Fractional HR for offshore teams: Who handles what
Key takeaways
- Your provider or employer of record (EOR) owns contracts and payroll. A fractional human resources (HR) lead owns people strategy. You keep daily direction.
- In the Philippines, regular staff can only be dismissed for a just or authorized cause. Just-cause dismissals need written notice and a chance to be heard.
- Under Article 109 of the Philippine Labor Code, you can be solidarily liable with your provider for violations.
- Agree the split in writing with your provider early.
Your offshore team is hired and doing good work. Then a performance problem surfaces, and nobody’s sure whose job it is to answer.
That gap is where fractional HR for offshore teams earns its keep. A fractional HR lead is a form of fractional staffing: a senior HR professional you hire part-time, on contract, to own people strategy without a full-time salary.
The legal detail uses the Philippines as the worked example, so check local law if your team sits elsewhere.
Why offshore teams create an HR gap
Offshore teams create an HR gap because the legal employer and the day-to-day manager are different parties. Your provider runs payroll and contracts, but it doesn’t set your people strategy, and you can’t manage around local labor law you don’t know.
Most companies build an offshore team in the Philippines through one of a few models, and in most a staffing provider or EOR becomes the legal employer.
That setup handles paperwork but rarely covers performance frameworks, manager coaching or policies matching your onshore team.
Who really owns each HR task
The provider or EOR owns legal employment. The fractional HR lead owns strategy and policy. You own daily direction and the final call on roles, goals and budget.
Here’s the typical split:
| HR task | Offshore provider or EOR | Fractional HR lead | You |
|---|---|---|---|
| Employment contracts and payroll | Owns | Reviews | Agrees terms and budget |
| Statutory benefits and filings | Owns | Checks | – |
| Hiring and role design | Sources | Designs | Decides |
| Performance management | Documents | Builds the system | Runs reviews |
| Discipline and termination | Runs the legal process | Advises | Decides with the provider |
| Culture and engagement | Supports | Plans | Leads |
Contracts and models vary, so check yours.
In the Philippines, Article 106 adds a catch. If the provider lacks substantial capital and its staff do work tied to your core business, the law treats the provider as your agent and you as the employer.
Pick a provider with real capital and operations.
What your offshore provider or EOR covers
An employer of record (EOR) is a firm that legally employs staff on your behalf. It handles contracts, payroll, tax filings and statutory benefits in the worker’s country.
A staffing provider covers similar ground, plus office space. Either way, they carry the day-to-day legal obligations.
In the Philippines, though, Article 109 of the Labor Code of the Philippines (Presidential Decree No. 442) makes a client that contracts out work jointly and severally (solidarily) liable with its contractor for Labor Code violations.
What a fractional HR lead covers
A fractional HR lead designs the people systems your provider doesn’t. That means performance reviews, job levels, onboarding plans and policies that work across both locations.
They also coach your managers, so treat them as part of the leadership team.
In a 2024 Harvard Business Review (HBR) IdeaCast interview, fractional chief product officer Amy Bonsall advised including fractional leaders in key leadership touchpoints, much like a full-time hire.
What stays with you
You set the work, goals and standards, decide promotions, and approve the budget and role changes.
Philippine labor law you can’t outsource away
You can hand over the paperwork, but not the consequences. Philippine labor law protects jobs and pay in ways that shape how your managers act, so your fractional HR lead must design policies around it.
Article numbers follow the Department of Labor and Employment (DOLE) 2022 edition, renumbered in 2015. These rules matter most:
- Security of tenure. Under Article 294, an employer can’t terminate a regular employee except for a just or authorized cause.
- Just causes. Article 297 lists them: serious misconduct or willful disobedience of lawful orders, gross and habitual neglect of duties, fraud or willful breach of trust, crimes against the employer, their family or representatives, and analogous causes.
- Due process. Article 292(b) requires a written notice of the causes and ample opportunity to be heard, and puts the burden of proving a valid cause on the employer. DOLE’s Department Order No. 147-15 (2015) amends the implementing rules on termination, so get legal advice before any dismissal.
- Redundancy and retrenchment. Both are authorized causes under Article 298 and need written notice to the worker and to DOLE at least one month ahead.
- Separation pay. Redundancy pays one month’s pay per year of service, and retrenchment half a month per year. Either way the floor is one month’s pay, and a part-year of six months or more counts as a full year.
- Night work. Under Article 86, staff working between 10 pm and 6 am earn at least 10% of their regular wage on top for each of those hours. Managerial staff are exempt under Article 82.
Pay rules add more. Presidential Decree (PD) 851 created the 13th-month pay, and Memorandum Order No. 28 (1986) extended it: employers must give rank-and-file staff their 13th-month pay by December 24 each year.
How to set up fractional HR for offshore teams
Start by writing down who owns what, then give your fractional HR lead access to your provider and your managers. A clear split, agreed in writing, closes the “whose job is it?” gap.
- Scope the role. Decide whether you need a policy build, manager coaching or ongoing cover. Look for Philippine experience, and ask how they bill.
- Map the split. Agree the table above with your provider before anything goes wrong.
- Share the provider contract. Your fractional HR lead needs to see what the provider promised.
- Align policies. Build one set of performance and conduct policies, with local notes where Philippine law differs.
- Train your managers. Teach them the dismissal process your provider follows before they ever need it.
- Review every quarter to check the split still works.
Get those six steps right and fractional HR for offshore teams stops being a gap. It becomes the link between your onshore standards and your offshore staff.
If you’re still choosing a provider, compare how each one splits HR duties in the Outsource Accelerator directory.
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