Employer Obligations to Remit SSS Contributions Despite Low Remittances (Philippine Legal Perspective)
1. Statutory Framework
| Instrument | Key Provisions Relevant to Employers |
|---|---|
| Republic Act (RA) 11199 – Social Security Act of 2018 (superseding RA 8282) | • Mandatory registration of all employers and their employees (private sector and household). • Progressive contribution‑rate schedule (12 % in 2019, 13 % in 2021, 14 % in 2023, 15 % effective 01 Jan 2025). • Allocation: Employer‑share ≈ 2⁄3, Employee‑share ≈ 1⁄3. • 2 % per month penalty on unremitted amounts; criminal liability for willful non‑compliance. |
| SSS Circulars & Resolutions (e.g., 2022‑033‑B on PRN system; 2023‑003 on condonation) | • Prescribe payment deadlines, electronic PRN (Payment Reference Number) rules, wage brackets, and condonation windows. |
| Implementing Rules & Regulations (IRR) of RA 11199 | • Detail procedures for registration, reporting, inspection, settlement, and enforcement. |
| Batas Kasambahay (RA 10361) & Domestic Workers Coverage Rules | • Household employers must register and remit for “kasambahays,” whatever the actual wage. |
| RA 11552 (2021) – Contribution Penalty Condonation | • Grants SSS authority to implement condonation programs; does not waive principal contributions. |
2. Coverage and Registration
Employer Coverage
- Any person, partnership, corporation, or organization (including non‑stock, non‑profit, foreign firms, and householders) hiring at least one employee for pay, regardless of work hours.
Employee Coverage
- Compulsory for private employees under 60, receiving at least ₱1,000/month — even for part‑timers, apprentices, or probationary workers.
- Voluntary only when the employer–employee relationship ceases (e.g., self‑employed, OFWs).
Registration Duties
- Secure an Employer (ER) Number within 30 days of start‑up or first hire.
- Submit R‑1A (Employment Report) within 30 days of first day of service.
3. Computing the Contribution
| Period | Statutory Contribution Rate | Employer Share | Employee Share | ECC ¹ |
|---|---|---|---|---|
| 2019–2020 | 12 % of Monthly Salary Credit (MSC) | 8 % | 4 % | ₱10–₱30 (ER‑only) |
| 2021–2022 | 13 % | 8.5 % | 4.5 % | same |
| 2023–2024 | 14 % | 9.5 % | 4.5 % | same |
| 2025 onward | 15 % | 10 % | 5 % | same |
¹ Employers also shoulder Employees’ Compensation (EC) contributions: ₱10/month for MSC ≤ ₱14,500; ₱30 for higher MSC.
- Minimum MSC (2024): ₱4,000 → total monthly due ≈ ₱560 (ER ₱380 + EE ₱180)
- Maximum MSC (2024): ₱30,000 → total monthly due ≈ ₱4,200 (ER ₱2,850 + EE ₱1,350)
“Low remittances” commonly refer to (a) very small absolute amounts because employees earn near the statutory minimum wage, or (b) under‑reported wages that depress the MSC. Both are addressed below.
4. Core Legal Obligations—Even When Amounts Are Small
Withhold & Remit in Full
- Deduct the employee’s share at the time of payroll.
- Add the employer’s share.
- **Remit on or before the 15th, 20th, 25th, or last day of the month (deadline depends on ER number’s last digit or the PRN schedule).
- Use the PRN‑based electronic collection platforms (banks, G‑Cash, UnionBank Online, PayMaya, etc.).
Report Wages Accurately
- No ceiling‑avoidance: declaring only a portion of wages to shrink MSC is unlawful misreporting (Art. 174[g], RA 11199).
Maintain Records (payroll, proof of remittance, acknowledgment receipts) for at least 10 years.
Display Compliance Certificate in the workplace (Sec. 24, IRR).
5. Scenarios Involving “Low” Remittances
| Scenario | Employer’s Duty | Typical Pitfall |
|---|---|---|
| Minimum‑wage earners | Must still remit based on MSC ₱4,000 (or the prevailing floor). Employer cannot invoke hardship. | Non‑remittance because “contribution is too small.” |
| Reduced workdays / flexible hours | Compute monthly earnings, determine applicable bracket, and remit. | Forgetting to adjust MSC, leading to arrears. |
| Apprentices / interns with allowances | Coverage kicks in once monthly remuneration ≥ ₱1,000 and relationship meets “employer–employee” test. | Mistaken belief they are exempt. |
| Business losses | Statutory duty is not contingent on profitability. | Deferral of SSS deposits to fund operating cash flow—subject to penalties. |
| Under‑declared salaries | Must correct retroactively; SSS may assess differential contributions. | Intentional understatement to curb employer share. |
6. Penalties and Liability for Short or Non‑Remittance
| Nature | Statutory Basis | Sanctions |
|---|---|---|
| Administrative | Sec. 22(b) & (e) RA 11199 | 2 % interest per month on delinquency until fully paid; compromise/condonation possible but principal is non‑negotiable. |
| Civil | Sec. 22(e) | SSS may sue for collection; employer must also reimburse employee benefits SSS had to advance. |
| Criminal | Sec. 28(h) | Fine ₱5,000–₱20,000 and/or imprisonment 6 yrs 1 day–12 yrs for willful refusal/fraudulent reporting. Corporate officers, partners, and managing heads are personally liable. |
| Corporate Consequences | Corporation Code & SEC rules | Denial of business permit renewals, government bidding, and loans (must present latest SSS clearance). |
7. Jurisprudence Illustrating Strict Employer Accountability
- SSS v. Moonwalk Development Corp. (G.R. 170663, 22 Jan 2010) Even if the employee later joins voluntary coverage, the employer remains liable for its past contributions and penalties.
