Overseas Filipino Workers (OFWs) have been a significant part of the Philippine economy for decades. According to the Philippine Statistics Authority, there were approximately 2.2 million OFWs in 2019, remitting a total of ₱1.56 trillion (US$33.5 billion) to their families in the Philippines. The demand for Filipino workers abroad continues to grow, presenting a lucrative opportunity for entrepreneurs who want to start an OFW employment agency.
However, setting up an OFW employment agency is not a simple task. It requires a thorough understanding of the legal requirements, recruitment process, and the challenges that come with managing an agency. In this comprehensive guide, we will walk you through the step-by-step process of creating an OFW employment agency, from business registration to deployment of workers.
Step 1: Register Your Business
Before you can start your OFW employment agency, you need to register your business with the appropriate government agencies. Here’s a detailed breakdown of the registration process:
1.1. Choose a Business Structure
There are three common business structures in the Philippines: sole proprietorship, partnership, and corporation. Each structure has its own advantages and disadvantages, so it’s essential to choose the one that best suits your needs and goals.
- Sole Proprietorship: This is the simplest and most common business structure in the Philippines. It is owned and operated by a single individual, and there is no legal distinction between the owner and the business. Sole proprietorships are easy to set up and have minimal reporting requirements, but the owner is personally liable for all debts and obligations of the business.
- Partnership: A partnership is formed when two or more individuals agree to do business together. Partnerships can be general or limited, depending on the level of involvement and liability of each partner. Like sole proprietorships, partnerships are relatively easy to set up, but partners are personally liable for the debts and obligations of the business.
- Corporation: A corporation is a separate legal entity from its owners, providing limited liability protection. Corporations are more complex to set up and have more stringent reporting requirements, but they offer greater flexibility in raising capital and transferring ownership.
1.2. Register Your Business Name
Once you have chosen your business structure, you need to register your business name with the appropriate government agency:
- For sole proprietorships and partnerships, register with the Department of Trade and Industry (DTI). You can check the availability of your preferred business name and reserve it online through the DTI’s Business Name Registration System (BNRS). Once you have reserved your business name, you need to submit the required documents and pay the registration fee at any DTI office.
- For corporations, register with the Securities and Exchange Commission (SEC). You need to submit your company’s articles of incorporation, by-laws, and other required documents, along with the registration fee. You can check the availability of your preferred corporate name and reserve it online through the SEC’s Company Registration System (CRS).
1.3. Obtain a Mayor’s Permit
After registering your business name, you need to obtain a Mayor’s Permit from your local government unit (LGU). The requirements and process for obtaining a Mayor’s Permit vary depending on your LGU, but generally, you need to submit the following documents:
- DTI or SEC registration certificate
- Barangay clearance
- Occupancy permit or contract of lease for your office space
- Fire Safety Inspection Certificate
- Sanitary Permit (for food-related businesses)
- Environmental Compliance Certificate (for businesses with environmental impact)
You may also need to pay local taxes and fees, such as the business permit fee, garbage fee, and signboard fee.
1.4. Register with the Bureau of Internal Revenue (BIR)
As a business owner, you are required to register with the BIR to obtain a Tax Identification Number (TIN) and to pay the necessary taxes. Here are the steps to register with the BIR:
- Obtain a BIR Form 1901 (Application for Registration) from the nearest Revenue District Office (RDO) or download it from the BIR website.
- Fill out the form and submit it to the RDO, along with the following requirements:
- DTI or SEC registration certificate
- Mayor’s Permit
- Contract of lease for your office space
- ID picture of the owner or authorized representative
- Annual Registration Fee (ARF) of ₱500
- Pay the Documentary Stamp Tax (DST) and Certification Fee at any Authorized Agent Bank (AAB) or Revenue Collection Officer (RCO).
- Obtain your Certificate of Registration (Form 2303) and Authority to Print (ATP) receipts and invoices from the BIR.
1.5. Register with the Philippine Overseas Employment Administration (POEA)
To operate legally as an OFW employment agency, you must register with the POEA as a private recruitment agency. Here are the general requirements for POEA registration:
- A certified true copy of your DTI or SEC registration certificate
- A certified true copy of your Mayor’s Permit
- A certified true copy of your BIR Certificate of Registration
- Proof of financial capacity, such as a bank certificate or audited financial statements
- A verified undertaking to comply with POEA rules and regulations
- A notarized undertaking to assume full responsibility for all claims and liabilities that may arise in connection with the recruitment and placement of OFWs
- A detailed recruitment plan, including the countries and industries you intend to serve, your marketing strategies, and your recruitment process
- A list of your key personnel, including their qualifications and experience
- A surety bond of ₱1 million, to be posted with the POEA
The specific requirements and process for POEA registration may vary depending on the type of recruitment agency you want to set up (e.g., land-based or sea-based) and the countries you intend to deploy workers to. It’s best to consult with the POEA directly or with a legal professional who specializes in labor and employment law.
