Payroll deductions for SSS, PhilHealth, and Pag-IBIG can feel confusing because they affect an employee’s take-home pay every payday, but the employer is the one legally responsible for computing, deducting, reporting, and remitting them. The safest way to handle these deductions is to treat them as statutory payroll deductions: deduct only the employee’s lawful share, add the employer’s required counterpart, remit on time, and keep records that match the employee’s payslip, agency reports, and actual posted contributions.
For employees, the main concern is usually: “Why was this deducted from my salary, and was it really remitted?” For employers and HR/payroll teams, the concern is: “How do we compute this correctly and avoid penalties?” This guide explains the legal basis, current contribution rules, payroll process, common mistakes, documents, deadlines, and practical steps when contributions are deducted but not posted.
What Are SSS, PhilHealth, and Pag-IBIG Payroll Deductions?
SSS, PhilHealth, and Pag-IBIG deductions are mandatory government contributions connected to employment in the Philippines.
They are not ordinary company deductions. They are required by law and are meant to fund employee benefits such as:
| Agency | Main purpose | Common benefits |
|---|---|---|
| SSS | Social security protection for private-sector employees | Retirement, sickness, maternity, disability, death, funeral, unemployment, salary loans |
| PhilHealth | National health insurance | Hospitalization and health benefit packages |
| Pag-IBIG Fund / HDMF | Provident savings and housing finance | Member savings, dividends, housing loans, multi-purpose loans, calamity loans |
The employer withholds the employee share from wages, adds the employer share where required, and remits both to the proper agency. For employees, the deduction should appear clearly in the payslip or payroll summary. For employers, the amount deducted from employees should reconcile with the monthly remittance file and payment confirmation.
Legal Basis: When Are These Salary Deductions Allowed?
As a general rule, the Labor Code protects wages from unauthorized deductions. Article 113 of the Labor Code allows deductions only in specific cases, including those authorized by law or regulations. Article 116 also prohibits unlawful withholding of wages. Mandatory SSS, PhilHealth, and Pag-IBIG deductions are lawful because they are required under separate social legislation, not because the employer simply wants to deduct them. (Lawphil)
The main legal bases are:
| Deduction | Main law | Practical payroll effect |
|---|---|---|
| SSS | Republic Act No. 11199, or the Social Security Act of 2018 | Employer must deduct the employee share, pay the employer share, and remit to SSS |
| PhilHealth | Republic Act No. 11223, or the Universal Health Care Act | Employer and employee share the premium for employed direct contributors |
| Pag-IBIG | Republic Act No. 9679, or the Home Development Mutual Fund Law of 2009 | Covered employers and employees contribute to the Fund based on compensation |
RA 11199 requires SSS contributions and authorizes the SSS contribution schedule. RA 11223 sets the premium contribution framework for PhilHealth direct contributors. RA 9679 establishes Pag-IBIG as a provident savings system supported by employee and employer contributions. (Lawphil)
The important rule is simple: the employee share may be deducted from salary; the employer share must be paid by the employer. An employer should not shift the employer counterpart to the employee by disguising it as a payroll deduction.
Current Contribution Rules for Payroll
Contribution rates can change by law, circular, or agency issuance, so payroll teams should check the official agency tables regularly, especially at the start of the year. The following reflects the current rules shown in official issuances and agency pages available as of 2026.
SSS Contribution Deductions
For employed private-sector members, SSS contributions are based on the employee’s Monthly Salary Credit, or MSC. The MSC is the compensation base used for SSS contributions and benefits.
Effective January 1, 2025, SSS states that the Social Security contribution rate is 15% of the MSC, up to the maximum MSC of ₱35,000, shared by the employer and employee as follows:
| SSS share | Rate |
|---|---|
| Employer share | 10% |
| Employee share | 5% |
| Total SS contribution | 15% |
SSS also states that the Employees’ Compensation Program, or EC contribution, is paid only by the employer: ₱10 for employees with MSC of ₱14,500 and below, and ₱30 for employees with MSC of ₱15,000 and above. Contributions on MSC above ₱20,000 up to ₱35,000 are credited to the member’s Mandatory Provident Fund, now called the MySSS Pension Booster. (Social Security System)
For payroll purposes, this means:
- Deduct only the employee share from the employee’s salary.