- Philippine National Construction Corp. v. SSS (G.R. 165080, 23 Feb 2011) Government‑owned or controlled corporations engaged in proprietary functions are not exempt from SSS coverage.
- People v. Gregorio Cataño (CA‑G.R. No. 24076‑R, 1965) Personal criminal liability of a managing partner upheld for deliberate non‑remittance.
- SSS v. Court of Appeals & Jaka Food Processing (G.R. 101576, 26 Jun 1992) Failure to register and report employees does not prejudice the employee’s right to benefits; employer becomes directly liable to reimburse SSS.
8. Prescriptive Periods
| Action | Prescriptive Period |
|---|---|
| SSS collection of contributions or penalties | 20 years from the time delinquency is known or assessment is made. |
| Criminal prosecution | 20 years from commission or discovery. |
Prescription is interrupted by (i) filing of a case, (ii) written acknowledgment, or (iii) partial payment.
9. Remediation & Condonation Programs
RA 11552 (2021) empowers SSS to condone penalties periodically via Board resolutions (e.g., 2023 Condonation for pandemic arrears).
Employer must:
- Pay 100 % of principal contributions and ECC;
- Settle within the approved term (lump‑sum or installment up to 48 months);
- Submit updated ER records.
Penalties and part of interest may then be waived.
10. Practical Compliance Tips for Employers
- Adopt Payroll‑to‑PRN Automation: Integrate HRIS/payroll with SSS Electronic Collection System to generate PRNs per cutoff.
- Quarterly Self‑Audit: Reconcile payroll totals with remitted MSCs; flag zero or low brackets inconsistent with salary histories.
- New‑Hire On‑Boarding Checklist: Ensure SSS numbers, obtain signed DDR‑1 forms (downgrades risk of dummy/ghost entries).
- Exit‑Clearance Protocol: Verify last three months of contributions; issue certificate of SSS remittance to separating employees.
- Maintain a “Proof of Compliance Docket”: Hard copy or secure cloud folder containing: bank payment confirmations, PRN‑acknowledged receipts, SSS‑generated contribution collection lists.
- Attend SSS Seminars: The SSS routinely offers free webinars on updates (rate changes, condonation rules, WISP+ savings, etc.).
11. Special Notes on Low‑Income and Special‑Sector Employees
| Sector | Particular Rule |
|---|---|
| Kasambahay (RA 10361) | Employer shoulders entire contribution if wage < ₱5,000/month; shared formula only when wage ≥ ₱5,000. |
| Private school teachers on “10‑month pay” | Spread MSC across 12 months or remit for the 10 actual salary months + additional voluntary remittance for the gap (coordination with concerned faculty essential). |
| Micro‑enterprises (< 10 workers) | No exemptions; may, however, avail of condonation and installment plans. |
| Employees over 60 but still working | Continue SSS deductions (now treated as Retirement Insurance Contributions); employee entitled to additional lump‑sum at retirement. |
12. Consequences for Employees When Employers Under‑Remit
- Benefit Reduction or Denial – Sickness, maternity, unemployment, or retirement claims may be denied if qualifying contributions are lacking; however, the SSS will pay the employee first and recover from the defaulting employer (Sec. 22‑A).
- Delayed Retirement Credits – Low MSC depresses Average Monthly Salary Credit (AMSC), permanently reducing pension.
- Coverage Gaps – Non‑remitted months create “lags” that can disqualify short‑tenure employees from sickness and unemployment benefits.
13. Key Take‑Aways
- Contribution duty is absolute once an employer–employee relationship exists—profitability, cash‑flow issues, or minimal salaries do not excuse non‑remittance.
- Low remittance amounts (because of low wages) do not translate to lower legal obligations: the same reporting, deadlines, and penalty rules apply.
- Liabilities are multi‑layered—administrative (2 % monthly interest), civil (collection suits), criminal (fine/imprisonment), and collateral (business permit holds).
- Vigilant payroll controls, accurate wage reporting, and routine reconciliation are the employer’s best defenses.
- Condonation programs give relief from penalties—but never from the principal amount—so prompt enrollment when available is financially prudent.
Bottom‑line: Comply on time, even for the smallest contribution, or pay exponentially more later—often with personal liability for owners and officers.
Prepared July 2025. This overview reflects laws and regulations in force up to RA 11199’s scheduled 15 % contribution rate effective 01 January 2025 and recent SSS circulars. For complex or disputed cases, seek formal guidance from the Social Security Commission or qualified Philippine labor counsel.