and regular inspections to verify compliance with AEP regulations.
Sanctions for Violations
- Employment of foreign nationals without a valid AEP may result in administrative fines and penalties for both the foreign national and the employer.
- Non-compliant employers risk cancellation of their business permits or licenses.

VIII. Special Rules for Certain Industries

DOLE may impose industry-specific guidelines for the employment of foreign nationals, particularly in sectors requiring technical expertise or innovation. Special consideration is also given to the employment of foreign nationals in the information technology and business process outsourcing (BPO) industries.

IX. Appeals

Appeal Process
Decisions denying or canceling an AEP may be appealed to the DOLE Secretary within ten (10) days of receipt of the decision.
Appeals must be accompanied by supporting evidence and payment of the prescribed fee.
Finality of Decisions
Decisions by the DOLE Secretary are final and executory unless reversed by the courts.

X. Interaction with Other Laws

Immigration Requirements
Foreign nationals must also comply with applicable immigration laws, including securing the appropriate visa type (e.g., 9(g) pre-arranged employment visa).
Regulated Professions
For professions regulated under Philippine laws, foreign nationals must obtain the requisite PRC permits or licenses.

XI. Conclusion

Department Order No. 221-2021 ensures a balance between attracting foreign talent and protecting the rights of Filipino workers. Employers and foreign nationals must comply with all procedural and substantive requirements to lawfully engage in employment relationships in the Philippines.

Employment of Non-Resident Aliens under Philippine Labor Law

The employment of non-resident aliens in the Philippines is governed by various laws, regulations, and guidelines that aim to regulate the entry and employment of foreign nationals while prioritizing Filipino workers. Below is a detailed discussion of the fundamental principles and legal provisions concerning the employment of non-resident aliens.

1. Constitutional Basis

The Philippine Constitution mandates that the State shall protect labor and promote full employment. It prioritizes the employment of Filipino workers, and as such, the employment of non-resident aliens is subject to strict regulation to ensure compliance with this constitutional policy.

2. Legal Framework

Several laws govern the employment of non-resident aliens, including:

a. Labor Code of the Philippines (Presidential Decree No. 442)

Article 40: Employment Permit for Non-Resident Aliens
- Non-resident aliens may only be employed in the Philippines after securing an Alien Employment Permit (AEP) from the Department of Labor and Employment (DOLE).
- The AEP is issued only if there are no available or willing Filipino workers who are competent to perform the work for which the alien is being hired.
Article 41: Regulation of Employment
- The employment of non-resident aliens is conditional upon the granting of an AEP and other necessary clearances.
- Aliens found working without the proper permits may be penalized, and their employment terminated.

b. Immigration Act of 1940 (Commonwealth Act No. 613)

This law regulates the entry of non-resident aliens and requires them to secure a visa appropriate for their intended activities in the Philippines, such as a work visa or a special non-immigrant visa.

c. Anti-Dummy Law (Commonwealth Act No. 108, as amended)

Prohibits non-resident aliens from intervening in the management, operation, administration, or control of entities engaged in activities where the Constitution or laws require Filipino ownership or management.

3. Key Permits and Requirements

The following are the primary requirements for the lawful employment of non-resident aliens:

a. Alien Employment Permit (AEP)

Issued by DOLE.
Validity: Typically one year, renewable for the duration of employment.
Requirements:
- Application form.
- Proof of corporate existence or registration of the employer.
- Justification that no Filipino is capable of performing the job.
- Employer’s valid contract with the alien.
- Alien’s visa and other identification documents.

b. Work Visa

Non-resident aliens must also secure the appropriate visa from the Bureau of Immigration (BI). Common types include:

9(g) Pre-Arranged Employment Visa – For foreign nationals entering the Philippines for long-term employment.
47(a)(2) Special Non-Immigrant Visa – For those employed under agreements between the Philippine government and foreign entities.

c. Special Work Permit (SWP)

Issued by the Bureau of Immigration for temporary or short-term employment (usually valid for three to six months).
Required if the non-resident alien will engage in activities such as consultancy or project-based employment.

4. Priority for Filipino Workers

The issuance of an AEP is contingent upon proving that:

The position cannot be filled by a Filipino worker.
The skills or expertise required for the position are not available in the local labor market.

Employers are required to publish a job vacancy and show evidence of recruitment efforts aimed at hiring local talent.

5. Exemptions

Certain non-resident aliens are exempt from securing an AEP, such as:

Members of the governing board with voting rights in companies where foreign equity participation is allowed.
Consultants engaged by international organizations, government agencies, or educational institutions recognized by the government.
Individuals exempted by reciprocity agreements or other special laws.

6. Monitoring and Compliance

The DOLE and BI conduct regular inspections and audits to ensure compliance with labor and immigration laws.
Violations, such as employing a non-resident alien without the proper permits, may result in administrative penalties, deportation, or blacklisting.

7. Penalties for Non-Compliance

Employers and non-resident aliens found violating labor laws may face:

Fines and penalties as prescribed by the Labor Code or Immigration Act.
Cancellation of the AEP or visa.
Criminal liabilities under the Anti-Dummy Law if the alien is involved in restricted business or professions.

8. Recent Developments and Trends

The Philippines has seen an increase in foreign nationals employed in the business process outsourcing (BPO), gaming, and construction industries. The government has intensified monitoring and enforcement to curb illegal employment practices.
The DOLE has streamlined AEP application processes to accommodate legitimate foreign workers while maintaining strict compliance.

9. Special Considerations for Certain Industries

The Philippine Offshore Gaming Operators (POGO) industry has been a significant employer of non-resident aliens. The government has issued specific guidelines to regulate the employment of foreigners in this sector.
Industries with technology-intensive operations may request exemptions or waivers for highly specialized foreign workers.

10. Employment Contracts and Labor Rights

Non-resident aliens employed in the Philippines are entitled to the same rights and protections under Philippine labor laws, including:
- Minimum wage.
- Overtime pay.
- Security of tenure.
- Benefits under the Social Security System (SSS), PhilHealth, and Pag-IBIG Fund, where applicable.

Conclusion

The employment of non-resident aliens in the Philippines is highly regulated to protect the local labor market while allowing foreign nationals to contribute where necessary. Employers must strictly adhere to the legal requirements and obtain the necessary permits and visas to ensure compliance. The government continues to balance the need for foreign expertise with its constitutional duty to prioritize the employment and welfare of Filipino workers.