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 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.
Under the Labor Code of the Philippines, [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.
Government-mandated benefits from the Pag-IBIG, PhilHealth, and SSS cover the following workers:
You need to register your business or company with the Pag-IBIG Fund, 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 Employerβs 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:
Visit the Pag-IBIG branch that maintains your records and then submit the following requirements:
Fill out and submit these documents to any PhilHealth office:
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.
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:
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.
Ask your new employees to submit their Pag-IBIG Membership ID (MID) Number to you. Those without a MID number can register as Pag-IBIG members 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.
Submit these documents to the PhilHealth office where your business is registered:
Ask your new employees to submit their SSS numbers 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.
You can register your new kasambahay with Pag-IBIG, PhilHealth, and SSS through the Kasambahay Unified Registration, a one-stop shop online registration facility.
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.
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.
The maximum monthly compensation used to compute an employee's Pag-IBIG contribution is β±5,000. For employees earning higher than β±5,000, the total contribution is β±200ββ±100 is deducted from their salary, and the employer remits the other β±100.
Note: The Pag-IBIG Fund deferred the increase in members' contributions for 2023. [7] This means the β±100 employee's and employer's share is still implemented, which remains unchanged since 1986.
The Pag-IBIG contribution hike, which will raise the employee share from β±100 to β±150, has been moved to January 2024.
Employers and employees equally share the monthly contributions to PhilHealth. The premium rate collection is currently at 4%, and the income ceiling is set at β±80,000.
For 2023, PhilHealth was supposed to implement a higher premium rate of 4.5% with a higher income ceiling rate of β±90,000. However, President Ferdinand Marcos Jr. ordered to suspend the proposed contribution hike this year. [8]
With the SSS contribution rate hike implemented in January 2023, the current SSS contribution rate is 14% of an employee's monthly salary credit, 9.5% of which is shouldered by the employer and 4.5% is deducted from the employee's salary.
To avoid penalties for late remittances, it's important to take note of the contribution payment due dates of each government agency.
Here are the Pag-IBIG Fund payment due dates (following the applicable month) according to the first letter of employer or business name:
Payment deadlines (following the applicable month) for PhilHealth are based on the last digit of the PhilHealth employer number:
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.
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:
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.
Below are the criminal penalties for failure to register, update records, or deduct and report government contributions:
Meanwhile, here are the penalties for late remittance:
Complying with government-mandated employee benefits in the Philippines 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:
Venus has almost 20 years of combined experience in content marketing, SEO, corporate communications, and public relations. Most of her career was spent creating informative articles on personal finance and digital marketing. She also invests in stocks, mutual funds, VUL, and Pag-IBIG MP2. Venus graduated cum laude with a Journalism degree from the University of the Philippines Diliman. A hardcore Hallyu Tita, she loves bingeing Korean shows on Netflix while bonding with her cats. Follow Venus on LinkedIn.
