Employer Delinquency and Non-Compliance

Here’s a topic that is closest to the heart of SSS lawyers and account officers in the branch operations. Before we elaborate on employer obligations concerning their employees, we first have to look at the contingency that employers should deal with in case of delinquency and non-compliance.

I must relate the story of Diego who sought employment in a hardware store in Baguio City last March, 2017. As expected, he had to lift heavy construction materials and load them on trucks. This September, while on duty, sheets of galvanized iron roof fell on his leg, incapacitating him to work for at least a month, that’s if the fracture would heal well that fast. His employer gave him P3,000 presumably to cover for his medical expenses and P1,500 as separation pay. His employer gave him the word that he can get back to work as soon as he has recovered from the fracture. Diego was not reported for SSS coverage, thus, he cannot apply for sickness benefit because it follows that his contributions were also not paid. He has to stay home for a month, without pay and without any more help coming from his employer until he regains use of both feet.

It would have been a different scenario if Diego were reported to SSS and his contributions were paid. Let’s say Diego is receiving a monthly salary of P5,000 monthly. The premium due for this salary bracket is P550 a month plus an additional P10 for employee compensation. However, considering that the employer only has to pay 368.30 of the monthly contribution as his employer share, he should have shelled out a total of P2,578.10 in SSS premiums plus P70 as Employee Compensation contribution for the seven months Diego was under his employ. Diego, for his part should have been deducted a total of P1,271.90 as his employee share for the same period, that is P 181.70 multiplied by seven months, his employee share.

That would be a total of P2,585.10 in expenses for the employer and not P4,500.

Meanwhile, Diego who would paid P1,271.90 for seven months should have been entitled to SSS Sickness benefit and Employee Compensation Sickness (EC) benefit. EC is the additional P10 monthly payment made by the employer for his employees to cover any sickness or injury suffered by the employee while at work or performing duties for the employer. EC also applies to any injury sustained by the employee going to his place of work and from work going home. Roughly computed, both benefits would be estimated at P4,500 each, thus, a total of P9,000 in benefits for the employee, again, if Diego were reported and his contributions were paid. If still unable to recover from the injury, our SSS doctors will evaluate Diego’s condition to determine if he could qualify for more SSS benefits.

On the other hand, the employer who is now considered delinquent and non-compliant under the SS law could face criminal sanctions for: non-reporting of employee for coverage which gave rise to employer liability following an accident that incapacitated his laborer; and non-remittance of SS contributions. The SS Law is a special penal law, where violators could be meted out an imprisonment of 6 years and 1 day to 20 years as decided by the Supreme Court, making it a non-probationable offense.

In case you are curious if the SSS is serious about its business in going after delinquent employers, this columnist already obtained four (4) convictions against delinquent employers, the latest was promulgated last August. SSS does not rest in its effort against delinquent and non-complying employers. Recently, the Legal and Enforcement Group headed by SVP Voltaire P. Agas launched RACE or Run After Contribution Evaders and SSS Oplan Tokhang where a famous cosmetic doctor and several other known personalities became all the more famous following their conviction for non-payment of SSS contributions.

Mandatory SSS coverage for the working class does not only serve to protect the member in times of contingencies, it should also protect the employer. The bad habit of circumventing RA 8282 or the SS Act of 1997, just so the employer could save costs for the meantime could cause them a fortune in the future. Violations of RA 8282 include: 1. non-registration as employer for purposes of SSS coverage; 2. non-reporting of employees for coverage; and 3. non-payment of premiums. The SSS which is mandated by law to inspect employer records can also require employers to produce documents pertaining to the employment of employees who are mandatorily covered by SSS from day one. Non-production of records is also another violation.

Sec. 10 of RA 8282 provides:
Effective Date of Coverage. – Compulsory coverage of the employer shall take effect on the first day of his operation and that of the employee on the date of his employment:

The law is clear. The employer need not wait for six months, the supposed probationary employment, even if he tries to mask his violation by using the terms “casual”, “trainee” or “under observation” to make it appear that his employee should not be subject to compulsory coverage. Employers who reason out erroneously that the employee is not yet an employee as he still has to prove his worth before he can be reported for SSS coverage are definitely misled. The SS law did not mention the need to make one a regular employee. It only provided the definition of the term employee, meaning “any person who performs for an employer in which either or both mental and physical efforts are used and who receives compensation for such services, where there is an employer-employee relationship (par. d, Section 7). Regardless of being seasonal, temporary, casual or intermittently reporting, for so long as they were employees during the period and received salaries, they should be covered.

When can we say that an employer is non-compliant? As mentioned, employers should at the start of operation register with SSS as an employer and report his employees for SSS coverage at the start of their employment. Having no SS number or birth certificate is no longer an excuse, the SSS may issue temporary SS numbers for purposes of registration.

Now when does an employer become delinquent? As soon as the employee receives his first pay, the employer is obliged to deduct his employee share which should only be 30 percent of the monthly premium but not the entire amount of the contribution. The employer should also observe the correct salary bracket of his employee and remit his rightful contribution based on his monthly salary credit. Any delay in the payment of contributions will earn a three (3%) percent penalty which will accrue for so long as the premiums are not fully paid. Thus a caveat for employers, your employee can still file a complaint come retirement age or when a contingency happens. Your delinquency may be an amount as small as one monthly contribution which your employee may need to in order complete 120 months so that he can qualify for retirement and pension but its computed penalties will also balloon with the accumulated years of non-payment. You can do a computation of say, P550 multiplied by the number of months of delay and the 3 percent penalty that accrued through the years. We have had so many cases where accrued penalty over the premiums could be far greater than the premiums. Yet this penalty could not be condoned or be the subject of a compromise unless a law is passed allowing the same. The accumulated amount is nothing compared to the stress, embarrassment, arrest and possible conviction in Court. If one contends, walang nakukulong sa utang, the SSS can assert, “marami nang nakulong dahil sa di pagbabayad ng hulog sa SSS.”

How then can an employee prevail upon his employer to deduct from his salaries his employee share so that his SSS premiums can be remitted to SSS together with the employer counterpart? If persuasion fails, the SSS Legal Department offers its free legal services. The employee may file a complaint with the SSS armed with his proof of employment. We understand that in most instances, the employee would not want to lose his job thus, he would refuse to testify or file a complaint. We cannot guarantee that you can stay on the job once you strained your relations with your employer over your SSS contributions but we can guarantee you that we are going to make your employer remit your contributions if you can show us proof of your employment, all at no cost, from the filing to disposal of the case. Even transcript of stenographic notes are all shouldered by the SSS. We only need your full cooperation and your counterpart transportation expenses in going to SSS and the Court if subpoenaed to take the witness stand. Meanwhile, our hardworking accounts officers will gladly assist you in convincing your employer to comply with the SS Act to prevent prosecution or the lawyers will take over.

What if one does not have any proof of employment, say for taxi drivers, kasambahay, sari-sari store helpers or those who may be working in the underground economy? We do conduct coverage drives, visitation and in the process require inspection of records. But we still need the cooperation of employees. We have had instances of employees coming to us for leverage in their labor cases, meaning, they never thought of their SSS contributions until their relationship with their employer turned sour or they were already terminated. If we allow a lapse of time, it might be difficult to prove employment especially if we allege long years of service.

As it is always said, only two things are certain in life—death and taxes. That certainty should include contingencies like old age, sickness, and even giving birth for women. As a member be vigilant and make sure your contributions are regularly remitted.

For we are taking pains to do what is right, not only in the eyes of the Lord but also in the eyes of man. 2 Corinthians 8:21


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