Step 2: Set Up Your Office
Once you have completed the registration process, you need to set up your physical office. According to POEA guidelines, your office must have a minimum floor area of 100 square meters and must be located in a commercial building. Your office should have the necessary facilities and equipment, such as computers, printers, scanners, and a reliable internet connection.
Step 3: Hire Your Staff
Your OFW employment agency must have a minimum of four full-time employees, including:
- A licensed recruitment officer who is responsible for the day-to-day operations of the agency, including recruitment, selection, and deployment of workers.
- A documentation officer who is responsible for preparing and processing the necessary documents for deployment, such as employment contracts, visa applications, and medical certificates.
- An administrative staff who is responsible for managing the agency’s finances, records, and other administrative tasks.
- A liaison officer who is responsible for communicating with foreign employers, government agencies, and other stakeholders.
All your staff must be properly trained and oriented on the legal and ethical standards of recruitment, as well as the cultural and social norms of the countries you intend to deploy workers to.
Step 4: Develop Your Recruitment Plan
A well-designed recruitment plan is essential for the success of your OFW employment agency. Your recruitment plan should include the following elements:
- Market research: Identify the countries and industries that have a high demand for Filipino workers, as well as the skills and qualifications that are most in-demand. You can gather this information through online research, attending job fairs and conferences, and networking with foreign employers and recruitment agencies.
- Marketing strategies: Develop a marketing plan to promote your agency and attract potential job applicants. This may include advertising in local newspapers, social media, and job portals, as well as conducting job fairs and information sessions in schools and communities.
- Screening and selection process: Establish a rigorous screening and selection process to ensure that you are recruiting qualified and suitable candidates. This may include conducting interviews, skills assessments, medical examinations, and background checks.
- Pre-departure orientation: Provide comprehensive pre-departure orientation to your selected candidates, covering topics such as the employment contract, working and living conditions in the host country, cultural differences, and safety and security measures.
- Monitoring and support: Set up a system for monitoring the welfare and well-being of your deployed workers, as well as providing support and assistance in case of emergencies or disputes with employers.
Step 5: Build Your Network
Building a strong network of partners and stakeholders is crucial for the long-term success of your OFW employment agency. Here are some key groups you should focus on:
- Foreign employers and recruitment agencies: Establish partnerships with reputable foreign employers and recruitment agencies who are looking to hire Filipino workers. You can connect with them through online platforms, job fairs, and industry associations.
- Government agencies: Build relationships with relevant government agencies, such as the POEA, the Overseas Workers Welfare Administration (OWWA), and the Department of Foreign Affairs (DFA). These agencies can provide you with valuable information, resources, and support in facilitating the deployment of workers and resolving issues that may arise.
- Schools and training centers: Partner with schools and training centers that offer courses and programs relevant to the skills and qualifications required by your target markets. These institutions can be a good source of potential job candidates and can help you develop a pipeline of skilled workers.
- Industry associations: Join industry associations, such as the Philippine Association of Service Exporters, Inc. (PASEI) and the Philippine Recruiters Association (PRA). These associations can provide you with networking opportunities, market insights, and best practices in recruitment and deployment.
- Local communities: Engage with local communities, particularly in areas with high rates of overseas employment. You can conduct information sessions, job fairs, and other outreach activities to raise awareness about your agency and the opportunities available for overseas work.
Step 6: Ensure Compliance and Transparency
As an OFW employment agency, you are subject to strict legal and ethical standards set by the POEA and other relevant government agencies. Failure to comply with these standards can result in penalties, suspension, or even revocation of your license to operate. Here are some key areas of compliance you should focus on:
- Recruitment and placement: Ensure that your recruitment and placement practices are in line with POEA rules and regulations, including the use of standard employment contracts, the payment of fees and other charges, and the provision of pre-departure orientation and training.
- Welfare and protection: Implement measures to protect the welfare and well-being of your deployed workers, such as regular monitoring and communication, emergency assistance and repatriation, and the resolution of complaints and disputes with employers.
- Recordkeeping and reporting: Maintain accurate and up-to-date records of your recruitment and deployment activities, including job orders, employment contracts, and worker profiles. Submit regular reports to the POEA and other government agencies as required.
- Financial management: Ensure that your agency’s finances are managed transparently and responsibly, including the payment of taxes, fees, and other obligations, as well as the proper handling of workers’ funds and remittances.
To promote transparency and accountability, it’s also important to establish clear communication channels with your job applicants, deployed workers, and their families. This may include regular updates and feedback mechanisms, as well as a grievance and complaint system to address any issues or concerns that may arise.
Conclusion
Setting up an OFW employment agency can be a complex and challenging process, but it can also be a rewarding and fulfilling venture that contributes to the welfare and development of Filipino workers and their families. By following the steps outlined in this guide, and by adhering to the highest standards of legal compliance, ethical conduct, and social responsibility, you can build a successful and reputable OFW employment agency that makes a positive impact on the lives of many.
