HR/Payroll Or A Business Owner? Here’s A Guide To Prepare For SSS Contribution Hike

The 1.5% SSS contribution hike to 12.5% on employee’s monthly salary is expected to be implemented in January 2018. The move to increase the contribution was largely credited to President Rodrigo Duterte approving the two-stage monthly pension increase of Php2,000 to retirees. Since March, each SSS pensioner gets an additional Php1,000 on top of their previous monthly receivable from the agency. To cover the additional pensioner money, Duterte also approved the plan to increase member contribution rate of 11 percent by adjusting the yearly by 1.5 percent until it reaches 17 percent by 2020.

While this is a great thing for paying SSS members, the move is just one of the many financial and payroll adjustments needed to be done correctly by entrepreneurs and HR staff.

Employer’s Share

The current SSS contribution, which is 11 percent of the employee’s salary, is being shared by the employer (7.37 percent) and employee (3.63 percent). The SSS usually releases an updated contribution table to avoid confusion and overpayment/underpayment.

sss contribution table 2017

SSS Current 2017 Employee-Employer Share Table from SSSguides.com.

Early this year, SSS Chairman Amado Valdez clarified in an interview that while the current setup suggests a 70:30 employer-employee share, it does not mean that the same rate will be used in the upcoming increases.

There is little employer’s feedback publically available regarding the increase, but a trade association chair indicated that the increase could make a significant impact on operational costs. Employers Confederation of the Philippines chairman emeritus Donald Dee expressed in a statement that while the association supports the intention behind the contribution increase, there should be a study conducted regarding the matter. He also said the average cost spent per employee of the association is already higher than other companies because they spend more money on other benefits and not just SSS.

Ahead of the SSS contribution hike, it is best for companies (via HR and Payroll departments) to anticipate the changes they would need to avoid over or underpayment. Here are a few things you need to prepare ahead of the changes:

1. Make sure all employees have an online account.

The SSS has an online facility where all employees, employers, and other members access contributions and membership records, perform online transactions, request for copies, and set appointments with their SSS servicing branch. This means they can check online instead of having to talk to your HR Team about these details.

It’s easy to direct incoming employees who have yet to have an SSS number to set up their online account. For employees who have forgotten login details of their online account, they can simply do a password reset or email at onlineserviceassistance@sss.gov.ph.

2. Make sure your employer online details are also updated on your SSS online account.

SSS aims to have almost every transaction done online, which is great for HR and Payroll who needed to keep tabs on pertinent employer and employee information. On the other hand, hard changes like change in business address or company type will still require you to provide supporting documents that are needed to be submitted at a physical branch.

3. You would still need to go to SSS to pay for the contributions

It would be nice to be able to pay for your employee contributions online. As of the moment, you would still have to make the payments directly at a physical branch with the following:

  • Accomplished SSS Form R-5 or also known as the Employer Contributions Payment Form
  • Accomplished SSS Form R-3 Contributions Collection List
  • Cash or Check totaling amount payable to SSS

4. You would need to be diligent in keeping employee contributions updated

The R3 form is a list of all contributions collected for employee-members. HR (with Payroll assistant), need to submit this form every month or every quarter. You would need to submit this along with the USB file or the printed version and copies of the Transmittal Certification and Employee File per month.

For some companies experiencing high attrition or is expanding its workforce at a rapid pace, it can be quite taxing to prepare an accurate R3 form. It’s easy to overlook or prepare all required documents in one go and forget to include updated information that could lead to underpaying or overpaying SSS contributions. Moreover, it can also be complex when there are changes in the company that require salary adjustments.

Here are some tips for you to make this process easier to manage:

  • Pay on or before the 10th day of the following month. As your employees have different SSS numbers, it will be easier for HR and Payroll to collect and prepare updated documents.
  • Pay SSS contributions with the SSS branch who handles your company’s records. It can be easier for HR/Payroll or business owners to pay the contributions at a nearby branch, but it would be much easier to deal with the branch that can access your records and handle application concerns or requests faster.
  • Get an HR/Payroll software who can handle repeated SSS processes. The SSS’s file generator program can be a frustrating tool to do, and some free R3 file generators online may not be reliable or safe.

