Employers in the Philippines are expected to comply with laws that protect the rights of employees against unfair labor practices. Regardless of the nature of the business and the number of people hired, employers have a legal and moral responsibility to provide their workers with government-mandated employee benefits under the Philippine Labor Code.
Whether you're a regular employee, a business employer, a household employer, or an HR practitioner, here are the critical things you need to know about government-mandated employee benefits in the Philippines.
Pag-IBIG, PhilHealth, and SSS: What are the Mandated Government Benefits in the Philippines?
Under the Philippine Labor Code,[1] employees are entitled to monetary benefits such as the minimum wage, 13th-month pay, and overtime pay, among many others.
In addition, the Labor Code also requires employers to become members of the Pag-IBIG Fund, PhilHealth, and SSS, as well as remit monthly contributions on behalf of their employees to these government offices. This ensures employees' access to mandated benefits from the government, such as affordable house financing, health insurance, and social security benefits.
Who Can Receive Government-Mandated Employee Benefits in the Philippines?
Government-mandated benefits from the Pag-IBIG, PhilHealth, and SSS cover the following workers:
- Permanent, temporary, or provisional employees (hired by private companies) under the age of 60 with a monthly income of more than ₱1,000
- Household workers with a monthly income of at least ₱1,000, including kasambahays, drivers, cooks, and gardeners.
- Filipinos working for Philippine-based or foreign-based employers and are working locally or overseas
- Foreigners not older than 60 years old who are living and working in the Philippines, except for those who are exempted under the country's totalization agreements
Guide to Employer Registration with Pag-IBIG, PhilHealth, and SSS
You need to register your business or company with Pag-IBIG, PhilHealth, and SSS to become an employer-member of these agencies. Only after doing so can you provide employee benefits mandated by the government.
When you register your business with the Department of Trade and Industry (DTI) through the Philippine Business Registry (PBR), you'll also get your Pag-IBIG, PhilHealth, and SSS Employer’s Registration Numbers.
But if you fail to register through the PBR, go to each of the government offices and submit your proof of business existence according to the type of your business:
- Micro-enterprise: Mayor's Permit or Barangay Certification
- Single proprietorship: Business Permit or Registration of Business Name from DTI
- Partnership or Philippine corporation: Articles of Partnership/Incorporation from the Securities and Exchange Commission
- Foreign-owned corporation: Articles of Incorporation and License to Transact Business in the Philippines
- Cooperative: Certificate of Registration from the Cooperative Development Authority[2]
How to Register as a Business Employer with Pag-IBIG
Visit the Pag-IBIG branch that maintains your records and then submit the following requirements:
- Employer’s Data Form
- Specimen Signature Form
- SSS Certification (if you're registered with SSS already)
- Proof of business existence
How to Register as a Business Employer with PhilHealth
Fill out and submit these documents to any PhilHealth office:
- Proof of business existence
- Two copies of Employer Data Record form (ER1)[3]
- Two copies of PhilHealth Membership Registration Form (PMRF) for each employee
How to Register as a Business Employer with SSS
Fill out and submit the Employer Registration (SSS Form R-1)[4] and Employment Report (SSS Form R-1A)[5] plus a photocopy of your proof of business existence to the nearest SSS office.
How to Register as a Household Employer
Pag-IBIG, PhilHealth, and SSS have a unified registration process for household employers. If you hired a kasambahay, fill out and submit these documents to any branch of the three government offices:
- Household Employer Unified Registration Form
- Household Employment Unified Report Form (three copies)
- Kasambahay Unified Registration Form
- SSS Specimen Signature Card (SSS Form L-501)
- Pag-IBIG Specimen Signature Form
New Employee Registration with Pag-IBIG, PhilHealth, and SSS
Each time you hire an employee or household worker, you're responsible for updating Pag-IBIG, PhilHealth, and SSS about the new employment. This will ensure the accuracy of the employee's records, especially their contributions, with these government agencies.
How to Register New Employees with Pag-IBIG
Ask your new employees to submit their Pag-IBIG Membership ID (MID) Number to you. Those without an MID number can register as a Pag-IBIG member online.[6]
To report your new employees, simply add them to the Member's Contribution Remittance Form (MCRF) when remitting your company's monthly Pag-IBIG contribution. Under the last column ("REMARKS"), indicate "N" (new hire) and the hiring date in MM/DD/YY format.
How to Register New Employees with PhilHealth
Submit these documents to the PhilHealth office where your business is registered:
- Accomplished PMRFs of new hires (whether they're PhilHealth members or not)
- Two copies of PhilHealth Report of Employee-Members form (ER2)
How to Register New Employees with SSS
Ask your new employees to submit their SSS number to you. Require the non-SSS members to register at the SSS branch where your company is registered.
When you have the SSS numbers of all your new hires, fill out and submit an SSS Form R1-A to the branch where your company is registered. Alternatively, you can submit the form online via the My.SSS online facility. Before you can do that, you need to register for an SSS online employer account.
How to Register Newly Hired Kasambahays
You can register your new kasambahay with Pag-IBIG, PhilHealth, and SSS through the Kasambahay Unified Registration, a one-stop shop online registration facility.
