Philippines vs UK Offshore Developer Costs in 2026

A software engineer in the United Kingdom earns a median of £89,814 a year on Levels.fyi, about $119,700. The same title in the Philippines pays ₱967,890, about $15,400. That is a ratio of almost eight to one before an employer adds anything on top.

The Philippines vs UK offshore developer costs question turns on that gap, and on five other numbers: the employer costs on each payroll, the hours London and Manila share, the rules for ending a contract, the change to UK unfair dismissal law in January 2027, and what five engineers cost for a year on each route.

What a software engineer earns in each country

Levels.fyi publishes pay for the same “Software Engineer” title in both countries, which gives a like-for-like starting point. Read on 19 October 2026, the United Kingdom page shows a median total pay of £89,814 a year from 4,850 submissions. The Philippines page shows ₱967,890 from 97 submissions.

At the European Central Bank reference rates for 19 October 2026, taken from the Frankfurter API, one dollar bought £0.75016 or ₱62.998. That puts the UK median at $119,726 and the Philippine median at $15,364.

The two ranges sit far apart. A UK engineer at the 25th percentile earns more than three times a Filipino engineer at the 75th.

Our nearshore vs offshore cost comparison sets the Philippines against more countries, and the guide to offshore developer rates in US dollars shows the monthly figures by role.

Employer costs in the UK

A UK payroll adds two statutory items on top of salary for a software engineer. Both are set by HM Revenue and Customs and the Department for Work and Pensions for the 2026 to 2027 tax year, which runs from 6 April 2026 to 5 April 2027.

Employer National Insurance. HMRC’s rates and thresholds for employers set the employer’s Class 1 rate at 15% on earnings above a secondary threshold of £5,000 a year. Employer contributions have no upper limit: the 15% applies to every pound above the threshold. On the £89,814 median, that is £12,722 a year, or 14.2% of pay.

Workplace pension. Under automatic enrolment, the employer pays at least 3% and the employee 5%, a minimum total of 8%, according to gov.uk’s workplace pension guide. Most schemes calculate it on qualifying earnings between £6,240 and £50,270 a year. For anyone earning above the band, the employer’s minimum stops at £1,321, which is 1.5% of the median salary. Employers can pay more, so treat this as a floor.

Paid holiday. Workers on a five-day week get at least 28 days of paid leave a year, the equivalent of 5.6 weeks, per gov.uk’s holiday entitlement page. An employer can count bank holidays within those 28 days. The cost sits inside the salary, so it does not appear as a separate on-cost below.

Two items can move the total, and neither is added to the figures in this post:

• Employment Allowance. Eligible employers can cut their annual National Insurance bill by up to £10,500 in 2026 to 2027, per the same HMRC page. Five engineers at the median generate about £63,600 of employer contributions, so the allowance would cover about a sixth of it.
• Apprenticeship Levy. It applies only to employers with an annual pay bill above £3 million, at 0.5% with a £15,000 allowance. A five-person team at the median has a pay bill of about £449,000.

Employer costs in the Philippines

The Philippine items are smaller, and the biggest are capped at salary levels well below a software engineer’s.

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%, about ₱2,016 a month at the median.

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, or 0.2% of the median.

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. Article 86 of the Labor Code adds at least 10% of the regular wage for each hour worked between 10pm and 6am. A UK buyer triggers it only in part. On a Manila 4pm to midnight shift, two of the eight hours fall after 10pm, which adds 2.5% to pay. A US buyer on New York hours triggers it for almost every hour.

Computed from the sources above at each country's Levels.fyi median, 19 October 2026.

The percentages look close, and the money does not. UK National Insurance has no ceiling, so it keeps rising with salary: at the 75th percentile it reaches £18,810. The Philippine SSS and Pag-IBIG caps stop early, so their share shrinks as pay rises. On a median engineer, the UK employer pays about £14,043 in statutory costs a year, roughly $18,700. The whole Philippine package at the median, salary and statutory costs together, costs $17,730.

Time zones: London and Manila

The UK moves its clocks twice a year. In 2026 British Summer Time runs from 29 March to 25 October, putting London on UTC+1, and the rest of the year London sits on Greenwich Mean Time, UTC+0, per gov.uk’s clock change dates. The Philippines runs on UTC+8 and has not observed daylight saving since 1991, as the Philippine Standard Time entry records.

Manila is seven hours ahead of London in summer and eight in winter. A standard Manila 9am to 5pm day ends at 10am or 9am London time.

The shift a UK team needs is much smaller than a US team’s. A Manila 1pm to 9pm day covers the London morning and lunch, 4 to 5 hours, with no night premium. A 4pm to midnight day covers 8 hours of a London summer day and 7 in winter, with only two hours inside the night differential window. A US team on New York hours needs a Manila day that runs from about 9pm to 5am.

Teams that split the day this way put stand-ups and code review in the shared hours. Our guide to managing offshore developers covers how to run the handover across a time gap.

English

English is the UK’s first language, and EF’s English Proficiency Index does not rank the UK, so there is no score to set against the Philippines. The useful number is the Philippine one. The EF EPI 2025 ranks the Philippines 28th of 123 countries with a score of 569, against a global average of 488.