An HR/Payroll software like PayrollHero can not only generate the reports you need for SSS contributions, it can also come with features like an AI assistant who can handle employee changes, requests and other things that could have an impact on contribution computations. An AI assistant can also help onboard new employees and collect the required data needed for your R3 report.

SSS R3 Form PayrollHero

Generate SSS R3 forms and automate mundane HR and payroll functions with our 30-day free trial. You can also download government forms here.

5. Inform employees about the changes in SSS policies and increases in their benefits.

HR is duty-bound to not only keep employees informed about SSS policies but also inform any effects on their payslips. While a memo or an email may suffice to inform employees, HR and Payroll will still get questions from employees about deductions on their payslips down to the last cent. Unless you have an HR or Payroll assistant to assist in addressing these type of questions, handling repeated inquiries is a waste of your time and company resources.

Final Thoughts

As the government intends to make frequent increases on SSS contributions over the next five years, you may want to invest your time and effort now to make sure your HR and Payroll teams have the right processes and systems in place to deal with these increases. Streamlining HR and Payroll tasks will ensure that SSS contributions are correct and updated with minimal effort and use of resources.

FREE Payroll Kit for All Employees

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If you’re an employee and you’re reading this, then you’re in luck!

The PayrollHero team prepared the Ultimate Payroll Kit that answers all your questions and concerns regarding the following topics:

  • How to Compute 13th Month Pay
  • How to Compute Holiday Pay & Rest Day Pay
  • How to Compute your BIR Taxes
  • How to Compute your Government Deductions (SSS, PAG-IBIG, PhilHealth)
  • How to Compute Night Differential Pay
  • How to Compute Your OT Pay

All these and more for FREE! Click here to download your FREE Payroll Guide in the Philippines.

Aside from providing smooth and efficient HR, Time, Attendance, and Payroll processes to businesses, we also provide a wealth of information for employees regarding matters concerning their payroll.

So if you always found yourself making a Google search on “How to Compute 13th Month Pay” or “How much is my SSS deduction”, then our free PayrollHero Kit will do wonders for you.

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You won’t have to Google about these payroll concerns in the Philippines ever again. Simply get the guide, keep it in a folder (It’s in PDF format), and consult it whenever you want to know something that concerns your payroll.

Not only do you get a more clear and defined answer to your questions; you also won’t have to bug your company HR with trivial questions anymore. You will be well-equipped with all the basic and necessary info about your payroll. Sounds awesome, right?

So download the free PayrollHero Kit now and learn everything you need to know about your payroll today!

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How do I open a restaurant in the Philippines? Presenting the PayrollHero Knowledge Kit!

The PayrollHero blog aims to be the knowledge repository for any restaurant owner or retailer in Southeast Asia. We have built our database with things you need to know while doing business in the Philippines.

With that in mind, we have been working on a little project. Presenting the PayrollHero Knowledge Kit for opening a restaurant in the Philippines!

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Download it now – free! 
This starter kit was put together to give you high level information about the Philippines, share some thoughts from restaurant owners, and present relevant statistics from our market research.

The information here includes research that will help you open a restaurant in the Philippines or expand into the country.

  • We talk about what BIR, SSS, PhilHealth and Pag-IBIG are all about.The pages are linked to relevant tax forms and websites that offer more detailed information if you want it.
  • There is an industry overview and analysis on the latest consumption trends in the country. For example, did you know that the Home delivery and takeaway sector grew at a staggering 10.3%. It’s closest competitor was the fast food industry at 8.1%.

But we don’t want to give you simple hard facts that you could just Google anyway. The Knowledge Kit has a wealth of information in the form of personal stories and experiences in these countries. We interviewed the owner of the Advent Manila Hospitality Group, Mr. Andrew Masigan, and asked him about how he runs his business in this part of the world. We see it as a way to help the community because there is no better way to learn than from people who have gone through the same roadblocks as your are facing right now.

We hope this information is useful to you. We would love to hear back from you with what you think about the Knowledge Kit, how we can make things better and how you use this Kit for your own research into the restaurant industry.

Lastly, we are releasing more of these for the retail and BPO industry. Watch out for more information about these industries and countries.

So go ahead and click on the image above to access the Knowledge Kit. Let us know what you think. And good luck with your new business!

