Employer Contribution in Thailand
Find out everything you need to know about employer contribution in Thailand. Brush up on the pros, cons, and more.
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In the Philippines, employers play a crucial role in ensuring employee welfare through mandatory employer contributions to government programs such as the Philippines Social Security System (SSS), the Philippines Health Insurance Corporation (PHIC), and the Home Development Mutual Fund (Pag-IBIG). These contributions collectively safeguard employees’ health, financial stability, and retirement security.
Under the Social Security Act of 2018 (Republic Act No. 11199), all private-sector employers are legally required to register their employees with the SSS and remit monthly contributions. This framework underscores the Philippines’ commitment to social protection, labor welfare, and payroll compliance.
For international businesses expanding into the Philippines, understanding these regulations is essential. Partnering with an Employer of Record (EOR) Philippines provider such as Slasify simplifies the process by ensuring full compliance with local payroll and tax regulations while managing all mandatory contributions on behalf of the employer.
Employer Contribution Rates & Calculation Rules
Employers in the Philippines are required to remit monthly contributions for both local and expatriate employees, encompassing allocations to the Philippines Social Security System , (SSS), PHIC, and Pag-IBIG.
Beyond ensuring coverage, understanding the SSS contribution sharing scheme is essential for payroll accuracy. The monthly cost is legally split between the employer (approx. 9.5%) and the employee (approx. 4.5%) based on the government-mandated salary bracket.
Understanding the Calculation: Monthly Salary Credit (MSC)
It is important to note that contributions are not always calculated as a flat percentage of the employee's exact gross salary. Instead, they are based on the Monthly Salary Credit (MSC) determined by the government.
The contribution rate is applied to the specific MSC bracket that corresponds to the employee's salary range. Since each agency sets a Maximum MSC (Ceiling), the contribution amount stops increasing once an employee's salary exceeds this cap.
Employer Payroll Contribution (2026 update)
| Type of Contribution |
Contribution for Locals | Contribution for Expatriates |
| Regular SS | 9.5% 10% | 9.5% 10% |
| Mandatory Provident Fund (WISP) | 9.5% 10% | 9.5% 10% |
| Employee’s Compensation (EC) | PHP 10 (or PHP 30 if monthly salary credit is above PHP 14,500) | PHP 10 (or PHP 30 if monthly salary credit is above PHP 14,500) |
| Philippine Health Insurance Corporation (PHIC) | 2% | 2% |
| Home Development Mutual Fund (Pag-IBIG) |
2% (Capped at max contribution) |
– |
Employee Payroll Contribution (2026 update)
| Type of Contribution |
Contribution for Locals | Contribution for Expatriates |
| Regular SS | 4.5% 5% | 4.5% 5% |
| Mandatory Provident Fund (WISP) | 4.5% 5% | 4.5% 5% |
| Philippine Health Insurance Corporation (PHIC) | 2% | 2% |
| Home Development Mutual Fund (Pag-IBIG) | 1%–2% | – |
Critical Compliance Note: Calculating Contributions Correctly
Employers are legally mandated to ensure that all government contributions (SSS, PhilHealth, Pag-IBIG) are accurate and up to date. However, a common payroll error is simply summing up contribution percentages to estimate costs.
Do not calculate total contributions by adding flat percentages.
- Different Caps Apply: SSS, PhilHealth, and Pag-IBIG each have different Maximum Monthly Salary Credits (MSC).
- The "Effective Rate" Drops: For high-income earners, the effective contribution percentage decreases as their salary exceeds these statutory caps.
Slasify Pro Notes
Using a flat percentage total will lead to incorrect remittances. Late or inaccurate payments may trigger post-payment adjustments (PPA), payroll reconciliation issues, and potential penalties under Philippine labor laws.
Want to legally hire local talent in the Philippines? Click the link to explore our Philippines hiring guides, or schedule a free one on one consultation with us.
