1) Overview: The “No Employees” Corporate Reality

A Philippine corporation can exist and operate without having any employees in the labor-law sense (i.e., no one is hired under an employer–employee relationship, no one is on payroll, no salaries are paid, and no one is under the corporation’s control and supervision as a worker). Common scenarios include:

Dormant or newly incorporated entities that have not yet commenced operations;
Holding companies with only investment activities and no staff;
Project companies preparing for a future launch;
Corporations run entirely by directors/officers who do not draw compensation and do not function as employees; and
Corporations that outsource all work to independent contractors or service providers.

Even with “no employees,” the corporation still interacts with three social protection systems, each with its own definitions and triggers:

SSS (Social Security System) – social security coverage for private sector workers and certain self-employed/voluntary members;
PhilHealth (Philippine Health Insurance Corporation) – national health insurance coverage for members; and
Pag-IBIG (Home Development Mutual Fund / HDMF) – savings and housing fund coverage for employees and certain self-employed/voluntary members.

The compliance question is not simply “Does the corporation have employees?” but rather:

Is the corporation an “employer” required to register?
Does it have “employees” or covered persons for whom contributions must be withheld and remitted?
Do its officers/directors create an employer-employee relationship or a coverage obligation?
What must be filed (or maintained) to prove non-liability during a no-employee period?

This article addresses those questions in practical, Philippine corporate compliance terms.

2) Key Definitions in Philippine Context

A. “Employer”

Generally, an employer is an entity that hires individuals under an employer–employee relationship and pays compensation. Across agencies, the practical trigger is the existence of covered employees for whom contributions are required.

However, agencies often encourage or require employer registration once the entity is set up and is capable of hiring, even if actual remittance obligations begin only when employees exist.

B. “Employee”

In Philippine labor law, an employer–employee relationship is determined by the four-fold test, with the “control test” being the most important (selection and engagement, payment of wages, power of dismissal, and power to control the employee’s conduct). Social security agencies also rely heavily on the existence of compensation and an employment arrangement.

If there are truly no employees, then there are typically no contribution remittance obligations as an employer—subject to special cases for officers and board members.

C. Corporate Officers and Directors

This is where many corporations get tripped up.

Directors (board members) generally govern the corporation; they are not automatically “employees.”
Corporate officers (e.g., President, Treasurer, Corporate Secretary) may be:
- performing only their statutory/corporate functions; or
- simultaneously working in an operational role that looks like employment (with control, compensation, and day-to-day duties).

The compliance consequences often turn on whether an officer is receiving regular compensation and is functioning like an employee.

3) SSS Compliance When a Corporation Has No Employees

A. Is SSS Employer Registration Required?

In practice, SSS expects private employers to register as an employer when they start employing people. For a corporation with zero employees, two common approaches exist:

Register only when you actually hire employees, and keep documentation showing you had none before that date; or
Register early (for readiness) and maintain a “no employees” status (often requiring periodic reporting or confirmation depending on SSS branch practice).

Because implementation details can vary by SSS branch and electronic system settings, corporations often choose to register early only if they anticipate hiring soon or if required by a bank, investor, or regulatory checklist.

B. Are Corporate Officers Covered Under SSS?

Coverage depends on the officer’s status and compensation arrangement:

If officers do not receive compensation and do not act as employees, there is typically no SSS basis for employer remittance.
If officers receive salaries, regular compensation, or allowances treated as compensation, and they function under an employer–employee relationship, SSS may treat them as employees for coverage purposes.

Practical rule of thumb: If the corporation pays someone (including an officer) a regular salary and treats it as payroll compensation, expect SSS coverage to be triggered.

C. What If the Corporation Uses Only Independent Contractors?

Independent contractors are generally responsible for their own SSS (as self-employed/voluntary members), and the corporation is typically not required to remit employer contributions for them if they are genuinely independent and not misclassified employees.

Risk point: Misclassification. If the “contractor” is effectively under the corporation’s control, working like staff, using company time rules, and economically dependent, agencies may treat them as employees, exposing the corporation to retroactive contributions, penalties, and potential labor claims.