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Planning on expanding to the Philippines? Here are some helpful resources

Are you thinking about doing business in the Philippines? With almost 100,000,000 people, mostly English speaking, a fast growing economy and the worlds largest centre for voice based outsourcing – the Philippines is a hot market.

Many business owners are coming to the Philippines looking to setup their restaurant chain, expand their retail business, outsource some of their operations or getting into the outsourcing business themselves.

I have compiled a bunch of resources that will help you along the way with your research of the Philippine market.

BPOs

Simon Meers of Wint and Kidd, tells his story about how he transitioned his Australian business to the Philippines and eventually opened a BPO. Read more about Simon’s story.

Clare Matchett, another Australian shares her story about human resource challenges in the Philippines, how they recruit, hire and manage their team as well as why she learned Tagalog. Read more about Clare’s story.

David Elefant has worked with tons of business owners wanting to setup in the Philippines. He is a fantastic resource to get your setup questions answered. Read more about David and what he is doing in the Philippines.

If your interested in learning more about setting up in the Philippines then check outMike O’Hagan‘s tours. He brings in entrepreneurs looking to see first hand how it all works. Read more about Mike.

Then of course there are questions about taxes, Government organizations, etc. Here are some resources on SSS, PhilHealth, Pagibig and PEZA.

Restaurant / Retail

Adrien of Singapore’s Salad Stop in the the process of expanding his restaurant chain into the Philippines. Read more about his adventure.

Eileen Grey, a business women in the Philippines who has grown The Picture Company into a multi-location success story. Read more about her experience here.

Andrew Masigan talks about his restaurant chain in the Philippines and how he got started. With 14 stores open and 2 more on the way, Andrew has some great experiences to share about operating in the Philippines.

Here is a video we shot a while back with startup founders and other stakeholders as to why they think the Philippines is a great place to do business.

Payroll in APAC: The Philippines

The Payroll in APAC blog posts are (as you might have guessed), a series of blog posts on tax and employer contribution laws in APAC nations. This gives payroll and human resource administrators a high level understanding on what you should know in these countries. Our first post is on the Philippines.

Creditable and Final Withholding Taxes:

The Bureau of Internal Revenue (BIR) is the Philippine equivalent of the IRS in the United States. Companies are required to withhold taxes from employees who are subject to income tax. They are then required to remit these taxes to the BIR.

There are two broad classifications of withholding taxes: Creditable withholding taxes and final withholding taxes. Creditable withholding taxes apply for certain income payments and are creditable against income tax. On the other hand, Final Withholding Taxes are not creditable against withholding taxes. Unlike the former, final withholding taxes are prescribed on royalties and interest incomes.

Social Security Service (SSS)

The SSS is the social security net for Filipinos. It covers a list of contingencies: from disabilities to maternity. All private companies are required to register with the SSS and deduct contributions for their employees. Around 70% of the contribution comes from the employer and 30% from the employee.

Deductions are made from the employee’s salary and remitted to the SSS. Payments are done monthly or quarterly, based on the type of employee. The summary on benefits and schedule on payments is posted here.

PhilHealth

The health insurance institution in the Philippines is called PhilHealth. All private and government institutions are required to register and deduct contributions from their employees’ salaries. PhilHealth covers a number of benefits. The share of the contribution is split between the employer and the employee. The payment dates and contribution schedule are available here.

Pag-IBIG – Home Development Mutual Fund

The final contribution that employers need to be aware of is Pag-IBIG. This institution provides housing finance for Filipinos. Contributions by the employer are equal to 2% of the employee’s salary. The dates for payment are in this link.

These are the 4 major tax and employer contribution laws that Payroll and Human Resource administrators should be aware of. At PayrollHero, we deduct the required contributions and generate payroll for our clients. Here are examples of how we compute BIR taxes, SSS, PhilHealth and Pag-IBIG contributions.

For more information on BIR, SSS, PhilHealth and Pag-IBIG with respect to what forms need to be filled and filing deadlines, make sure to click on the links!

Disclaimer: As always, consult your lawyer or accountant for advice! We are here to help, but your specific situation should be reviewed by a professional with complete knowledge of your situation.

