Below is a comprehensive overview of (1) the legal framework governing salary deductions, (2) the rules on Social Security System (SSS) coverage and contributions, (3) employer obligations and liabilities, and (4) remedies available to employees in the Philippines in cases of unlawful salary deductions and unremitted social security contributions. This article synthesizes the relevant provisions of the Labor Code of the Philippines, the Social Security Act, and other pertinent laws, regulations, and issuances.

1. Legal Framework on Salary Deductions

1.1. Governing Law

The primary law regulating wages, including the payment and deduction thereof, is the Labor Code of the Philippines (Presidential Decree No. 442, as amended). The Labor Code provides general guidelines on when and how employers may deduct from an employee’s salary.

1.2. Prohibited Deductions

Under Article 113 (formerly Article 113) of the Labor Code and relevant Department of Labor and Employment (DOLE) regulations:

General Rule: No employer shall make any deduction from the wages of employees without their written authorization and unless it is allowed by law, regulation, or a collective bargaining agreement.
Common Prohibitions:
- Deductions for the cost of damages to company property (unless upon due process and with the employee’s consent).
- Deductions for cash shortages or losses due to negligence or fault of persons other than the employee.
- Deductions not expressly authorized by law or the employee, or those that are not meant to benefit the employee directly.

1.3. Permissible Deductions

Certain deductions are explicitly permitted or required by law:

Withholding Tax – Pursuant to the National Internal Revenue Code (NIRC), employers are mandated to deduct and withhold income tax from employees’ salaries.
SSS, PhilHealth, and Pag-IBIG Contributions – Employers must deduct the employee’s share from the salary and remit this together with the employer’s share to these agencies.
Union Dues – If employees belong to a union and an appropriate check-off arrangement is in place, deductions for union dues are permissible with the employee’s written authorization.
Others Under Specific Laws or Contracts – Deductions for loans or certain benefits (e.g., salary loans from SSS, Pag-IBIG, or other authorized lenders) are lawful with proper documentation and consent.

Any other form of deduction not sanctioned by law, regulation, or collective agreement may be deemed unlawful.

2. Social Security System (SSS) Coverage and Contributions

2.1. Governing Law

The Social Security Act of 2018 (Republic Act No. 11199) amended the Social Security Act of 1997 (RA 8282) and governs the mandatory SSS coverage and collection of contributions. All private sector employees, including domestic workers (kasambahays), must be enrolled and covered by the SSS.

2.2. Mandatory Coverage

Employers – Any person or entity that uses the services of another person who is under their employ.
Employees – Any person who performs services for an employer and receives compensation for such services.
Self-Employed and Voluntary Members – Independent contractors, freelancers, and other self-employed individuals have obligations or rights to register and pay contributions themselves.

For employees, the employer is responsible for:

Registering the employee with SSS upon employment.
Deducting the employee’s share of contributions from the salary.
Adding the employer’s share of the contribution.
Remitting the total contributions (employee + employer shares) to the SSS.

2.3. Payment and Remittance Schedules

Employers must remit contributions on or before the due dates set by the SSS. Employers register with SSS and are assigned a payment schedule based on their respective SS number or business registration number. Failure to pay on time subjects the employer to penalties and interest charges.

3. Unlawful Salary Deductions and Non-Remittance of SSS Contributions

3.1. Unlawful Salary Deductions

Even if SSS (or other mandatory contributions) appear on an employee’s payslip, it does not automatically mean the employer has actually remitted these amounts to the respective government agencies. If the employer deducts but does not remit, such deduction is effectively unlawful because it deprives the employee of wages without providing the intended benefit or coverage.

3.2. Legal Consequences of Non-Remittance

The Social Security Act imposes penalties on employers who fail to remit contributions:

Administrative Penalties – SSS may impose penalties on delinquent employers. There are prescribed interest and penalties computed monthly on the contributions due.
Civil Liabilities – Employers remain liable to pay the unremitted contributions plus penalties. An employee may also sue for unpaid or improperly withheld wages under the Labor Code.
Criminal Liabilities – Willful failure or refusal to pay or remit SSS contributions can constitute a criminal offense. Under Section 28 of RA 11199, the employer or responsible officers may face imprisonment and/or fines if found guilty of misappropriating or failing to remit contributions.

3.3. Effect on Employees

Loss of SSS Benefits – If contributions are not remitted, employees are at risk of not being able to claim SSS benefits (e.g., sickness, maternity, disability, retirement, or death benefits).
Wage Deprivation – When deductions are made but not remitted, employees effectively lose part of their salary without receiving statutory coverage.

4. Enforcement and Remedies for Affected Employees

4.1. Grievance Procedures

Employees who suspect or discover unlawful salary deductions or unremitted contributions may:

Inquire with SSS – Employees can check their contribution records online or at SSS branches to confirm if their employer regularly remits.
Internal Complaint – File a complaint with the company’s HR department, requesting proof of remittances and explanation of unauthorized deductions.
File a Complaint with DOLE – If an internal resolution is not possible, employees can approach the DOLE’s regional office or use the Single Entry Approach (SEnA) for mediation.

4.2. Administrative Complaints (SSS)

SSS Enforcement – Employees may file a complaint with the SSS, which has the authority to investigate and assess liabilities. SSS may:
- Conduct inspections.
- Impose penalties on the employer.
- Initiate civil or criminal proceedings for non-remittance.

4.3. Court Action

Labor Arbiter (NLRC) – If the dispute involves monetary claims due to unlawful deductions (e.g., underpayment of wages, overtime, holiday pay, 13th month pay), an employee may file a complaint before the National Labor Relations Commission (NLRC).
Criminal Case – The SSS or the employee, through the assistance of the public prosecutor, may file a criminal complaint against the employer or its responsible officers under RA 11199.

4.4. Potential Outcomes

Payment of Arrears – The employer may be ordered to remit all delinquent contributions plus penalties and interest.
Reinstatement of Employee Coverage – SSS will credit the proper contributions to ensure employees’ coverage is recognized.
Fines and Imprisonment – Severe or willful violations can lead to fines and imprisonment for responsible officers of the employer.

5. Best Practices for Employers and Employees

5.1. For Employers

Compliance Checks – Regularly review wage computations and deductions to ensure compliance with the Labor Code and other regulations.
Timely Remittances – Adhere strictly to SSS deadlines to avoid penalties and criminal liabilities.
Document Retention – Keep records of payslips, remittance receipts, and contribution reports.

5.2. For Employees

Record Monitoring – Periodically check SSS, PhilHealth, and Pag-IBIG contribution records (online portals or branch inquiries).
Payslip Verification – Confirm that the amounts deducted for government contributions match actual remittances (if possible, ask HR for official SSS R-3 or ML-2 forms where applicable).
Early Reporting – If an employer is suspected of non-remittance or unlawful deductions, lodge an inquiry or complaint sooner rather than later to prevent further losses.

6. Conclusion

Unlawful salary deductions and non-remittance of social security contributions are serious offenses under Philippine law. They violate employees’ rights to fully receive wages and statutory benefits, undermining social welfare and labor protection. The Labor Code prohibits employers from making unauthorized deductions, while the Social Security Act imposes strict obligations to remit SSS contributions. Noncompliance can result in administrative fines, civil liabilities (payment of arrears with penalties), and even criminal prosecution.

For employees, vigilance and awareness of their rights are crucial. Tools such as the SSS online verification system, DOLE’s mediation services, and legal avenues with the NLRC or regular courts provide pathways to relief and enforcement. Employers, on the other hand, are encouraged to maintain proper documentation, comply with mandatory statutory deductions, and ensure timely remittances to foster a lawful and productive workplace environment.