- Add the employer share as company cost.
- Add the EC contribution as employer cost.
- Use the latest SSS contribution table, not an old spreadsheet.
- Generate and pay using the SSS Payment Reference Number, or PRN.
PhilHealth Contribution Deductions
For employed members, PhilHealth premiums are based on Monthly Basic Salary, or MBS. PhilHealth Advisory No. 2025-0002 states that the premium rate remains 5%, with an income floor of ₱10,000 and an income ceiling of ₱100,000. The monthly premium therefore ranges from ₱500 to ₱5,000.
For 2026, government reporting also confirms that PhilHealth set the premium rate at 5%, the final scheduled adjustment under RA 11223. (Philippine Information Agency)
For employed members, the total PhilHealth premium is generally split equally:
| Monthly Basic Salary | Total premium | Employee share | Employer share |
|---|---|---|---|
| ₱10,000 or below | ₱500 | ₱250 | ₱250 |
| ₱30,000 | ₱1,500 | ₱750 | ₱750 |
| ₱100,000 or above | ₱5,000 | ₱2,500 | ₱2,500 |
PhilHealth specifically reminds employers to use Monthly Basic Salary in computing contributions. MBS generally excludes sales commission, overtime pay, allowances, 13th month pay, bonuses, gratuity payments, and salary deductions caused by undertime, tardiness, leave without pay, absences, or similar circumstances.
Pag-IBIG Contribution Deductions
Pag-IBIG contributions are also called monthly savings because they are credited to the member’s savings account with the Fund.
Under Pag-IBIG Fund Circular No. 460, implemented starting February 2024, the maximum fund salary used to compute employee and employer savings increased from ₱5,000 to ₱10,000 per month. The contribution rates are:
| Fund salary | Employee share | Employer share |
|---|---|---|
| ₱1,500 and below | 1% | 2% |
| Over ₱1,500 | 2% | 2% |
Because of the ₱10,000 maximum fund salary, the usual maximum mandatory Pag-IBIG contribution is ₱200 from the employee and ₱200 from the employer, or ₱400 total per month.
Employees and employers may save more than the mandatory amount, but any voluntary increase should be clearly documented. A voluntary additional employee deduction should not be mixed up with the required Pag-IBIG employee share.
Payroll Computation Example
Assume an employee earns ₱30,000 monthly basic salary and is paid twice a month.
| Item | Employee deduction | Employer cost | Notes |
|---|---|---|---|
| SSS | ₱1,500 | ₱3,000 + EC ₱30 | Based on 15% of ₱30,000 MSC, split 5% employee and 10% employer |
| PhilHealth | ₱750 | ₱750 | 5% of ₱30,000 = ₱1,500 total premium, split equally |
| Pag-IBIG | ₱200 | ₱200 | Capped at ₱10,000 fund salary |
| Total | ₱2,450 | ₱3,980 | Employer cost includes SSS EC |
If the employee is paid semi-monthly, payroll may split the employee deduction across two cutoffs, such as half on the 15th and half on the 30th. Some employers deduct certain statutory items on one cutoff only. Either method can work if the monthly amount is correct, the payslip is clear, and the full monthly contribution is remitted on time.
Step-by-Step Guide for Employers and Payroll Teams
1. Register the employer with each agency
A newly registered business should complete employer registration with SSS, PhilHealth, and Pag-IBIG.
