Demystifying Statutory Benefits: Employer of Record Philippines

Executive summary

• Three contributions, three logics. SSS funds pensions and life-event benefits, PhilHealth funds health coverage, Pag-IBIG funds housing and savings. They are not interchangeable and not a single tax.
• The employer adds its share on top of salary. The employee's share is deducted from pay; the employer's share is an additional cost the company carries.
• The bases are capped, so the cost is regressive. Because all three contributions cap out, the employer's statutory cost falls as a share of salary as pay rises, from roughly 13% at ₱20,000 to about 4% at ₱150,000.
• Non-remittance is a crime, not a billing error. Deducting an employee's share and failing to remit it carries criminal liability, which is precisely the exposure an EOR absorbs.

The Three Mandatory Contributions, and What an Employer of Record Philippines Handles

The structure is consistent across all three: a rate is applied to a salary base, the result is split between employer and employee, and the employer remits the combined amount to the agency every month. What differs is the rate, the base, and the ceiling. The SSS uses a bracketed Monthly Salary Credit that tops out at ₱35,000; PhilHealth takes a straight percentage of basic salary up to ₱100,000; Pag-IBIG caps its base at a modest ₱10,000. The employer's job is to apply the current tables correctly, deduct the employee portion, add its own, remit on time, and file the supporting reports. Part of why the system reads as opaque from outside is structural rather than mathematical: three separate agencies, three registration numbers per employee, three contribution schedules, and three electronic portals that do not talk to each other. The amounts are neither large nor mysterious once laid side by side; the friction is in the coordination. Enter a salary below to see exactly how the three contributions break down between the two sides.

Section I — SSS (Republic Act No. 11199)

The Social Security System is the broadest of the three. It replaces income during the contingencies that interrupt a working life: sickness, maternity, disability, retirement, death, and, since the Social Security Act of 2018, involuntary unemployment. That unemployment benefit is a relatively recent addition to the Filipino safety net, paying a cash amount for up to two months to qualifying members who lose their jobs through no fault of their own. The 2026 contribution is 15% of the Monthly Salary Credit, the final step in the schedule that R.A. 11199 set in motion, and it is split with the employer carrying 10% and the employee 5%. The Monthly Salary Credit is not your exact salary; it is a bracketed figure that moves in ₱500 steps between a ₱5,000 floor and a ₱35,000 ceiling, which is why every SSS computation snaps to a bracket. On top of the 15%, the employer alone pays a small Employees' Compensation premium, ₱10 or ₱30 depending on the bracket, which funds work-related injury and illness coverage at no cost to the worker. For higher earners, the portion of the contribution above a ₱20,000 MSC is channelled into a mandatory provident fund that supplements the basic pension.

Section II — PhilHealth (Republic Act No. 11223)

PhilHealth administers the national health insurance program, and under the Universal Health Care Act every Filipino is a member by default. Its arithmetic is the simplest of the three: a flat 5% of monthly basic salary, divided evenly so that employer and employee each carry 2.5%. The salary base runs from a ₱10,000 floor to a ₱100,000 ceiling, which puts the contribution between ₱500 and ₱5,000 in total, or ₱250 to ₱2,500 on each side. The premium funds inpatient and outpatient coverage, diagnostic services, and high-cost treatment packages for conditions such as cancer and heart disease. For an employer, the appeal of the flat-percentage design is predictability; for the worker, membership is the entry point to subsidised care across the public and accredited private systems.

Section III — Pag-IBIG (Republic Act No. 9679)

The Home Development Mutual Fund, known universally as Pag-IBIG, is a national savings and housing-finance scheme. It is the smallest contribution by peso amount because its base is deliberately low: 2% from each side on a maximum fund salary of just ₱10,000, which caps each share at ₱200 a month regardless of how much more the employee earns. Modest as it is, the fund is consequential for members. It underwrites some of the most accessible home-financing in the country, pays annual dividends on members' savings, and offers a voluntary higher-yield savings program on top of the mandatory contribution. For workers earning ₱1,500 or less the employee rate halves to 1%, though the employer's 2% holds.

Section IV — How Zero-Ten Park Philippines Handles Compliance

Knowing the rates is the easy part. The work is in doing it correctly, every month, for every employee, while the tables change. As the legal employer, Zero-Ten registers each worker with all three agencies, computes the contributions against the current schedules, deducts the employee share from payroll, adds the employer share, remits the combined total by each agency's deadline, and files the monthly and annual reports that document it. Those deadlines do not align tidily: each agency runs its own schedule and its own electronic filing system, and the contribution tables themselves shift as the agencies and Congress revise them, so every computation has to be re-run whenever a schedule changes mid-year. The remittance itself is where the real exposure sits. Deducting an employee's share from their pay and then failing to remit it to the agency is not a clerical slip; it is a criminal offence under the governing statutes, with penalties that fall on the employer and its officers. An outsourcing Philippines arrangement through an EOR moves that liability, and the administrative burden behind it, off your books entirely. You fund the contributions; Zero-Ten carries the obligation to get them right and the consequence if they are not. Because an EOR runs this same process across an entire client base, the cost of the expertise, the filing infrastructure, and the constant monitoring of rate changes is spread thin, which is part of why offloading it tends to be cheaper than building the same capability in-house for a small team.

Frequently Asked Questions