Government Contributions in the Philippines: Guide for Employees and Employers
Philippine labor laws require employers to deduct the monthly government contributions from their employees' salaries and pay both the employee and employer share of contributions to Pag-IBIG, PhilHealth, and SSS.
The remittances collected from the employee and employer contributions are what these three government agencies use to fund the mandatory benefits for employees.
How Much Should Employers and Employees Contribute?
Refer to the following tables to know how much the employee's and employer's share of contributions are for Pag-IBIG, PhilHealth, and SSS.
Pag-IBIG Contribution Rates 2022
The maximum monthly compensation used to compute an employee's Pag-IBIG contribution is ₱5,000. For employees earning higher than ₱5,000, the total contribution is ₱200—₱100 is deducted from their salary, and the employer remits the other ₱100.
PhilHealth Premium Contribution Table 2022
Employers and employees equally share the monthly contributions to PhilHealth. The state health insurer has also announced that starting June 2022, the the premium rate collection will be at 4%.[7]
The contribution hike is also retroactively effective from January 2022. This means that those who already paid their contributions at 3% from January to May will have to settle the 1% differential until December 2022, but without interest.[8]
SSS Contribution Rates Effective January 2021
With the SSS contribute rate hike implemented in January 2021, the current SSS contribution rate is 13% of an employee's monthly salary credit, 8.5% of which is shouldered by the employer and 4.5% is deducted from the salary. From the maximum MSC of ₱20,000 in 2020, the maximum MSC now is ₱25,000.
Payment Due Dates That Employers Must Remember
To avoid penalties for late remittances, it's important to take note of the contribution payment due dates of each government agency.
Pag-IBIG Contribution Payment Deadlines
Here are the Pag-IBIG Fund payment due dates (following the applicable month) according to the first letter of employer or business name:
- A to D: 10th to 14th day of the month
- E to L: 15th to 19th day of the month
- M to Q: 20th to 24th day of the month
- R to Z and 0 to 9: 25th to the last day of the month
PhilHealth Contribution Payment Deadlines
Payment deadlines (following the applicable month) for PhilHealth are based on the last digit of the PhilHealth employer number:
- 0 to 4: 11th to 15th day of the month
- 5 to 9: 16th to 20th day of the month
SSS Contribution Payment Deadlines
For SSS contribution payments, the deadline of payment of contributions for regular employers is on the last day of the month following the applicable month.
How to Pay Pag-IBIG, PhilHealth, and SSS Contributions
After deducting the monthly government contributions from your employees' salaries, remit them along with your employer share to Pag-IBIG, PhilHealth, and SSS branches or their authorized collecting partners such as banks and bills payment centers.
The easiest way is to use Bancnet's e-Gov, the centralized online facility for Pag-IBIG, PhilHealth, and SSS contribution filing and payments. It's also convenient because you can access its 24/7 service anytime.
The government agencies also require you to prepare and submit remittance reports that serve as proof of employer's monthly contribution payments.
Here are the contribution remittance forms you'll use when filing and paying government contributions:
- Pag-IBIG: Member's Contribution Remittance Form (MCRF)
- PhilHealth: Electronic Premium Remittance System (EPRS)
- SSS: Contribution Collection List (SSS Form R-3) and Employer Contributions Payment Return (SSS Form R-5)
Penalties for Violation of Rules on Government-Mandated Employee Benefits
Make sure to register, update employer and employee records, and pay contributions on time to avoid penalties. If employers fail or refuse to remit contributions deducted from employee salaries, their workers will still be entitled to government-mandated employee benefits. However, their loan applications with Pag-IBIG or SSS won't be approved.
Employees can check if employers are remitting their Pag-IBIG, PhilHealth, and SSS contributions. If they find out that their employers aren't paying, they can file a complaint, and the employer might be fined and jailed for violation of Philippine labor laws.
Criminal penalties for failure to register, update records, or deduct and report government contributions
- Pag-IBIG: A fine of not less than but not more than twice of the unpaid amount, six-year maximum imprisonment, or both
- PhilHealth: A fine of ₱5,000 to ₱10,000 multiplied by the total number of employees of the company
- SSS: A fine of ₱5,000 to ₱20,000, imprisonment of up to 12 years, or both
Penalties for late remittance
- Pag-IBIG: 1/10 of 1% of the amount due per day of delay
- PhilHealth: 2% of the amount due per month of delay
- SSS: 3% of the amount due per month of delay
Final Thoughts
Complying with government-mandated employee benefits in the Philippine is a serious business. If you take them for granted, it will cost you not just money but also your company's reputation. Thus, be sure to know and understand all the mandatory employee benefits you must provide as an employer.
Sources:
- [1] Philippine Labor Code
- [2] Cooperative Development Authority
- [3] Employer Data Record Form
- [4] Employer Registration (SSS Form R-1)
- [5] Employment Report (SSS Form R-1A)
- [6] Online Membership Registration
- [7] PhilHealth contribution hike starting June retroactive from January (Inquirer.net, May 2022)
- [8] PhilHealth says contributions are for hospitalization, benefits expansion (GMA News, May 2022)
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