Common forms and portals include:
| Agency | Common employer documents or system |
|---|---|
| SSS | Employer Registration Form R-1, Employment Report R-1A, My.SSS employer account |
| PhilHealth | Employer Data Record ER1, Report of Employee-Members ER2, EPRS |
| Pag-IBIG | Employer registration, Virtual Pag-IBIG for Employers, eSRS or Electronic Submission of Remittance Schedule |
SSS maintains downloadable employer forms, PhilHealth lists employer registration requirements such as ER1 and PMRF, and Pag-IBIG provides online employer services including eSRS for monthly remittance schedules. (Social Security System)
2. Collect the employee’s government numbers
Before or during onboarding, ask the employee for:
- SSS number
- PhilHealth Identification Number, or PIN
- Pag-IBIG MID number
- TIN for tax payroll purposes
- Full legal name, birthdate, and other identifiers that match agency records
Name mismatches are a common cause of posting problems. For example, an employee may have a maiden name in one agency, a married name in payroll, and a different middle name format in another system.
3. Determine the correct contribution base
Do not use one base for all three agencies without checking the rule.
| Agency | Payroll base commonly used |
|---|---|
| SSS | Monthly Salary Credit based on compensation under the SSS table |
| PhilHealth | Monthly Basic Salary |
| Pag-IBIG | Fund salary or monthly compensation, subject to the ₱10,000 maximum fund salary |
This is where many payroll errors happen. For example, overtime may affect SSS compensation treatment but is generally excluded from PhilHealth MBS. Pag-IBIG is capped at ₱10,000 for mandatory savings even if the employee earns much more.
4. Compute employee share and employer share separately
Payroll should have separate columns for:
- Employee SSS
- Employer SSS
- SSS EC
- Employee PhilHealth
- Employer PhilHealth
- Employee Pag-IBIG
- Employer Pag-IBIG
- Loan amortizations, if any
This separation matters because the employer share is not a deduction from wages. It is a company liability.
5. Reflect deductions clearly on the payslip
A good payslip should show:
- Gross pay
- Taxable and non-taxable items, if applicable
- SSS deduction
- PhilHealth deduction
- Pag-IBIG deduction
- Government loan deductions, if any
- Withholding tax
- Net pay
Employees should be able to compare their payslip deductions with their My.SSS, PhilHealth, and Pag-IBIG records.
6. Generate monthly reports and remit on time
For SSS, regular employers generally remit contributions by the last day of the month following the applicable month, using the PRN system. SSS also reminds employers that they must deduct the employee share, remit it together with the employer share and EC, and that unpaid contributions may result in penalties and criminal liability. (Social Security System)
For PhilHealth, employers remit through the applicable payment and reporting process. PhilHealth’s employer payment schedule generally uses the last digit of the PhilHealth Employer Number, or PEN: employers with PEN ending in 0–4 pay every 11th to 15th day of the following month, while those ending in 5–9 pay every 16th to 20th day. (PhilHealth)
For Pag-IBIG, employers commonly use eSRS or Virtual Pag-IBIG employer facilities to submit monthly remittance schedules and pay through available channels. (Pag-IBIG Fund Services)
7. Reconcile after payment
After remittance, payroll should check:
- Was the payment accepted?
- Was the file uploaded successfully?
- Do employee names and numbers match?
- Were new hires included?
- Were separated employees removed?
- Were loan amortizations reported separately from regular contributions?
- Did the payment post to the employee’s online account?
A payment receipt alone does not always mean every employee’s contribution was properly posted. A wrong member number, wrong applicable month, or rejected file can still cause gaps.
Common Payroll Mistakes and How to Avoid Them
Deducting but not remitting
This is the most serious problem. Once the employer deducts the employee share, the money is no longer an ordinary company fund. It must be remitted to the proper agency together with the employer counterpart.
For SSS, failure to pay contributions can result in unpaid contributions, penalties, and possible criminal liability. SSS materials state that delinquent employers may be required to pay unpaid contributions plus a penalty and may be held liable for a criminal offense punishable by fine and/or imprisonment. (Social Security System)
Using PhilHealth gross pay instead of Monthly Basic Salary
PhilHealth computation is based on MBS, not total gross pay. Including overtime, commissions, allowances, 13th month pay, and bonuses when they should be excluded may lead to over-deduction. Excluding basic salary items may lead to underpayment.