The Philippines Social Security System (SSS)
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Established in 1957, the Philippines Social Security System (SSS) remains a cornerstone of private sector employee protection. The system offers a comprehensive range of benefits funded through employer contributions and employee deductions.
|
Benefit Type |
Description |
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Retirement |
Available for members aged 60+ with at least 120 months of contributions. Benefits can be received as a pension or a lump sum. |
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Disability |
Monthly pension for members with 36+ months of contributions before disability; otherwise, a lump-sum benefit. |
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Sickness |
Provides 90% of the daily salary for at least three days of confinement, given three months of contributions within the last year. |
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Maternity |
Female employees receive 105 days of paid leave, reimbursable through SSS. |
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Death & Funeral |
Beneficiaries receive a pension or lump-sum benefit. |
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Unemployment |
Cash assistance for involuntarily separated employees who meet contribution requirements. |
Furthermore, the SSS oversees the Employees’ Compensation Program (ECP), which provides additional compensation to workers who experience illness, accidents, or fatalities during work-related activities. This program ensures that employees receive double compensation, offering support and protection for workplace-related incidents.
“We’ve heard the clamor for higher pensions loud and clear. The SSS is the solution.”
— Rolando Ledesma Macasaet, President and CEO, Philippines Social Security System (SSS)
Key takeaway:
Timely reporting and accurate SSS payment contribution ensure continued access to SSS benefits and compliance with Philippine labor standards.
Philippine Health Insurance Corporation (PHIC)
The Philippine Health Insurance Corporation (PHIC) manages the National Health Insurance Program (NHIP), which provides affordable healthcare services to all Filipinos. Contributions are shared between the employer and employee, forming part of the mandatory employer contribution system. The benefits under the NHIP are comprehensive and include:
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In-patient Benefits |
Covers diagnostic or therapeutic procedures, and other hospital charges |
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Out-patient Benefits |
Covers medical consultations, diagnostic tests, and preventive health services |
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Z Benefits |
High-cost medical services that are not typically covered by regular health insurance plans, i.e. cancer and bypass surgery |
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*SDG-related benefits |
Malaria, HIV-AIDS, Animal bite, etc. |
*Refers to the United Nations’ Sustainable Development Goals.
"We've heard the clamor for higher pensions loud and clear. The SSS is the solution."
— Robert Joseph M. De Claro, President and CEO of the Social Security System (SSS)
Key takeaway:
Consistent employer contribution to PHIC ensures that employees can access necessary healthcare while promoting a healthy, productive workforce.
Home Development Mutual Fund (Pag-IBIG)
The Home Development Mutual Fund (Pag-IBIG), also known as the Pag-IBIG Fund, provides employees with housing and savings opportunities. It is mandatory for all Filipino employees under 60 who are covered by the Philippines Social Security System SSS.
Key takeaway:
Accurate and timely employer contribution to Pag-IBIG allows employees to enjoy long-term benefits such as affordable housing loans and short-term financial assistance.
Beyond Contributions: The Mandatory 13th Month Pay
In addition to monthly social contributions, employers in the Philippines must comply with Presidential Decree No. 851, which mandates the payment of 13th Month Pay. Unlike a discretionary Christmas bonus, this is a statutory requirement for all rank-and-file employees who have worked for at least one month during the calendar year.
- How it is Calculated:It is equivalent to 1/12 of the employee’s total basic salary earned within a calendar year. It generally does not include allowances and monetary benefits unless stated in the employment contract or company policy.
- Payment Deadline:Employers must pay the 13th Month Pay not later than December 24 of each year.
- Pro-Rating Rule:Employees who resign or are terminated before the end of the year are still entitled to a pro-rated 13th Month Pay based on the number of months worked.
Compliance Risk:
Failure to pay the 13th Month Pay is a violation of labor laws and can lead to administrative complaints filed with the Department of Labor and Employment (DOLE). Global employers must ensure this liability is accrued throughout the year to avoid year-end cash flow issues.
Slasify: Simplifying Payroll and Compliance in the Philippines
Managing multi-agency payroll compliance can be challenging for global employers unfamiliar with Philippine regulations. As a trusted Employer of Record (EOR) Philippines provider, Slasify simplifies payroll management and ensures compliance with all local labor laws.
Slasify’s global payroll solution automates the entire lifecycle: from calculating the correct SSS contribution sharing amounts to finalizing the SSS payment contribution remittance to government agencies.
By streamlining these complex processes, including post-payment adjustments (PPA) and reconciliation, our system minimizes manual errors and guarantees full compliance with Department of Labor and Employment (DOLE) requirements.