Within the country, Manila scores 603, Cebu City 585 and Davao City 579. Test takers in IT roles average 581. These are averages across adults who take the test, not a guarantee for one candidate. We test every offshore developer at C1 or above before a client sees a profile.

Notice, dismissal and ending a contract

The two systems put the cost of a bad hire in different places, and the UK rules change on 1 January 2027. None of this is legal advice.

The UK today. An employer must give at least one week’s notice to an employee with between one month and two years of service, one week for each full year from two to twelve years, and twelve weeks after that, per gov.uk’s notice period rules. An employee who resigns after a month gives at least a week, per gov.uk.

Statutory redundancy pay applies after two years’ service. An employee aged 22 to 40 gets one week’s pay per full year, with weekly pay capped at £751 for redundancies from 6 April 2026 and a maximum award of £22,530, per gov.uk’s redundancy pay guide. A median engineer earns about £1,727 a week, so the cap applies.

The UK from January 2027. Ordinary unfair dismissal protection needs two years’ service today. Section 25 of the Employment Rights Act 2025 cuts that to six months, and the Act removes the cap on compensatory awards, which since 6 April 2026 is the lower of £123,543 or 52 weeks’ gross pay, according to the government’s unfair dismissal factsheet. The government’s timeline, updated 14 October 2026, applies both changes to dismissals from 1 January 2027.

For a UK hire made in late 2026, the employer has about six months to decide whether the role works before a dismissal can be challenged as unfair, and an award for a well-paid engineer will no longer stop at £123,543.

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 labor 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. A UK redundancy costs less per year of service at engineer salaries because of the weekly cap. The UK risk sits in unfair dismissal, which from 2027 arrives sooner and without a ceiling on compensation.

Philippines vs UK offshore developer costs: five engineers 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 the same things on both sides:

• The cost of employing anyone: a local entity or an employer of record, payroll, recruiting fees, laptops and the time spent replacing someone who leaves.
• Employment Allowance, which would take up to £10,500 off the UK National Insurance bill for an eligible employer.
• Pension and benefits above the legal minimum, in either country.
• The spread around the median, which the pay chart shows is wide in both countries.

On these numbers, a UK team costs between about 1.9 and 4.6 times the Hire Offshore range, and about 7.6 times a Philippine team employed directly. The 2.5% night premium for London hours adds about $2,000 a year to the Philippine team.

When the UK wins, and when the Philippines does

A UK hire fits when

• The work needs people in the room: client workshops, on-site teams, regulated work that has to stay in the UK.
• The role needs UK security clearance.
• The team runs on a full shared day and cannot move any of it to the London morning.
• Budget per engineer matters less than having the whole team on one clock.

The Philippines fits when

• The team works in writing: tickets, pull requests, recorded demos and async review.
• Four to eight hours of overlap with London is enough, on a shifted Manila day.
• You are hiring several engineers and want the per-head saving to compound.
• You want six months of probation to judge a hire and an exit cost you can predict.

For a comparison with another European market, see the Philippines vs Belgium cost breakdown. Our guide on how to vet offshore developers covers the screening that matters whichever country you choose.

Hire offshore developers with Hire Offshore

We do not hire in the UK. 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 working schedule before the offer, so a London team can set the overlap it needs. Filipino offshore developers cover stacks such as PHP and Java. See how it works, check pricing or send us the role.

FAQ

Is it cheaper to hire developers in the Philippines than in the UK?

Yes, by a wide margin. Median software engineer pay on Levels.fyi is about $15,400 a year in the Philippines against $119,700 in the UK. Statutory employer costs add about 15.7% in the UK and 15.4% to 17.9% in the Philippines, so the gap stays near eight to one.

What does a UK employer pay on top of a developer’s salary?

Employer National Insurance at 15% on earnings above £5,000 a year, with no upper limit, and a minimum workplace pension of 3% on qualifying earnings between £6,240 and £50,270. For a £89,814 salary that is about £14,043 a year, before any voluntary benefits.

How many working hours do London and Manila share?

On a standard 9am to 5pm day in both cities, one hour in British Summer Time and none in winter. A Manila 1pm to 9pm day shares 4 to 5 hours with London, and a 4pm to midnight day shares 7 to 8 hours.

Do Filipino offshore developers need a night shift premium to work UK hours?

Only for hours worked between 10pm and 6am Manila time, at a minimum of 10% of the regular wage under Article 86 of the Labor Code. A 1pm to 9pm schedule triggers none of it, and a 4pm to midnight schedule triggers two hours, about 2.5% of pay.

What changes in UK unfair dismissal law in 2027?

From 1 January 2027 the qualifying period for ordinary unfair dismissal falls from two years to six months, and the cap on compensatory awards is removed. The change applies to dismissals on or after that date, under the Employment Rights Act 2025.

How long is probation in the Philippines?

Up to six months under the Labor Code. An employee who resigns gives at least one month’s written notice, and a redundancy needs one month’s notice and at least one month’s pay per year of service.

Does Hire Offshore hire developers in the UK?

No. We hire offshore developers in the Philippines, Vietnam and India, at $2,499 to $5,999 a month all-in, with a shortlist in 24 hours and a hire in about 2 weeks.