Republic Act No. 11199, otherwise known as the Social Security Act of 2018, expressly repealed Republic Act No. 1161 (the old Social Security Law) and Republic Act No. 8282 (amending the old previous Social Security Law).
Signed into law on 07 February 2019, the new charter of the Social Security System took effect on 05 March 2019. It introduced major changes and innovations on the state-operated social security program.
Some of the major changes in the law include:
a. Increased minimum and maximum salary credits and contribution rates, beginning at 12% per year for the years 2019 and 2020, with 8% and 4% shares in the premium contributions for employers and employees, respectively; 13% per year for the years 2021 and 2022, with 8.5% and 4.5% shares in the premiums for employers and employees, respectively; 14% per year for the years 2023 and 2024, with 9.5% and 4.5% shares in the premiums for employers and employees, respectively; and 15% per year for the year 2025 and thereafter, with 10% and 5% shares in the premiums for employers and employees, respectively. The new schedules of SSS contributions are in Circular 2019-007 (for OFWs), Circular 2019-006 (for household employees), and Circular 2019-006 (for employees of private companies).
b. Compulsory coverage for all sea-based and land based Overseas Foreign Workers (OFW), declaring manning agencies as agents of their principals, and employers of sea-based OFWs, and holding them jointly and severally liable with the actual employers of the OFWs under the new law, and
c. Providing unemployment insurance and involuntary separation benefits to an SSS member, not over sixty (60) years of age, who has paid at least thirty-six (36) months contributions, in the form of monthly cash payments equivalent to fifty percent (50%) of the average monthly salary credit for a maximum of two (2) months.
Of great interest to employers is a six (6) month penalty condonation granted to delinquent employers, who have not remitted the mandatory SSS premiums. The condonation granted to delinquent employers is much-awaited.
Unlike tax delinquencies and liabilities, where the Commissioner of Internal Revenue is granted under Section 204 of the National Internal Revenue Code of the Philippines with the power to compromise taxes in the Philippines or to allow payment of taxes at minimal amounts under certain instances, no similar power is given to the SSS.
Hence, delinquent employers, rejoice! Under the Social Security Act of 2018, employers are now given the opportunity to remit delinquent contributions without penalties. However, applications for condonation must be filed with the SSS during the period of 05 March 2019 to 06 September 2019, in accordance with Circular 2019-004 issued by the SSS. Obviously, employers who do not meet the deadline and fail to submit their application for condonation during this offer period with the SSS will not be able to claim benefits under the law.
An official copy of the law may be accessed here.
Nicolas & De Vega Law Offices is a full-service law firm in the Philippines. You may visit us at the 16th Floor, Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City, Metro Manila, Philippines. You may also call us at +632 4706126, +632 4706130, +632 4016392 or e-mail us at [email protected].