Philippines vs Canada Offshore Developer Costs in 2026

A software engineer in Canada earns about six times what one in the Philippines earns, on the same Levels.fyi title. Canada adds less on top in payroll costs, in percentage terms, than the Philippines does. The salary gap is so wide that the smaller Canadian on-cost barely matters.

That is the Philippines vs Canada offshore developer costs question in short. For a Toronto company, or a US company weighing a team in Canada, six numbers settle it: pay, the employer costs on top, the clock, English, the cost of ending a contract, and what five engineers cost for a year in each country.

What a software engineer earns in each country

Levels.fyi reports pay for the same “Software Engineer” title in both countries. Read on 19 October 2026, the Canada page gives a median total pay of CA$137,510 a year from 5,461 submissions. The Philippines page gives ₱967,890 from 97 submissions.

At the European Central Bank reference rates for 19 October 2026, taken through the Frankfurter API, that is about $97,705 in Canada and $15,364 in the Philippines. One dollar bought CAD 1.4074 or PHP 62.998.

The two ranges sit far apart. A Filipino engineer at the 75th percentile earns less than a third of a Canadian engineer at the 25th.

The Canadian page pools the whole country, so pay in a single city can sit above or below it. For a wider view of hourly rates by country, see our guide to offshore developer rates in US dollars.

Employer costs in Canada

Canadian payroll costs are low in percentage terms for a well-paid engineer, because the two federal programmes stop at ceilings far below the median. The figures below are the Canada Revenue Agency’s for 2026 and apply outside Quebec, which runs its own pension plan and EI rate.

Canada Pension Plan. Employer and employee each pay 5.95% on earnings between a CA$3,500 basic exemption and the year’s maximum pensionable earnings of CA$74,600, according to the CRA’s CPP rates page. The employer’s maximum is CA$4,230.45 a year. At the median, that is 3.1% of pay.

CPP2. A second contribution of 4% each applies to earnings between CA$74,600 and CA$85,000, with an employer maximum of CA$416, per the CRA’s CPP2 table. That adds 0.3%.

Employment Insurance. Employees pay 1.63% on insurable earnings up to CA$68,900, and the employer pays 1.4 times the employee premium, up to CA$1,572.30 a year, per the CRA’s EI rates page. That is 1.1% at the median.

Ontario Employer Health Tax. The province charges 0.98% to 1.95% of Ontario payroll, with the rate set by total payroll and 1.95% applying above CA$400,000, according to Ontario’s EHT guide. Eligible employers with Ontario payroll under CA$5 million exempt the first CA$1 million. Five engineers at the median come to about CA$688,000 of payroll, so a small Toronto company that qualifies pays no EHT on them. A group above CA$5 million pays 1.95% from the first dollar.

Vacation pay. The Employment Standards Act gives two weeks of vacation and at least 4% vacation pay in the first five years, rising to three weeks and 6% after that, per Ontario’s ESA guide. A salaried engineer is paid as usual during those weeks, so the 4% sits inside the salary rather than on top of it. The table below leaves it out for that reason, as it leaves out the Philippine service incentive leave.

The figures here also leave out workplace insurance through the WSIB, and health and dental plans, which no statute requires.

Employer costs in the Philippines

The Philippine items are smaller in pesos, but the 13th month and any night work stay proportional to pay, so the percentage runs higher.

SSS. The Social Security System charges 15% of the monthly salary credit, with the employer paying 10% and the employee 5%, on a credit capped at ₱35,000, according to SSS. The employer also pays ₱30 a month for employees’ compensation cover. On a median engineer’s ₱80,658 a month, the employer’s share stops at ₱3,530, or 4.4% of pay.

PhilHealth. The premium is 5% of monthly basic salary, between a ₱10,000 floor and a ₱100,000 ceiling, per PhilHealth Advisory 2025-0002. A 2026 advisory keeps the 5% rate. Employer and employee split it equally, as Sprout’s worked example shows, so the employer pays 2.5%.

Pag-IBIG. Employers remit 2% of a monthly fund salary that tops out at ₱10,000 since February 2024, per Forvis Mazars’ summary of Circular 460. That is ₱200 a month at most.