If you are in need of a payroll provider in the Philippines that can provide an end to end solution, then let us know. PayrollHero’s Philippine cloud based payroll platform incorporates, time, attendance, scheduling, HRIS, business intelligence and Philippine payroll in one, easy to use solution.
Cloud Payroll Software for Philippines

Part I: Employee Contributions in the Philippines: BIR and SSS

As an HR admin or payroll admin, it is important to understand how employee contributions work for the social security nets that are in place for Filipinos. There are 4 institutions that you should know about for employee contributions:

  1. Bureau of Internal Revenue (BIR)
  2. Social Security System (SSS)
  3. Philhealth
  4. Home Development Mutual Fund

We will be talking about each of these over the next few blog posts. Let’s start with the first:

Bureau of Internal Revenue

When you are employing someone in the Philippines, the first requirement is to have a Tax Identification Number (TIN) that is registered in the same Revenue District Office (RDO) as your business. The TIN is essential in order to process employee contributions.

  • If the employee does not have a TIN, she must file form 1902 at the RDO where your business is registered.
  • If the employee does have a TIN but is not registered in the same RDO as your business, then she must fill form 1905 and file it at the RDO where her previous employee was registered in order to cancel it.
  • If the employee has a TIN registered at the same RDO as your company’s, then you will have to file form 2305 at the same RDO to update your employee’s information.

Here are all the BIR forms for your convenience.

Social Security Service

All employees in private companies across the country are required to be SSS members. The social security net covers a range of contingencies such as disability, sickness, retirement. Here is a summary of contingencies that the SSS covers. Around 70% of the contribution towards the SSS is made by the employer while 30% is made by the employee. Here is a schedule of contributions based on monthly salary.

First, you need to register your company as an employer in the nearest SSS office by filing Form R1. Along with this, you need to submit a list of employees with their SSS numbers. Note that private companies can only hire employees with SSS numbers. The form that needs to be files is Form R1A. The last form that needs to be submitted is the Specimen Signature Card SS Form L501. With these 3 forms, you will have to submit a sketch of your business address.

You will also have to pay a fee of PHP 160 for an Employer Registration Plate at the SSS or any SSS accredited bank. The list of accredited banks are here (at the bottom of the document). Along with the payment, you need to submit validated Miscellaneous Payment Return – SS Form R6 along with a Special Bank Receipt with this form.

You need to submit Form R1A – the Employment Report – every time a new employee joins. It must be filed within thirty days of the employee receiving the benefits of the coverage. The form must be submitted with the Specimen Signature Card and the 13 digit ER number and business address.

If there are changes to business operations, you need to file an Employer Data Change Request. This way, you will be billed correctly by the SSS.Singapore Payroll

Now that you know what these institutions are and what forms need to be filled, here is our example on how SSS contributions are calculated using PayrollHero software. As a bonus, we also have an example on how BIR taxes are computed.

That’s it for now! Check out our next few posts on Philhealth and Home Development Mutual Fund to find out everything you need to know about employer contributions.

Disclaimer: As always, consult your lawyer or accountant for advice! We are here to help, but your specific situation should be reviewed by a professional with complete knowledge of your situation. 


If you are interested in learning more about PayrollHero for your Philippine business, check out our website at PayrollHero.ph. We would be pleased to chat further about your needs.
Cloud Payroll Software for Philippines

Where does South East Asia rank on Maternity Leave?

baby photoEmployee benefits are a growing concern for human resource (HR) administrators. South East Asia (SEA) lags behind the global average in terms of providing employee benefits. However, when it comes to maternity leave, the situation has been improving.

According to the International Labour Organization’s report: Maternity and paternity at work: Law and practice across the world, there has been a shift towards increasing maternity leave periods that go further than the 14 – week standard suggested by ILO. However the coverage is neither sufficient nor long enough for mothers before they have to get back to work.

SEA ranks in the middle to lower half in terms of length of maternity leave. On average, around 12 to 13 weeks are given as leave.

Singapore: the Ministry of Manpower lays down conditions for eligibility of maternity leave. This leave can be paid by the employer or can be reimbursed by the government. The length of the leave depends on certain conditions. A maximum of 16 weeks is allowed if the following criteria are met:

  1. The child will be a Singapore citizen
  2. The mother is legally married to the father of the child
  3. The mother has worked in the same establishment for a minimum of 3 months.

