Employment Law: Non-Payment of SSS Contributions by Employers in the Philippines
(For informational purposes only; not intended as legal advice.)

1. Introduction

In the Philippines, the Social Security System (SSS) provides social insurance protection to workers in the private sector. It is mandated under Republic Act No. 11199, also known as the Social Security Act of 2018, which consolidated and updated prior laws governing the SSS. One of the key obligations imposed on employers by this law is the timely and correct payment of SSS contributions for their employees.

However, there are instances where employers fail to remit or intentionally neglect the payment of these contributions. This article provides an in-depth look into the legal framework, obligations, consequences, and remedies related to non-payment or underpayment of SSS contributions by employers under Philippine law.

2. Legal Framework

2.1. The Social Security Act of 2018 (RA 11199)

Scope and Coverage
The Social Security Act of 2018 covers all private-sector employers and their employees. It applies to any person or entity that uses the services of another person under an employer-employee relationship.
Mandatory Coverage
Under Section 9 of RA 11199, coverage in the SSS is compulsory for all employees not over sixty (60) years of age and their employers, unless specifically exempted by law or covered by other existing social protection systems (e.g., Government Service Insurance System for government employees).

2.2. Supporting Regulations and Circulars

SSS Circulars and Issuances
The SSS regularly issues circulars and advisories that update contribution rates, payment schedules, and procedures for filing and remittance. Employers must stay informed of current regulations to remain compliant.
Labor Laws and Related Statutes
The Labor Code of the Philippines also underscores the duty of employers to comply with statutory benefits, including SSS, Philippine Health Insurance Corporation (PhilHealth), and Home Development Mutual Fund (HDMF or Pag-IBIG) contributions.

3. Employer Obligations

3.1. Registration

All employers in the Philippines are required to register with the SSS. Upon registration, the employer will be assigned an SSS employer ID number, which they must use in all filings and remittances.

3.2. Enrollment of Employees

Employers must enroll their employees for SSS coverage upon hiring. The employer is also responsible for maintaining accurate employment records and for ensuring that an employee’s membership information with the SSS is correct and updated.

3.3. Deduction and Remittance of Contributions

Contribution Rate
- Both employer and employee share the burden of SSS contributions. The rates and ceilings are revised periodically, with the SSS issuing updated schedules (e.g., SSS Contribution Schedule).
- The employer must deduct the employee’s share from the employee’s salary and add the employer’s share before remitting the total sum to the SSS.
Payment Schedule
- Contributions must be remitted on or before the deadlines set by the SSS, generally based on the last digit of the employer’s SSS number or other published schedules.
- Late remittances incur interest and penalties.

3.4. Record-Keeping

Employers should keep detailed records of all remittances and deduction transactions, including salary statements reflecting the SSS deductions. Under Philippine labor laws, failure to maintain these records or falsification of records can lead to legal consequences.

4. Non-Payment of SSS Contributions

4.1. Common Reasons for Non-Compliance

Financial Constraints: Some employers cite cash flow problems or financial difficulties.
Ignorance of the Law: Lack of awareness or confusion about changing contribution rates or procedures.
Intentional Evasion: Fraudulent attempts to avoid the costs of employer contributions by not remitting or under-declaring employee salaries.

4.2. Underpayment vs. Non-Payment

Underpayment occurs when the employer remits a contribution amount lower than what is required based on the prescribed rates and the employee’s salary.
Non-Payment refers to a total failure to remit any amount of SSS contributions, despite having deducted the employee’s share or notwithstanding the legal obligation to do so.

5. Legal Consequences for Employers

Employers who fail to remit SSS contributions face administrative, civil, and/or criminal liabilities under RA 11199 and related regulations.

5.1. Administrative Penalties

Interest and Penalties: The SSS imposes an interest of up to 2% per month (or such rate as fixed by SSS regulations) on late contributions, computed from the date the contribution falls due until it is fully paid.
Fines: Employers may be fined for delinquent payments, misrepresentation of employee salaries, or failure to register employees.

5.2. Civil Liabilities

Civil Actions: The SSS may file civil suits against delinquent employers to recover the unpaid contributions, along with penalties and surcharges.
Lien on Properties: The law grants the SSS the power to impose a lien on the employer’s properties to satisfy unpaid contributions, subject to court processes.