13th-month pay. Presidential Decree 851 requires one-twelfth of the year’s basic salary, paid by 24 December. It adds 8.3% to annual pay.

Night shift differential. A Canadian buyer triggers this one. Article 86 of the Labor Code adds at least 10% of the regular wage for each hour worked between 10pm and 6am. A Manila engineer on Toronto hours works 9pm to 5am in July and 10pm to 6am in January, so almost every hour qualifies.

Computed from the sources above at each country's Levels.fyi median, 19 October 2026. Canada rises to 6.5% for an employer that pays EHT at 1.95%.

The percentages move with salary in opposite directions. Canada’s CPP and EI ceilings sit below the median, so their share falls as pay rises: at the 75th percentile they come to about 3.3%. In the Philippines the SSS and Pag-IBIG caps also bite early, but the 13th month and the night differential never stop.

Time zones: Manila, Toronto and Vancouver

Toronto runs on UTC-5 in winter and UTC-4 from 8 March to 1 November 2026, the same dates as the US, per the Daylight saving time in Canada entry and NIST. Vancouver changed its clocks for the last time on 8 March 2026. British Columbia now stays on Pacific time at UTC-7 all year, and its clocks do not fall back on 1 November, according to the BC government.

The Philippines runs on UTC+8 and has not observed daylight saving since 1991, as the Philippine Standard Time entry records. Manila is 12 hours ahead of Toronto in July, 13 in January, and 15 ahead of Vancouver all year.

A standard Manila day runs 1am to 9am UTC. Toronto’s day starts at 1pm UTC in July, after Manila has gone home, so the two cities share no office hours in either season. Vancouver, starting at 4pm UTC, is further out still.

A shifted Manila schedule closes part of the gap. A 6pm to 2am shift gives Toronto 4 to 5 shared hours, and four of its eight hours fall in the night differential window, adding about 5% to pay. A 9pm to 5am shift covers Toronto’s whole day in July and 7 hours in January, at the full 10%. For Vancouver, a full overlap means a Manila day from midnight to 8am.

Teams that split the day well tend to keep a short live window and move the rest into tickets and pull requests. Our guide to managing offshore developers covers how that split works in practice.

English in each country

English is the working language of nearly every tech team in Toronto and Vancouver, so the English question runs one way: will a Filipino offshore developer keep up in writing and on calls?

The EF English Proficiency Index 2025 ranks the Philippines 28th of 123 countries with a score of 569, in its High proficiency band. Manila scores 603, Cebu City 585 and Davao City 579. Those are averages across adults who take EF’s test, not engineers.

The averages say how deep the English-speaking pool runs. They do not replace testing a candidate. We test every offshore developer at C1 or above before a client sees a profile.

Probation, notice and ending a contract

The two systems price an exit in different ways. None of this is legal advice, and the Canadian rules below are Ontario’s; each province sets its own.

Canada, Ontario. The Employment Standards Act sets no formal probation, but an employee with less than three months’ continuous service has no right to written notice or termination pay, per Ontario’s termination guide. After three months, statutory notice runs from one week in the first year, two weeks from one to three years, then one week per year of service up to eight weeks.

Severance pay is separate. An employee with five or more years of service at an employer with a global payroll of at least CA$2.5 million gets one week’s regular wages per year of service, up to 26 weeks, under Ontario’s severance rules.

The ESA amounts are minimums. Ontario’s guide notes that some employees have common law rights to notice that exceed them, and a dismissed employee can sue for wrongful dismissal instead of filing an ESA claim. Courts set common law notice case by case, and an employer that wants to hold notice closer to the ESA minimum relies on a termination clause in the contract. Have an employment lawyer draft that clause.

The Philippines. The Labor Code caps probation at six months. An employee who resigns without just cause gives at least one month’s written notice. An employer that cuts a role for redundancy serves written notice on the employee and the labour department at least one month ahead and pays at least one month’s pay per year of service.

The Philippine leave figure comes from Article 95 of the Labor Code. On statute alone, Ontario looks cheaper to exit in the first years. The common law risk is what changes that, since an Ontario court can award notice well beyond eight weeks to an employee without a sound termination clause.