D. Reporting and Recordkeeping During No-Employee Period

Even when no remittances are due, it is best practice to maintain:

Board resolutions or secretary’s certificates confirming no employees and no payroll;
General ledger and tax filings consistent with no salaries/wages;
Contracts showing outsourced work is independent contracting (if any);
Proof of “dormant” status if applicable (e.g., corporate filings stating no operations).

If SSS queries the corporation, consistency across records is critical.

E. Penalties Exposure

If SSS later determines there were employees or compensable officers during the “no employees” period, the corporation may face:

Retroactive contribution assessments;
Penalties and interest; and
Potential administrative actions (including collection and enforcement mechanisms).

4) PhilHealth Compliance When a Corporation Has No Employees

A. Is PhilHealth Employer Registration Required?

PhilHealth employer registration is generally linked to employing workers. A corporation with no employees typically has no employer remittance obligations.

As with SSS, some organizations register early for compliance readiness, but remittance begins once there are covered employees.

B. Officers/Directors and PhilHealth

PhilHealth coverage is membership-based; individuals can be members through employment, self-employment, or other categories. For a corporation:

If there are no employees and no compensation, the corporation generally has no basis to remit as an employer.
If it pays officers as employees (salary), PhilHealth contributions can be required as part of payroll remittances.

C. The “But We Pay Per Diems/Allowances” Issue

If directors or officers receive per diems or allowances, the question becomes whether those payments are treated as compensation akin to wages/salary. If they function like wages and the person is essentially working as staff, an employment-based contribution obligation is more likely.

D. Documentation

As with SSS, keep evidence of:

No payroll expense;
No employment contracts;
Outsourcing contracts;
Corporate records supporting dormancy or holding-company status.

5) Pag-IBIG (HDMF) Compliance When a Corporation Has No Employees

A. Is HDMF Employer Registration Required?

Pag-IBIG compliance likewise centers on employing covered employees. Without employees, the corporation generally has no employer contribution remittance duties.

B. Officers/Directors

The same concept applies: if an officer is paid like an employee, contribution obligations may arise.

C. Outsourced Labor and Contractors

If the corporation outsources to a service provider that is the true employer (e.g., agency-provided manpower), the service provider typically handles Pag-IBIG remittances for its own employees. The corporation should ensure the provider is legitimate and compliant (through contracts and periodic proof of remittance), because end-users can face reputational and operational risk when contractors are noncompliant or workers complain.

6) Common Corporate Setups and Their Compliance Treatment

Scenario 1: Dormant Corporation, No Operations, No Payments to Individuals

Typical result:

No SSS/PhilHealth/Pag-IBIG remittances due.
Employer registration may be deferred until hiring. Best practice: maintain a “no payroll/no employees” paper trail.

Scenario 2: Corporation With Officers Only, No Salaries, Minimal Reimbursements

Typical result:

Usually no employer contribution remittances. Watch-outs:
If “reimbursements” look like disguised compensation (fixed monthly “reimbursement” regardless of actual expense), agencies may treat this as compensation.

Scenario 3: Corporation Pays Its President/General Manager a Monthly Salary but Calls Them “Officer Only”

Typical result:

Likely triggers employer obligations, because there is compensation and an operational role akin to employment.

Scenario 4: Corporation Uses Only Independent Contractors (Consultants)

Typical result:

No employer remittances if classification is correct. Watch-outs:
Control test and economic dependence; exclusivity; fixed working hours; supervision; tools/equipment; integration into the business.

Scenario 5: Corporation Uses a Manpower Agency

Typical result:

Manpower agency is employer and remits contributions. Best practice: require proof of compliance and include indemnity clauses.

7) Practical Compliance Steps for “No Employees” Corporations

A. Internal Governance and Documentation

Board resolution stating:
- the corporation has no employees;
- no one receives salary/wages;
- operations (if any) are outsourced or limited to board-level governance.
Officer compensation policy:
- clarify whether officers are unpaid or paid;
- if paid, define whether the payment is honorarium/per diem vs salary (and ensure consistency in tax and accounting treatment).
Maintain clean accounting:
- avoid booking “Salaries and Wages” if truly none exist;
- keep reimbursements supported by receipts and liquidations.

