Employer Liability for Non-Remittance of SSS Contributions (Philippines)

Failing to register employees, deduct the correct Social Security System (SSS) contributions, and remit them on time is more than a payroll lapse—it can trigger civil liability, criminal prosecution, liens on assets, and personal exposure of corporate officers. This guide lays out, in Philippine context, everything employers and workers need to know.

1) Legal Foundation & Core Duties

Coverage & registration. All private-sector employers (including household employers) must register and report all employees for SSS coverage from day one of employment.
Compute, deduct, and remit. Employers must (a) compute the employee share, (b) add the employer share, (c) remit the total (both shares) within SSS deadlines, and (d) submit the required payroll/contribution reports.
No shifting of employer share. The employer share may not be deducted from the employee’s wage, and no waiver by the employee is valid.
Record-keeping. Maintain payroll, timekeeping, and contribution records; make them available to SSS on inspection.

2) What Counts as a Violation?

An employer violates the law if it:

Fails to register the business or its employees with SSS.
Fails to deduct the employee’s share from wages as required.
Deducts but fails to remit the employee share together with the employer share within the prescribed period.
Under-reports/under-remits by misstating wages or headcount, or by failing to file the required reports.
Obstructs SSS inspections or keeps false/incomplete records.

Key principle: Once you deduct the employee’s share from wages, that amount becomes a trust fund for SSS. Non-remittance after deduction is legally treated as misappropriation.

3) Civil Liability: Interest, Damages, and Liens

SSS “damages”/interest on delinquency. Unpaid contributions accrue statutory damages at two percent (2%) per month from the date due until fully paid. These are on top of the principal contributions due (both shares).
Solidary (joint) liability. The employer is solidarily liable for the entire contribution (employee + employer shares) and statutory damages—even if it failed to deduct the employee’s share.
Assessment & collection. SSS may issue billing assessments, demand letters, and pursue administrative collection (e.g., garnishment, levy, or liens) and court actions.
Preference of claims. In insolvency or liquidation, SSS contributions and penalties enjoy preference under law and may attach as a lien on employer assets.
No set-off against benefits. Employer liability to SSS cannot be offset against employees’ claims or benefits.

4) Criminal Exposure (Penal Clause)

Who can be charged. The employer and, if a corporation/partnership, its responsible officers (e.g., president, general manager, managing partner, treasurer, or any person who consented to or tolerated the violation).
Acts penalized. Non-registration, non-deduction, non-remittance, under-reporting, falsification, or obstruction of inspection.
Penalties. Imprisonment (typically six [6] years and one [1] day up to twelve [12] years) and/or fine (commonly ₱5,000 to ₱20,000) per offense, in addition to civil liabilities.
Presumption of misappropriation. If the employer deducted the employee share but did not remit within the period prescribed, the law presumes misappropriation—supporting prosecution similar in gravity to estafa-type offenses.
Continuing offense. Each period of non-remittance can constitute a separate punishable act, compounding exposure.

Practical effect: Paying the arrears after a criminal case has been filed does not automatically extinguish criminal liability; it may mitigate, but prosecution can proceed.

5) Personal Liability of Corporate Officers

Direct exposure. Responsible officers who knowingly allow non-remittance may be held criminally liable and/or solidarily liable for civil delinquency.
No corporate veil. Courts and SSS regularly pierce the veil where officers participated in or tolerated the violation.
Defenses that rarely work. “We had cash-flow problems,” “Our bookkeeper resigned,” or “We intended to pay later” do not excuse liability once deductions were made and not remitted.

6) Employee Rights Despite Employer Default

Benefits are protected. An employee’s SSS benefits (e.g., sickness, maternity, disability, retirement, death) are not forfeited by the employer’s non-remittance. SSS may credit unposted periods upon proof of employment/wages and then collect from the employer.
How to assert:
1. Check your My.SSS contributions;
2. Gather payslips, contracts/IDs, and any company certification of employment/wages;
3. File a contribution discrepancy/delinquency complaint with SSS.
Confidential reporting. Employees may report delinquent employers; SSS can audit and assess without exposing the whistleblower beyond what due process requires.