5.3. Criminal Liabilities

Imprisonment and/or Fines: Under Section 28(e) of RA 11199, any employer who fails or refuses to comply with the provisions of the Act—such as non-remittance or misrepresentation—may be criminally liable and could face fines and/or imprisonment ranging from six (6) years and one (1) day to twelve (12) years, depending on the gravity of the offense.
Officers of Corporations: In the case of a corporate employer, officers who are directly responsible for ensuring compliance (e.g., president, treasurer, or any responsible officer) may be held personally liable.

5.4. Disqualification from Government Contracts

Delinquent employers are also at risk of being disqualified from bidding on or obtaining government contracts if they fail to present the required certificate of SSS compliance.

6. Remedies for Employees

When an employer fails to pay SSS contributions, employees have several possible courses of action:

Check SSS Records
Employees should regularly verify their posted contributions through the SSS online portal or by visiting an SSS branch. Discrepancies between actual and posted contributions can be an early indicator of non-remittance.
Demand Letter to Employer
The employee can issue a written request or demand letter to the employer, reminding them of the duty to remit contributions and to correct any arrears immediately.
Filing a Complaint with the SSS
Employees can file a complaint directly with the SSS. The SSS may conduct an inspection or audit of the employer’s records. If a violation is found, the SSS can impose penalties or initiate legal action.
Filing Labor Complaints (DOLE/NLRC)
Although SSS concerns are handled primarily by the SSS and the courts, employees may also include non-payment of SSS contributions as part of an overall labor complaint with the Department of Labor and Employment (DOLE) or the National Labor Relations Commission (NLRC), especially if there are related labor law violations (e.g., illegal dismissal, unpaid wages).
Civil or Criminal Action
In extreme cases, employees (with the help of SSS or counsel) may pursue civil or criminal action against their employer. However, it is generally the SSS that takes the lead in filing criminal charges for non-remittance of contributions.

7. Enforcement Mechanisms

7.1. SSS Powers

Inspection and Enforcement: SSS inspectors can visit employer premises to audit payroll records and verify payment of contributions.
Issuance of Warrants: SSS can issue warrants to levy on bank accounts or garnish property once an assessment of delinquent contributions has become final and executory.
Prosecution: The SSS, through the Department of Justice (DOJ), can prosecute delinquent employers for criminal violations of RA 11199.

7.2. Coordination with Other Agencies

The SSS may coordinate with the DOLE, the Bureau of Internal Revenue (BIR), and local government units (LGUs) to track employer compliance, share information, and implement sanctions (e.g., disqualification from business permit renewal).

8. Recent Developments and Updates

Adjustments in Contribution Rates: Under RA 11199, SSS contribution rates have been subject to gradual increases to ensure the long-term viability of the pension fund. Employers must keep track of the latest contribution schedules and adjust employee deductions accordingly.
Online Services and E-Payments: The SSS has expanded its online services to facilitate electronic submission of reports and e-payments. Employers who fail to adapt to new systems and processes may inadvertently fail to remit on time.
COVID-19-Related Extensions: During national emergencies (e.g., COVID-19), the SSS may issue special guidelines on payment deadlines or installment programs for delinquent employers. However, these are temporary relief measures and do not absolve employers from ultimately settling all contributions due.

9. Practical Tips for Employers

Stay Updated: Regularly check the SSS website (www.sss.gov.ph) for updated circulars, payment schedules, and announcements.
Automate and Document: Use reliable payroll systems that automatically compute and deduct the correct SSS contributions. Retain all proofs of payment and official receipts.
Avoid Delays: File and pay contributions on or before the prescribed due date to avoid penalties and interest.
Seek Professional Advice: In case of financial or compliance difficulties, consult an accountant or attorney for proper advice and assistance with possible installment arrangements or penalty waivers.

10. Conclusion

Failure to pay SSS contributions is a serious offense in the Philippines. Not only does it jeopardize employees’ social security benefits, but it also exposes employers (and their responsible officers) to significant legal and financial risks—ranging from penalty surcharges to potential criminal prosecution.

Compliance with the Social Security Act of 2018 is not just a legal obligation but also a moral one, ensuring that employees receive the social protection they deserve. Employers must therefore remain vigilant, keep accurate records, and remit contributions on time. Meanwhile, employees should regularly monitor their contributions, proactively address discrepancies, and report non-compliance to the proper authorities when necessary.

Disclaimer

This article is provided for general informational purposes only and does not constitute legal advice. For specific concerns regarding non-payment of SSS contributions and your legal rights or obligations, it is best to consult a qualified attorney or contact the Social Security System directly.