B. If You Must Register Early

If business counterparties require employer numbers, consider registering but keep the account properly annotated as having no employees until hiring begins. Be prepared for agency-specific procedural steps (which may be branch- or system-dependent).

C. When You Hire Your First Employee

Once you hire, do the following immediately:

Register as employer (if not yet done) and register employees;
Set up payroll processes for withholding and remittance;
Ensure correct employee classifications;
Align employment contracts, payslips, tax filings, and contribution filings.

8) Tax and Corporate Filings Must Match Your “No Employees” Position

Agencies cross-check information. Your “no employees” position becomes weaker if your other filings suggest otherwise. Ensure consistency with:

BIR filings (e.g., withholding tax returns, alphalists, compensation-related submissions);
Audited financial statements (salary expense, benefits, and related accounts);
SEC submissions (general information sheet, notes on operations);
Local permits (some LGUs ask about number of employees).

Red flags include:

Withholding tax returns showing compensation-related withholding;
Salary expense in financial statements;
Reimbursements without liquidation;
Repeated payments to the same “consultant” resembling a wage.

9) Enforcement, Audits, and Risk Management

A. Typical Triggers for Agency Attention

Complaints by workers claiming employment;
Inconsistencies among tax filings and corporate financials;
Sudden large payments categorized as compensation;
Manpower agency disputes.

B. How Liability Can Accrue

If an agency determines that a person should have been covered as an employee, the corporation may face:

Employer share + employee share (sometimes assessed to employer if not properly deducted);
Penalties/interest; and
Administrative actions for noncompliance.

C. Mitigation

Use properly drafted independent contractor agreements;
Avoid controlling contractors like employees;
Keep proof of contractor registration and invoicing;
For manpower services, require proof of remittance and compliance warranties.

10) Frequently Asked Questions

Q1: “We have a President and Treasurer, but they’re not paid. Do we need to remit?”

Generally, no employer remittance obligations arise without compensation and without an employment relationship.

Q2: “We pay directors per meeting. Does that create an employer obligation?”

It depends on how those payments are structured and treated. True per diem for board meetings is less likely to be treated as wages, but if payments become regular, fixed, and tied to operational work, risk increases.

Q3: “We pay a monthly allowance for ‘transport’ even without receipts.”

This is high-risk. If it looks like a disguised salary, agencies may treat it as compensation.

Q4: “We have contractors only. Are we safe?”

Only if they are genuine independent contractors. If you supervise them like employees, set fixed hours, and integrate them into the business as staff, misclassification risk becomes significant.

Q5: “Do we need a certificate from SSS/PhilHealth/Pag-IBIG stating we have no employees?”

Often, corporations rely on internal documentation and consistent records. Some counterparties request proof of registration or good standing; agency-specific certificates and procedures vary in practice.

11) Practical Checklist for Corporations Without Employees

Board resolution: no employees/no payroll
Officer compensation policy: unpaid vs paid; clear basis
Accounting: no salary accounts; reimbursements liquidated
Contractor agreements: independence, deliverables, invoicing
No control indicators: no fixed hours, no timekeeping, no “staff-like” supervision
Consistency with BIR filings: no compensation withholding returns if none exist
If outsourcing manpower: require proof of remittances and compliance warranties
Prepare a “first hire” compliance pack: employer registration, payroll system, contribution setup

12) Conclusion

For Philippine corporations with no employees, SSS, PhilHealth, and Pag-IBIG obligations usually reduce to (a) avoiding triggers (compensation and employment relationships) and (b) maintaining strong documentation proving the absence of employees and payroll. The hardest part is not the “no employees” scenario itself, but the gray areas—especially paid corporate officers, recurring “allowances,” and misclassified contractors. If the corporation’s records, tax filings, and payment practices consistently support the no-employee position, compliance is typically straightforward: no employees means no employer remittances—until the day the first employee is hired.