FAQ for Employer Contribution and the Philippines Social Security System (SSS)
Q1. What is the Philippines Social Security System (SSS), and why is it important for employees?
The Philippines Social Security System (SSS) is a government-mandated social insurance program designed to provide financial protection for employees and their families. It offers benefits covering retirement, disability, sickness, maternity, death, funeral, and unemployment. Regular and accurate employer contribution to SSS ensures continuous access to these benefits and compliance with national labor laws.
Q2. How are employer contributions to the Philippines Social Security System (SSS) calculated for local and expatriate employees
The employer contribution to the Philippines Social Security System SSS is based on the employee’s monthly salary credit, following the official SSS contribution schedule. For local employees, the employer share follows the SSS contribution schedule based on the MSC.
It is crucial not to estimate the cost as a flat 23% total, as the effective rate varies significantly depending on the salary bracket and statutory caps. Contributions for PhilHealth and Pag-IBIG are calculated separately with their own respective ceilings. Expatriates contribute slightly less since the Pag-IBIG Fund is not mandatory for them.
Q3. What benefits are covered under the Philippine Health Insurance Corporation (PHIC)?
The Philippine Health Insurance Corporation (PHIC) administers the National Health Insurance Program (NHIP), providing access to affordable healthcare for all Filipino employees. Benefits include inpatient coverage, outpatient consultations, diagnostic and preventive services, and high-cost medical treatments (Z benefits) such as for cancer and heart surgery. Consistent employer contribution to PHIC ensures continuous coverage and compliance with the Universal Health Care Act (Republic Act No. 11223).
Q4. Who is required to contribute to the Home Development Mutual Fund (Pag-IBIG)?
Under the Pag-IBIG Fund Law (Republic Act No. 9679), all Filipino employees under 60 who are registered with the Philippines Social Security System SSS are required to make Pag-IBIG contributions, which include a corresponding employer contribution.
These contributions enable employees to access housing loans, short-term loans, and savings programs that promote long-term financial stability. Expatriates are generally excluded unless they choose to register voluntarily.
Q5: What happens if an employer doesn't pay SSS contributions on time?
Late remittances are taken very seriously. Under the Social Security Act of 2018 (R.A. 11199), employers who fail to remit contributions by the deadline face a penalty of 2% per month on the unpaid amount from the date it was due until it is paid.Furthermore, if an employer fails to register employees or deduct contributions, they may face criminal liability, including fines of up to PHP 20,000 and imprisonment ranging from 6 to 12 years.
Q6: Can employers deduct the full SSS contribution amount from the employee's salary?
No, this is strictly prohibited. The SSS contribution is designed to be shared. The employer must pay their designated share (approx. 9.5%) and can only deduct the employee’s specific share (approx. 4.5%) from their salary. Deducting the employer’s share from the employee’s wages is illegal and constitutes a violation of the Social Security Law.
See how simplify contractor management with Slasify efficient solutions for compliance, payments, and onboarding.
Q7: Are independent contractors required to have SSS coverage?
Legally, independent contractors and freelancers are classified as "Self-Employed" or "Voluntary" members. Therefore, the client (hiring company) is not required to pay the employer share of SSS contributions for them. However, proceed with caution: If a contractor is misclassified and DOLE determines an employer-employee relationship exists (based on control, work hours, etc.), the employer will be retroactively liable for all unpaid SSS contributions plus penalties.
Q8: How can employers correct SSS contribution errors?
If an error occurs (e.g., incorrect posting of payments or wrong employee details), the employer must file a Request for Adjustment with the SSS. This often involves submitting the R-5 Form (Employer Contributions Payment Return) amendment or reconciling records via the My. SSS portal.Since this process can be bureaucratic and time-consuming, many foreign employers prefer using an Employer of Record (EOR) like Slasify to handle disputes and reconciliations directly with government agencies.
Q9. How can Slasify help employers manage payroll, compliance, and contributions in the Philippines?
Slasify provides a fully compliant payroll and employer contribution management solution for businesses operating in the Philippines.
The platform automates remittances to SSS, PHIC, and Pag-IBIG, manages post-payment adjustments (PPA), ensures timely tax filing, and streamlines payroll reconciliation.
With Slasify, employers can stay compliant with Philippine labor and social security laws while ensuring employees receive their rightful benefits accurately and on time.