Dear Attorney,

I worked for my previous employer for over a year, but I found out that they didn’t pay for my SSS, PhilHealth, and Pag-IBIG contributions, even though they were deducted from my salary. I am worried about how this could affect my benefits, and I want to know what steps I can take to make a formal complaint. How do I hold my employer accountable for this? What is the process of filing a complaint or claim?

—Concerned Worker

Insights

In the Philippines, the issue of unpaid Social Security System (SSS), Home Development Mutual Fund (Pag-IBIG), and Philippine Health Insurance Corporation (PhilHealth) contributions is a serious labor and legal matter. Employers are required by law to deduct and remit contributions for SSS, PhilHealth, and Pag-IBIG for their employees. Non-compliance with these obligations can result in administrative, civil, and even criminal liabilities.

Legal Basis for Mandatory Contributions

Under Philippine labor law, employers are mandated to register their employees with SSS, PhilHealth, and Pag-IBIG and ensure the remittance of contributions. This requirement is grounded in several laws:

Social Security Act of 2018 (Republic Act No. 11199) - Employers must deduct and remit contributions to SSS.
National Health Insurance Act of 2013 (Republic Act No. 10606) - This law mandates that all employees must be covered by PhilHealth.
Home Development Mutual Fund Law of 2009 (Republic Act No. 9679) - Employers are also required to remit Pag-IBIG contributions.

Failure to remit these contributions, despite deducting them from an employee’s salary, violates the law and can lead to penalties, interest, and imprisonment for the responsible employer.

Consequences of Non-Remittance

Employers who fail to remit these mandatory contributions may face several penalties:

SSS: Employers are liable to pay not only the delinquent contributions but also a penalty of 2% per month for every missed contribution, as stipulated under the Social Security Act. They can also be held criminally liable under Section 28 (e) of RA No. 11199, facing fines and imprisonment.
PhilHealth: The failure to remit PhilHealth contributions can result in penalties and interest of at least 3% per month under RA No. 10606. Additionally, employees risk being unable to avail of healthcare benefits, which could lead to undue harm, especially in times of medical emergencies.
Pag-IBIG: Employers who fail to remit Pag-IBIG contributions face penalties of up to 1% per month on unremitted contributions, as provided under RA No. 9679. This also affects employees’ eligibility for housing loans and other Pag-IBIG Fund benefits.

Filing a Complaint with the Appropriate Agencies

Employees who believe that their employer has failed to remit their contributions can take the following steps:

1. Check Contribution Records

Before filing a complaint, employees should first verify their contribution records with SSS, PhilHealth, and Pag-IBIG. This can be done online or by visiting the nearest branch of each agency. If there are gaps or missing contributions, this evidence can be used to support a claim.

2. Send a Demand Letter

The next step is for the employee to send a formal demand letter to the employer, requesting immediate payment of the unpaid contributions and the penalties accrued. In many cases, employers will comply once they are formally notified to avoid further legal action.

3. File a Complaint with the Government Agencies

If the employer fails to act on the demand letter, the employee can file a complaint with the following agencies:

SSS: Complaints regarding unpaid contributions can be filed at the nearest SSS branch or through the SSS online portal. The agency may initiate an investigation, which can lead to fines and penalties against the employer.
PhilHealth: Employees can submit a formal complaint to PhilHealth. The agency has the power to impose fines and take administrative action against non-compliant employers.
Pag-IBIG: For Pag-IBIG contributions, employees can file a complaint directly with the Pag-IBIG Fund. Employers may be penalized for non-compliance and can be compelled to pay the contributions and corresponding penalties.

4. File a Complaint with the Department of Labor and Employment (DOLE)

In cases where multiple labor violations are present, including non-remittance of contributions, employees can file a complaint with DOLE. DOLE can conduct an inspection of the employer’s business and impose sanctions if labor standards are violated.

5. Seek Legal Remedies through Court Action

If all administrative remedies have been exhausted and the employer still refuses to comply, employees may consider filing a civil case in court for the recovery of unpaid contributions. In some instances, criminal charges can also be filed against the employer under the appropriate laws.

Employer’s Defense: Good Faith or Financial Difficulty

Employers may claim good faith or financial difficulty as reasons for non-payment. However, these defenses are generally unaccepted under Philippine law, particularly if the deductions were already made from the employee’s salary. Courts and administrative bodies typically view these claims as insufficient to excuse non-compliance.

Criminal Liability for Employers

The non-remittance of contributions is not only an administrative offense but also a criminal one. Under RA No. 11199 (Social Security Act of 2018), employers can be imprisoned for up to 12 years if convicted for non-payment of contributions. Similar penalties are provided under the National Health Insurance Act and the Pag-IBIG Fund Law.

Rights of Employees

Employees have the right to demand the full remittance of their SSS, PhilHealth, and Pag-IBIG contributions, as well as the penalties imposed for late payments. Even if an employer goes out of business or declares bankruptcy, the liability for these contributions remains.

Additionally, under the law, employees cannot be penalized or dismissed for raising concerns about unpaid contributions, as this would constitute retaliatory action, which is prohibited by labor laws.

Key Takeaways for Employers

Employers must ensure timely and accurate remittance of SSS, PhilHealth, and Pag-IBIG contributions to avoid penalties, litigation, and criminal liability. Failure to comply with these mandatory obligations can severely impact their business operations, reputation, and legal standing. Regular audits and coordination with these agencies can prevent the risks of non-compliance.

By understanding these key legal concepts, both employees and employers can protect their rights and fulfill their obligations under Philippine law.