Forgetting the Pag-IBIG ₱10,000 cap
For most employees earning above ₱10,000, the mandatory Pag-IBIG employee share is ₱200 per month, with a ₱200 employer counterpart. Payroll systems that still use the old ₱5,000 cap may under-deduct and under-remit; systems that apply 2% to the full salary may over-deduct.
Charging the employer share to the employee
The employer share is not supposed to reduce the employee’s take-home pay. This issue sometimes appears in small businesses, household employment, or informal arrangements where the worker is told, “Ikaw na bahala sa buong contribution.” For regular employment, that is not proper payroll handling.
Not updating new hires and separated employees
PhilHealth states that newly hired employees should be reported through ER2 within 30 days from assumption. (PhilHealth)
If HR fails to update agency records, the employer may continue deducting but contributions may not post correctly. For separated employees, payroll should still remit contributions and loan deductions properly up to the applicable period covered by employment.
Mixing up contributions and loans
SSS salary loans and Pag-IBIG multi-purpose or calamity loan amortizations are separate from monthly contributions. Loan deductions should follow the agency billing or amortization schedule. Employers should stop deducting once the loan is fully paid or once the agency billing no longer supports the deduction.
What Employees Should Do If Contributions Were Deducted but Not Posted
If your payslip shows SSS, PhilHealth, or Pag-IBIG deductions but your online record shows missing contributions, handle it methodically.
Download or screenshot your contribution records. Check My.SSS, PhilHealth Member Portal where available, and Virtual Pag-IBIG.
Collect payslips for the missing months. Highlight the government deductions.
Ask HR or payroll for proof of remittance. Request the applicable month, agency payment confirmation, PRN or remittance reference, and confirmation that your member number was included.
Check for identity or number errors. A wrong SSS number, PhilHealth PIN, Pag-IBIG MID, name spelling, or birthdate can delay posting.
File with the agency if HR cannot resolve it. For SSS, the branch handling the employer’s place of business is usually the practical starting point. For PhilHealth, use the appropriate Local Health Insurance Office. For Pag-IBIG, use the branch or Virtual Pag-IBIG channel connected to employer remittance.
Use DOLE SEnA for unresolved employment-related disputes. The Single Entry Approach, or SEnA, is a 30-day mandatory conciliation-mediation process for labor and employment issues. Requests for assistance may be filed onsite or online through DOLE channels. (Dole NCR)
Useful documents include:
- Payslips
- Employment contract or appointment letter
- Company ID or certificate of employment
- Screenshots of missing contribution records
- HR emails or messages
- Final pay computation, if already separated
- Any agency inquiry result or reference number
Special Situations
Minimum wage and low-income employees
Mandatory contributions still apply even to low-income workers, but the computation rules may use floors or special brackets. For PhilHealth, the ₱10,000 income floor means the minimum total premium is ₱500 per month, usually split ₱250 employee and ₱250 employer for employed members. For Pag-IBIG, employees with fund salary of ₱1,500 and below have a 1% employee share and 2% employer share.
Kasambahays or household employees
Household employers also have SSS, PhilHealth, and Pag-IBIG responsibilities, but rules can differ in who shoulders the contribution depending on wage level and specific agency rules. For example, PhilHealth’s UHC IRR recognizes special treatment for kasambahays, including employer responsibility and sharing when the kasambahay receives wages of ₱5,000 or above. (PhilHealth)
Foreign employees and expatriates
Foreign nationals working in the Philippines may have SSS and PhilHealth coverage depending on employment status, residence, reciprocity rules, and applicable social security agreements. Public FOI guidance states that foreign nationals working in the Philippines must contribute to SSS and PhilHealth unless exempt under totalization agreements, while PhilHealth has separate rules for foreign nationals with valid immigration documentation. (www.foi.gov.ph)
Pag-IBIG treatment for expatriates is more nuanced. HDMF Circular No. 421 has been widely cited as directing affected employers to stop deducting Pag-IBIG contributions from expatriates and allowing refund of previous contributions and dividends upon proper claim. Payroll teams handling foreign employees should verify the worker’s exact status before making Pag-IBIG deductions. (KPMG Assets)
OFWs
OFWs have separate rules. SSS coverage for OFWs is compulsory under RA 11199, but the Supreme Court has ruled that requiring land-based OFWs to pay SSS contributions before issuance of an Overseas Employment Certificate is unconstitutional. The Court still recognized the importance of SSS coverage for OFWs while striking down the OEC-payment condition. (Supreme Court of the Philippines)
Frequently Asked Questions
Can my employer legally deduct SSS, PhilHealth, and Pag-IBIG from my salary?
