Labor Law: Book IV; Title II; Chapter IV Contribution (Arts. 189 - 190)

    Book IV

Health, Safety and Social Welfare

Title II

Employees’ Compensation and State Insurance Fund

Chapter IV

Contribution

Arts. 189 - 190

Q: Does an employee pay contributions to the State Insurance Fund? If not, why?

Art. 189 [183]. Employers’ contributions.

(a) Under such regulations as the System may prescribe, beginning as of the last day of the month when an employee’s compulsory coverage takes effect and every month thereafter during his employment, his employer shall prepare to remit to the System a contribution equivalent to one percent of his monthly salary credit.

(b) The rate of contribution shall be reviewed periodically and subject to the limitations herein provided, may be revised as the experience in risk, cost of administration and actual or anticipated as well as unexpected losses, may require.

(c) Contributions under this Title shall be paid in their entirety by the employer and any contract or device for the deductions of any portion thereof from the wages or salaries of the employees shall be null and void.

(d) When a covered employee dies, becomes disabled or is separated from employment, his employer’s obligation to pay the monthly contribution arising from that employment shall cease at the end of the month of contingency and during such months that he is not receiving wages or salary.

Art. 190 [184]. Government guarantee. 

The Republic of the Philippines guarantees the benefits prescribed under this Title, and accepts general responsibility for the solvency of the State Insurance Fund. In case of any deficiency, the same shall be covered by supplemental appropriations from the national government.

Notes:
  • Art. 189 [183]: Employers’ Contributions
    • Employers must remit a monthly contribution equivalent to one percent of the employee's monthly salary credit from the effective coverage date and throughout employment.
    • The contribution rate can be periodically revised based on risk experience, administration costs, and losses, within specified limitations.
    • Employers are solely responsible for paying the contributions; 
      • any deduction from employees' wages is void.
    • Employer's contribution obligation ceases when a covered employee:
      • dies, 
      • becomes disabled, or 
      • separated from employment
  • Art. 190 [184]: Government Guarantee
    • The Republic of the Philippines guarantees benefits under this Title and ensures the solvency of the State Insurance Fund.
    • Any fund deficiencies will be covered by supplemental appropriations from the national government.
Notes:
  • Only the employer, not the employee, contributes to the State Insurance Fund.
  • The Amended Rules on Employees' Compensation specify ten brackets of monthly salary credits on which to base the employer's one percent contribution to the employees compensation fund.
  • The same Rules provide the penalties to an employer who is delinquent in paying the contributions. The penalties include imprisonment and/or fine and a three percent penalty per month from the date the contribution falls due until paid.
RULE V - EMPLOYER’S CONTRIBUTION

SECTION 1. Rate and amount. 
Subject to the following conditions, contributions under this Rules shall be paid in their entirety by the employer and any contract or device for the deduction of any portion thereof from the wages or salary of the employees shall be null and void:

    (1) For a covered employee in the public sector, his employer shall remit to the GSIS a monthly contribution equivalent to one percent of the actual wages or salary received by him as of the last day of the month but not to exceed P30 per employee. (ECC Resolution No. 1451 dated December 27, 1979).

    (2) For a covered employee in the private sector, his employer shall remit to the SSS a monthly contribution equivalent to one percent of his monthly salary credit as of the last day of the month, in accordance with the following schedule:


“Now, therefore, be it resolved, to amend Rule V, Section 1, paragraph 2 of the Amended Rules on Employees’ Compensation by adopting a rate of employers’ contribution which is fixed at P10/employee/month for employees with Monthly Salary Credits (MSC) of Fourteen ThousandFive Hundred Pesos (P14,500.00) and below, and a contribution rate of
0.2% of the monthly salary credit for employee with MSC of Fifteen Thousand Pesos (P15,000.00).”

    (3) When a covered employee dies during employment, or is separated from employment, his employer’s obligation to pay the monthly contribution arising from that employment shall cease on the last day of the month of contingency.

    (4) When a covered employee becomes disabled during employment, his employer’s obligation to pay the monthly contribution arising from that employment shall be suspended during such months that he is not receiving salary or wages.

    (5) No refund of contribution shall be allowed under these Rules.

SECTION 2. Remittance. 
Contributions shall start in January 1975 and every month thereafter for as long as the employee has earnings. The initial contribution for the month of January 1975 shall be remitted by the employer to the System in February 1975, unless some other arrangement has been agreed by the System and the employer.

SECTION 3. Penalty.
Any violation of the provisions on contribution under these Rules shall be penalized as follows:
    (1) Any employer who is delinquent in his contributions shall be liable to the System for the benefits which may have been paid to his employees or their dependents, and any benefit and expenses to which such employer is liable shall constitute a preferred lien on all his property, real or personal, over any credit except taxes:

    (2) The payment by the employer of the lump sum equivalent of such liability shall absolve him from the payment of the delinquent contributions due and payable during the calendar year of the contingency and penalty thereon with respect to the employee concerned, but said employer shall be subject to criminal liability;

    (3) In case of such delinquency the employer or responsible official who committed the violation shall be punished with a fine of not less than P1,000 nor more than P10,000 and/or imprisonment for the duration of the violation or non-compliance or until such time that a rectification of the violation has been made, at the Court’s discretion;

    (4) If any contribution is not paid to the SSS as prescribed under these Rules, the employer shall pay besides the contribution a penalty thereon of 3 percent a month from the date of the contribution falls due until paid.

Note: Under ECC Resolution No. 1243 dated Jan. 18, 1979, the System shall pay the employee or his dependents all benefits due them under PD 626, as amended, without prejudice on its part to proceed against the erring employer.

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