Addressing Underreported or Non-Remitted SSS Contributions by a Previous Employer in the Philippines

Introduction

In the Philippines, the Social Security System (SSS) serves as a cornerstone of social protection for workers, providing benefits such as retirement pensions, disability support, sickness allowances, maternity benefits, and death grants. These benefits are funded through mandatory contributions from employees, employers, and self-employed individuals. Employers are legally obligated under Republic Act No. 11199, also known as the Social Security Act of 2018, to deduct the appropriate SSS contributions from employees' salaries and remit both the employee's and employer's shares to the SSS on time.

However, instances where employers underreport earnings (leading to lower contributions) or fail to remit collected contributions altogether are not uncommon. This can severely impact an employee's future benefits, as SSS entitlements are calculated based on the number of contributions and the average monthly salary credit (MSC). If you discover that your previous employer has underreported your salary or neglected to remit your SSS contributions, it is crucial to act promptly to rectify the situation and protect your rights. This article outlines the legal framework, potential consequences, step-by-step procedures for resolution, available remedies, and preventive measures, all within the Philippine legal context.

Understanding Employer Obligations Under SSS Law

The SSS law mandates that employers:

Register Employees: All employers must register their business with the SSS and enroll their employees within 30 days of hiring. Employees receive an SSS number, which tracks their contributions.
Deduct and Remit Contributions: Employers deduct the employee's share (currently 4.5% of the monthly salary credit as of 2023, with gradual increases) from the salary and add the employer's share (9.5%, also increasing over time). The total must be remitted quarterly or monthly, depending on the employer's size, using the SSS Payment Reference Number (PRN) system.
Report Accurate Earnings: Employers must report the actual compensation of employees to determine the correct MSC, which caps at PHP 30,000 as of 2023 but is subject to adjustments. Underreporting occurs when an employer declares a lower salary than what was actually paid, resulting in reduced contributions and future benefits.
Maintain Records: Employers are required to keep payroll records, contribution payment proofs, and employee data for at least three years, extendable in cases of disputes.

Failure to comply constitutes a violation of the SSS law, punishable by fines, imprisonment, or both. The SSS has the authority to audit employers and impose penalties for non-remittance or underreporting.

Consequences of Underreporting or Non-Remittance

For the employee:

Reduced Benefits: Lower reported earnings mean a diminished MSC, leading to smaller pensions, loans, or other benefits. For example, retirement benefits are based on the average MSC over the last 60 months before retirement.
Gaps in Coverage: Unremitted contributions create gaps in your contribution history, potentially disqualifying you from certain benefits that require a minimum number of payments (e.g., 120 months for full pension).
Financial Loss: You may have effectively paid contributions through salary deductions that were never forwarded to SSS, amounting to theft of your funds.

For the employer:

Penalties: Under Section 22 of RA 11199, non-remittance can result in fines ranging from PHP 5,000 to PHP 20,000 per violation, plus interest on unpaid contributions at 2% per month. Criminal charges may lead to imprisonment from 6 years and 1 day to 12 years.
Civil Liability: Employers can be sued for damages, including the value of unremitted contributions plus interest.
Business Impact: SSS can issue cease-and-desist orders, garnish bank accounts, or levy properties. Repeated violations may lead to business closure.

The SSS actively pursues delinquent employers through its Run After Tax Evaders (RATE)-like program for contributions, known as the Run After Contribution Evaders (RACE) campaign.

Steps to Take If You Suspect Underreporting or Non-Remittance

If you notice discrepancies—such as your SSS contribution records showing lower amounts than your pay slips indicate or missing payments altogether—follow these steps systematically:

1. Verify Your SSS Records

Access your SSS account online via the My.SSS portal (sss.gov.ph) or the SSS mobile app. Register if you haven't already, using your SSS number.
Check your contribution history under "E-Services" > "Inquiry" > "Contributions." Compare this with your pay slips, employment contract, and BIR Form 2316 (Certificate of Compensation Payment/Tax Withheld).
Request a Statement of Account (SOA) from SSS if needed. This is free and can be obtained online or at an SSS branch.
Note any discrepancies, such as underreported salary (e.g., reported as PHP 10,000 when actual was PHP 20,000) or missing quarters.