What five engineers cost for a year

Put the pieces together for a team of five at each country’s median pay. These are direct employment figures: salary plus the statutory costs above, converted at the 19 October rates.

The direct figures leave out three things:

• Benefits such as health and dental plans, which no statute requires and which this post does not price.
• The cost of employing anyone at all: a local company or an employer of record, payroll, recruiting fees, laptops and the time spent replacing a hire who leaves.
• The spread around the median, which the pay chart shows is wide in both countries.

A Toronto team at the median costs between 5 and 6 times a directly employed Philippine one. Against the Hire Offshore range, which already includes employment and equipment, the Toronto figure is about 42% higher than our top rate and 3.4 times our bottom rate. For the same comparison with British pay and National Insurance, see Philippines vs UK offshore developer costs.

When Canada wins, and when the Philippines does

Canada fits when

• The work runs on live collaboration across a full Eastern or Pacific day.
• The engineer will meet Canadian customers or work under Canadian data residency or security requirements.
• You already have a Canadian entity and payroll, so the marginal hire carries no setup cost.
• French matters for a Quebec product or customer base.

The Philippines fits when

• The team already works in writing: tickets, pull requests, recorded demos and async review.
• You are hiring several engineers and want the per-head saving to compound across the team.
• You can run a short shifted window, or accept the night differential for full overlap.
• You want six months of probation to judge a hire, and an exit cost set by statute.

Some companies split the work: product and customer-facing roles stay in Toronto, and Filipino offshore developers take the build. Our Mexico nearshore vs Philippines offshore comparison covers the nearshore route for teams that need a shared day.

Hire offshore developers with Hire Offshore

We do not hire in Canada. We hire in the Philippines, Vietnam and India, and we shortlist 6 to 8 vetted offshore developers within 24 hours and complete the hire in 2 weeks. The monthly fee of $2,499 to $5,999 covers salary, payroll, equipment and employment, with no upfront cost and a 90-day replacement guarantee.

We agree the schedule before the offer, and our offshore developers overlap 4 to 6 hours with a US workday, which for Toronto is the same Eastern clock. Filipino offshore developers cover stacks such as PHP and Java. See how it works, check pricing or send us the role.

FAQ

Is Canada or the Philippines cheaper for software engineers?

The Philippines, by a wide margin. Median software engineer pay on Levels.fyi is about $15,400 a year there against $97,700 in Canada. Canadian statutory costs add only about 4.5% at that pay, against 15% to 25% in the Philippines, but the salary gap outweighs that many times over.

What does a Canadian employer pay on top of salary in 2026?

Outside Quebec, the employer pays 5.95% CPP up to CA$74,600 of earnings, 4% CPP2 between CA$74,600 and CA$85,000, and EI at 1.4 times the employee’s 1.63% on up to CA$68,900. In Ontario, Employer Health Tax adds up to 1.95% of payroll, with the first CA$1 million exempt for eligible employers under CA$5 million of payroll.

How many hours do Manila and Toronto overlap?

None on a standard 9 to 5 day in either city. Manila is 12 hours ahead of Toronto in summer and 13 in winter. A Manila shift from 6pm to 2am shares 4 to 5 hours, and a 9pm to 5am shift covers almost all of Toronto’s working day.

Do Filipino offshore developers get extra pay for working Canadian hours?

Under the Labor Code, yes. Article 86 adds at least 10% of the regular wage for each hour worked between 10pm and 6am. A full Toronto day falls almost entirely in that window, and a 6pm to 2am shift puts half its hours there.

Does Vancouver still change its clocks?

No. British Columbia moved to permanent Pacific time at UTC-7 after the clocks went forward on 8 March 2026, and they do not fall back on 1 November. Manila is 15 hours ahead of Vancouver all year.

Is it expensive to let an employee go in Ontario?

The statutory cost is modest: one to eight weeks’ notice by service, plus severance of a week per year after five years at larger employers. The risk sits in common law, where a court can award reasonable notice well beyond the ESA minimum unless the contract has a valid termination clause.