The Philippine government is bound to protect the welfare of employees and workers in the country. That is why through labor and social security laws, it mandates and obliges businesses and employers to ensure that their hired employees or laborers are covered by viable tax-exempt social security service and protection against the hazards of disability, sickness, maternity, old age, death, and other contingencies resulting in loss of income (Republic Act No. 8282, Social Security Act of 1997, Section 2). Thus, if you own a company and employs people to carry out your business, you have to comply with the law and register your business with the Philippine Social Security System (SSS).
The following are important discussions, including steps, procedures and requirements, every business owner and employer should know when registering a business with the SSS.
Who are the employers covered to register with the SSS?
The following employers are required for compulsory coverage under SSS:
a. An employer, or any person who uses the services of another person in business, trade, industry or any undertaking.
A social, civic, professional, charitable and other non-profit organization which hire the services of employees are considered “employers.”
b. A foreign government, international organization or its wholly-owned instrumentality such as embassy in the Philippines, may enter into an administrative agreement with the SSS for the coverage of its Filipino employees.
When should employers start the SSS coverage of their employees?
According to the SSS, for an employer, the effectivity of compulsory coverage starts on the first day he or she hires employees. The employer only has 30 days from the date of employment of employee to report the person for coverage to the SSS thru Form R-1A (Employment Report).
For self-employed persons, the effectivity of their SS coverage begins upon payment of the first valid contribution, in case of initial coverage.
For employees, they are effectively covered by SS on the first day of their employment.
How to register a business with the SSS?
The following are the instructions to register the different types of business with the SSS:
For Single Proprietorships
An owner of a single proprietorship business should accomplish and submit SSS Form R-1 (Employer Registration) and R-1A (Employment Report).
Any of the partners of a partnership firm should accomplish SSS Forms R-1 (Employer Registration) and (R-1A (Employment Report) and submit these forms together with a photocopy of the Articles of Partnership. The original copy of the Articles of partnership must be presented to the SSS for Authentication purposes.
A corporation must accomplish SSS Forms R-1(Employer Registration) and R-1A (Employment Report) signed by its President or any of the corporate officers and submit these forms together with a photocopy of the Articles of Incorporation. The original copy of the Articles of Incorporation must be presented to the SSS for authentication purposes.
For Self-Employed Members
A self-employed person should accomplish SSS Form RS-1 (Self-Employed Data Record) and submit it together with a photocopy of any of the following baptismal, birth certificate, driver’s license, passport, Professional Regulation Commission (PRC) Card, Seaman’s Book. I n the absence of these documents, any two of the secondary documents mentioned earlier.
A self-employed member who has employees, should also register as an employer and secure an employer ID number which the company must use in all transactions with the SSS.
What is the effect of non-reporting and non-remittance of contributions?
If you are not reporting and not remitting contributions to the SSS for your employees, the following are the effects to your employees and to yourself as the employer:
Effect to the Employee
The employee is still entitled to SS benefits even if the employer fails or refuses to remit the SSS contributions.
Effect to the Employer
An employer who does not report temporary or provisional employees is violating the SS law. The employer is liable to the employees and must:
1. pay the benefits of those who die, become disabled , get sick or reach retirement age;
2. pay all unpaid contributions plus a penalty of three percent per month; and
3. be held liable for a criminal offense punishable by fine and/or imprisonment.
For self-employed person, if he or she fails to register with the SSS, he or she would also be fined and or imprisoned. However, in the event the self-employed person does not realize earnings in a given month, payment of SSS contributions for that month is no longer required.
For computing SSS contributions, you may read our post on “how to compute SSS contributions”.
To download SSS forms, please visit this page from the official website of the Philippine SSS.
To register your business with other government agencies or offices, you may read our post on “how to register a business in the Philippines“.
As business owners and employers, we have to be responsible in assuring the welfare of our employees or workers. Covering your employees with the Philippine Social Security System is not only a compulsory obligation that must be complied to avoid penalties or punishments for violating the law, but it is also showing that you truly care and love the people who are helping you to bringing your business to success. Besides, benefits, whether based on law or based on your cheerful heart, will always make your employees happy and productive, leading your business to profitability and sustainability.