In the Philippine employment landscape, an employee’s transition from active duty to an extended sick leave often raises complex questions regarding mandatory statutory benefits. Among these, PhilHealth contributions are frequently a point of contention and confusion for both Human Resources departments and the employees themselves.
Understanding the legal framework—governed primarily by the Universal Health Care (UHC) Act (RA 11223) and the Revised Implementing Rules and Regulations of the National Health Insurance Act—is crucial to ensuring compliance and maintaining continuous health coverage.
1. The Principle of "No Pay, No PhilHealth" (With Nuance)
The fundamental rule in Philippine labor law regarding statutory deductions is that they are tied to compensable income. Generally, if an employee is on leave without pay, there is no salary from which the employer can deduct the employee’s share of the PhilHealth premium.
- Paid Sick Leave: If the employee is using their accrued, company-provided sick leave credits (with pay), the employer must continue to deduct the PhilHealth premium from that pay and remit the corresponding employer share.
- Unpaid Sick Leave: Once an employee exhausts their paid leaves and transitions to "Leave Without Pay" (LWOP), the employer is generally not obligated to remit premiums since there is no "basis" (salary) for the deduction.
2. The Obligation to Notify: "SSS Sickness Benefit" vs. PhilHealth
It is a common misconception that SSS and PhilHealth handle leaves the same way. When an employee is on extended sick leave, they often apply for the SSS Sickness Benefit.
While the SSS provides a daily cash allowance, this allowance is not considered "salary" or "wages" under the law. Therefore:
- Employers cannot deduct PhilHealth premiums from the SSS Sickness Benefit reimbursement.
- The employer’s obligation to pay their share of the premium is typically suspended while the employee is on valid LWOP.
3. Preserving "Member in Good Standing" Status
The primary risk for an employee on extended sick leave is losing their "Member in Good Standing" status. To avail of PhilHealth benefits (hospitalization, outpatient surgeries, etc.), a member must generally have paid at least six (6) months of contributions within the twelve (12) month period prior to the first day of confinement.
Critical Note: To avoid a gap in coverage during an extended unpaid leave, the employee should consider shifting their membership category temporarily to "Informal Economy" or "Self-Earning Individual" to pay the premiums voluntarily.
4. Employer Reporting Responsibilities
Even if no deductions are being made, the employer has a legal duty to report the employee's status to PhilHealth.
- RF-1 (Report of Contributions): The employer should indicate the employee’s status (e.g., "Leave Without Pay" or "Sickness") in the monthly remittance report.
- Separation vs. Leave: If the illness leads to a long-term inability to work, the employer should not "terminate" the PhilHealth membership unless the employment relationship is officially severed.
5. Summary of Rules by Leave Type
| Situation | Employee Share | Employer Share | Remittance Required? |
|---|---|---|---|
| Paid Sick Leave | Deducted from pay | Paid by employer | Yes |
| Unpaid Sick Leave | No deduction | No obligation | No |
| SSS Sickness Benefit | No deduction | No obligation | No |
Legal Implications of Non-Remittance
Under RA 11223, employers who fail to remit contributions while the employee is receiving a salary (paid leave) face stiff penalties, including:
- A fine of not less than ₱50,000 but not more than ₱100,000 per violation.
- Potential imprisonment for the responsible officers (6 months to 6 years).
- Liability for the "cost of benefits" if the employee is denied PhilHealth coverage because of the employer's failure to remit.
Conclusion
For employees on extended sick leave, the continuity of PhilHealth coverage is a safety net that cannot be ignored. Employers should clearly communicate when deductions will cease due to the exhaustion of leave credits, and employees should be proactive in settling premiums as "Voluntary" members if their leave extends beyond their paid credits.
Would you like me to draft a sample internal memo for employees explaining how their PhilHealth contributions will be handled once they exhaust their paid sick leave?