7) Government Transactions & Compliance Consequences

Clearances & permits. Delinquencies can block SSS clearance required for government bidding, PEZA/BOI compliances, and some business permit renewals or incentives.
Payroll reimbursement impacts. Employers that fail to remit may lose eligibility for certain SSS reimbursements (e.g., sickness benefit advances) and face audit flags.

8) Audits, Assessments, and Enforcement Toolkit

Desk or field audit. SSS compares payroll, books, bank records, and government filings to detect under-remittance or under-reporting.
Notices & due process. Employers receive pre-assessment and final assessment notices with opportunity to explain/contest.
Collection remedies. If unpaid, SSS may issue warrants, garnish bank accounts/receivables, levy on property, and file civil and/or criminal cases.
Compromise/condonation programs. From time to time, SSS may open penalty condonation or restructuring programs (subject to terms). Participation does not erase criminal liability already filed unless the program or law expressly provides.

9) Compliance Roadmap for Employers

Enroll correctly. Register the business and all employees on hiring; update status changes (probationary to regular, resignations) promptly.
Automate payroll accuracy. Align payroll with SSS tables; segregate employee vs employer shares; reconcile monthly with SSS postings.
Remit on time, every time. Use official e-payment channels; keep proof of payment and acknowledgment files.
Cure legacy gaps fast. If you discover unremitted periods, self-assess, pay, and request posting; earlier settlement reduces risk of criminal referral.
Governance. Board resolution assigning accountability (HR/payroll/finance) and internal controls (dual sign-offs, bank reconciliation, exception reports).
Exit protocols. Before dissolving/closing, secure SSS clearance; unpaid SSS can follow officers post-closure.
Third-party contractors. Vet contractors’ SSS compliance; consider withholding or indemnity clauses—especially for manpower/PEO arrangements.

10) Frequently Asked Questions

Q1: We deducted the employee share but couldn’t remit due to cash flow. Can we remit later without penalties? No. Statutory 2% per month damages apply until full payment; criminal exposure exists because the amount was already deducted from wages.

Q2: Can we pass the employer share to the employee? No. It is illegal to charge the employer portion to the employee or “net” it against benefits.

Q3: If we pay everything now, do we avoid criminal charges? Payment reduces civil exposure but does not guarantee immunity from prosecution for past offenses, especially where there were deductions without remittance.

Q4: Our bookkeeper hid the problem. Are officers still liable? Often yes. Officers with authority who failed to supervise or tolerated the practice may be held personally liable.

Q5: The employee resigned years ago; do we still owe the missed remittances? Yes. Employer liability for contributions survives separation and can be assessed with damages.

11) Defenses & Mitigating Factors (What Actually Helps)

Proof of timely remittance (official receipts, bank confirmation, SSS acknowledgment).
Clerical/encoding errors that did not involve withholding without remittance—quickly corrected and posted with SSS.
Good-faith classification disputes (e.g., independent contractor vs employee) resolved in favor of coverage—prompt payment upon resolution mitigates penalties and enforcement posture.

(Note: “No money,” “We intended to pay,” or “Employee agreed to waive” are not valid defenses.)

12) Employee Action Plan (If Your Employer Didn’t Remit)

Download your contribution record (My.SSS).
Collect proof: payslips showing SSS deductions, IDs, employment contract/COE, and any HR memos.
File a complaint with SSS (Contribution Discrepancy/Delinquency).
For time-sensitive benefits (e.g., maternity, sickness), file the benefit claim anyway with your proofs; SSS can process and charge the employer later.
If terminated for insisting on remittance, seek labor remedies (illegal dismissal/retaliation) in parallel.

13) Consequences Summary (At a Glance)

Civil: Principal contributions (both shares) + 2%/month statutory damages + costs; liens and garnishments possible.
Criminal: Fine and imprisonment; officers may be personally prosecuted.
Reputational/operational: Loss of clearances, blocked government deals, audit flags, and potential board/officer disqualification in practice.

14) Bottom Line

Deducting but not remitting SSS contributions is legally treated as misappropriation and invites serious civil and criminal penalties—including personal liability of officers.
Employees’ benefits remain protected, but SSS will collect aggressively from delinquent employers.
For employers, the only safe strategy is full, on-time remittance, airtight controls, and immediate regularization of any discovered gaps.
For employees, document, report, and claim—the law is designed so your SSS coverage endures despite employer default.

This article is for general information only and is not a substitute for tailored legal advice on your specific facts.