Yes. These are lawful statutory deductions because they are authorized by law. However, your employer may deduct only your employee share, not the employer counterpart.
What if my payslip shows deductions but my contributions are missing online?
First, ask payroll for proof of remittance and check whether your member number or name was encoded correctly. If the employer deducted but did not remit, you may raise the issue with the agency involved and use DOLE SEnA if it remains unresolved.
Should SSS, PhilHealth, and Pag-IBIG be deducted every cutoff?
Not necessarily. Some employers split the monthly deduction across two paydays, while others deduct the full amount in one cutoff. What matters is that the correct monthly amount is deducted, reported, and remitted for the proper applicable month.
Can the employer deduct its share from employees?
No. The employer counterpart is a legal obligation of the employer. Deducting the employer share from wages defeats the purpose of the required employer contribution.
Are government contributions deducted before withholding tax?
For payroll tax computation, mandatory contributions such as SSS, PhilHealth, and Pag-IBIG are generally considered in determining taxable compensation under BIR payroll rules and withholding tax computations. The BIR’s withholding tax calculator also recognizes regular compensation as paid less mandatory deductions such as GSIS, SSS, PhilHealth, and Pag-IBIG. (Bureau of Internal Revenue)
Does PhilHealth use gross salary or basic salary?
PhilHealth uses Monthly Basic Salary. PhilHealth’s advisory expressly excludes items such as sales commission, overtime pay, allowances, 13th month pay, bonuses, and gratuity payments from MBS computation.
How much is the maximum Pag-IBIG deduction from an employee?
For most employees earning more than ₱10,000 per month, the maximum mandatory employee share is ₱200 per month because the maximum fund salary is ₱10,000 and the employee rate is 2%.
Can an employee voluntarily increase Pag-IBIG savings?
Yes, but the additional amount should be clearly authorized and documented. The mandatory employee share and the voluntary additional savings should be separately identifiable in payroll records.
What happens if the employer pays late?
Late payment may lead to penalties, interest, collection action, and compliance problems. It can also affect employee claims if contributions are not posted when benefits are needed.
Can a resigned employee still complain about unremitted contributions?
Yes. A resigned or separated employee may still check posted contributions and raise missing remittances for months actually worked. Keep payslips, final pay documents, employment proof, and portal screenshots.
Key Takeaways
- SSS, PhilHealth, and Pag-IBIG deductions are lawful only because they are required by law.
- The employee share may be deducted from wages; the employer share must be paid by the employer.
- SSS uses the SSS contribution table and MSC; PhilHealth uses Monthly Basic Salary; Pag-IBIG uses fund salary subject to the ₱10,000 cap.
- For 2026 payroll practice, SSS is at 15% of MSC effective January 2025, PhilHealth remains at 5% with ₱10,000 floor and ₱100,000 ceiling, and Pag-IBIG’s usual maximum mandatory share is ₱200 employee plus ₱200 employer.
- Deducting contributions without remitting them is a serious compliance issue.
- Employees should keep payslips and regularly check My.SSS, PhilHealth, and Virtual Pag-IBIG records.
- Employers should reconcile payroll deductions, remittance reports, payment confirmations, and employee postings every month.