The last condition is mandatory for eligibility. MoM also takes into account the number of children the mother has to judge eligibility and coverage.

Malaysia: The 1955 Employment Act gives mothers 60 days (8 weeks) of maternity leave as long as the employee has worked in the company for 90 days prior to taking leave. The employer needs to pay the employee in full during leave. There are certain concessions for civil servants. Malaysia does not provide maternity leave for the sixth child and following children. Because of the short leave provided, mothers often work up to the due date in order to spend time with their child during leave.

Indonesia: Three months (or 12 weeks) of paid leave are given to mothers. At least 1.5 months of this leave must be taken after the birth of the child.

The Philippines: Article 133(a) of the Labour Code states that an employee who has worked in the establishment for at least 6 months is entitled paid leave 2 weeks before the due date and 4 weeks after delivery. The employer is required to pay for only the first four children.

Under SSS law, a woman member of the SSS is entitles to maternity benefits. While the employer must pay these benefits to the employers, it can be reimbursed by the SSS. In order to abail the Maternity Benefits, the employee must pay at least 3 monthly contributions within the year before the semester of childbirth.

Thailand: An employee is entitled to 90 days (or 12 weeks) of maternity leave. However, the employer must pay a maximum of 45 days. The remaining 45 days are paid from the Social Welfare Fund. In order to avail payment from the Social Welfare Fund, the employer is expected to make contributions to the Fund for at least 7 months before pregnancy.

Here we have a list of countries and the maternity leave that they offer:

Duration Countries
< 12 weeks ·         Hong Kong

·         Malaysia

·         Papua New Guinea

·         Philippines

·         Taiwan

12 – 13 weeks ·         Cambodia

·         China

·         DPRK

·         East Timor

·         Indonesia

·         Laos

·         Myanmar

·         South Korea

·         Thailand

14-17 weeks ·         Brunei

·         Japan

·         Singapore

>  17 weeks ·         Mongolia

·         Vietnam

Source of Cash Benefits: Historically, Asia has seen a higher percentage of the maternity leave being paid by the employer. However, the trend is moving towards cash benefits coming from mixed sources: from the employer and social security services. To put this in perspective, Europe, a region that has led the way for right of the employee, has always provided cash benefits from social security.

Paternity Leave: Rights offered to fathers are fairly limited. Countries offer just a couple of days of paternity leave as a shared provision between parents. Usually this leave is taken by the mother. Sometimes this leave is not paid. Approximately 28% of countries in Asia provide paternity leave.

Your Guide To Payroll In The Philippines

Here are some of the most frequently asked questions that our client happiness team gets asked about Philippine payroll.

What are the leave benefits that an employee is entitled to under existing laws?

How to compute Lates/Tardiness and absences

What do you mean by total working days per year?

How to compute the 13th month pay?

What are the legal non taxable allowance?

What are de minimis benefits?

How to compute Philippine BIR taxes.

What is taxable income?

Are minimum wage earners exempt from paying income tax?

How much is the minimum wage in Metro Manila?

How to compute for Night Differential?

How to compute Holiday, Rest day pay?

How much is my SSS, Philhealth, and HDMF (Pag-Ibig) deductions?

How do I compute my hourly rate?

How to compute overtime pay?

How do I compute my Daily rate?

Why do business in the Philippines, here is a quick video on the topic:

 

 

 

What is the SSS? (Philippines)

PayrollHero is hiringWhat is SSS in the Philippines?

The Philippine Social Security System (SSS) is a social insurance program for employees in the Philippines. Founded in 1957, the SSS is a government agency that provides retirement and health benefits to all paid up employees in the Philippines. Members of the SSS can also make ‘salary’ or ‘calamity’ loans. Salary loans depend on the monthly salary of the employee. Calamity loans are for such times when there is a calamity that has been so declared by the government, in the area where the SSS member lives, such as flooding, earthquake and natural disasters.

Philippine Federal Government Employees don’t contribute to SSS instead they have their own agency called the Government Service Insurance System or GSIS.

More details on the SSS in the Philippines.

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Are you setting up a new business in the Philippines? Check out PayrollHero.ph for your time, attendance, scheduling, HRIS, analytics and Philippine payroll needs.