2. Gather Evidence

Collect all relevant documents: pay slips, employment contract, company ID, bank statements showing salary deposits, and any correspondence with the employer regarding contributions.
If possible, obtain affidavits from former colleagues who may have similar issues, as collective complaints strengthen your case.
Secure a Certificate of Employment (COE) from the employer, which should include details of your salary and tenure.

3. Contact Your Previous Employer

Send a formal demand letter via registered mail or email, requesting an explanation for the discrepancies and demanding immediate remittance or correction.
Give them a reasonable deadline (e.g., 15-30 days) to comply. Reference RA 11199 and potential penalties to emphasize the seriousness.
If the employer responds positively, they can file an adjustment form (SSS Form R-3 for contribution reports) and pay the arrears with interest.

4. File a Complaint with SSS

If the employer ignores your demand or refuses to act, report the violation to the SSS.
Visit the nearest SSS branch or use the online complaint portal under "E-Services" > "Complaints."
Submit SSS Form SSS-102 (Complaint Against Employer) along with your evidence. Include details like the employer's SSS ID, address, and the specific violations.
SSS will investigate, which may involve auditing the employer's records. They can compel the employer to pay under Section 24 of RA 11199.
For underreporting, request a salary adjustment. SSS may require additional proof, such as tax records, to verify your actual earnings.

5. Escalate to Legal Action if Necessary

Administrative Proceedings: SSS handles initial complaints administratively. If unresolved, it can escalate to the Social Security Commission (SSC), the governing body of SSS, for adjudication.
Civil Case: File a collection suit in the Regional Trial Court (RTC) for recovery of unremitted contributions plus damages. Jurisdiction depends on the amount involved (e.g., Metropolitan Trial Court for claims below PHP 400,000 in Metro Manila).
Criminal Prosecution: Report to the Department of Justice (DOJ) or the Office of the Ombudsman if the employer is a government entity. Violations are criminal under RA 11199, with the SSS often assisting in filing charges.
Labor Dispute Angle: If the issue ties into unpaid wages or benefits, involve the Department of Labor and Employment (DOLE) via a Single Entry Approach (SEnA) mediation or file with the National Labor Relations Commission (NLRC) for money claims.
Statute of Limitations: Actions for recovery must be filed within 10 years from the date the contributions became due (Civil Code Art. 1144), but criminal actions have a 5-year prescription period under the Revised Penal Code.

6. Correct Your SSS Records

Once payments are made, ensure SSS updates your records. You can pay the employee's share voluntarily if the employer defaults, but seek reimbursement later.
For self-remediation, use SSS Form RS-5 to pay arrears personally, but this doesn't absolve the employer of liability.
If you're now self-employed or overseas, transition to voluntary contributions to avoid further gaps.

Available Remedies and Compensation

Back Payments: SSS can order the employer to remit arrears with 2% monthly interest and a 3% penalty for late filing.
Damages: In court, claim moral, exemplary, or actual damages if the non-remittance caused hardship (e.g., denied loan due to insufficient contributions).
Interest on Benefits: If benefits were delayed or reduced, SSS may adjust them retroactively upon correction.
Whistleblower Protection: Employees reporting violations are protected under labor laws from retaliation, such as wrongful termination.
Class Action: If multiple employees are affected, consider a collective suit to share legal costs.

Penalties for Employers

Beyond fines and imprisonment mentioned earlier:

Surcharges: Additional 10% surcharge for fraudulent underreporting.
Blacklisting: Delinquent employers may be barred from government contracts or loans.
Corporate Liability: Officers and directors can be held personally liable if the violation was willful.

Preventive Measures for Employees

To avoid future issues:

Regularly monitor your SSS contributions online.
Insist on itemized pay slips showing SSS deductions.
Choose employers with good compliance records—check SSS's list of top contributors or delinquent employers.
If changing jobs, request a clearance from SSS confirming all contributions are up-to-date.
Educate yourself on SSS rights through seminars or the SSS website.

Conclusion

Dealing with an employer's failure to remit or underreport SSS contributions requires diligence, documentation, and persistence. By following the outlined steps, you can enforce your rights and secure your social security benefits. Remember, the SSS is designed to protect workers, and the law provides robust mechanisms for accountability. If the matter is complex, consult a lawyer specializing in labor or social security law, or seek free legal aid from the Public Attorney's Office (PAO) or DOLE. Prompt action not only rectifies your personal situation but also promotes broader compliance, benefiting the entire workforce.