Opening A Business for Foreigners Part 3: SSS, Pag-Ibig and Philhealth

So far, we have discussed the initial steps on how to open a business here in the Philippines, focusing on obtaining a certificate from the Securities and Exchange Commission (SEC), Mayor’s Permit or business permit, and registering with the Bureau of Internal Revenue (BIR). In this article, we will discuss the next steps which will focus on your company’s backbone and important asset – your employees.

Quoting the renowned and serial business magnate, Richard Branson had said, “if you take care of your employees, they will take care of your customers”. This quote is true, especially when it comes to the Filipino workforce. When we feel that we are properly taken care of by the employers, we will definitely go the extra mile to reach and even exceed our target metrics and workload.

To ensure that the employees are reaping the fruits of their labor, the government has mandated 3 agencies to guarantee this vision, the Social Security System (SSS), Home Development Mutual Fund (commonly known as Pag -Ibig) and Philhealth.

 

What is Social Security System (SSS)

Established in 1954, SSS is an entity that handles the social insurance program in the country for those who are working in the private sector. Employers are mandated to contribute a portion of their employee’s salary to their respective SSS fund, which is 7.37% should be shouldered by the employer and 3.63% will be from the employee,  provided that the employee is not over 60 years old. By law, employers must be registered with SSS upon the start of their operations. SSS members can avail of the following benefits:

 

Sickness:

A daily cash allowance paid for the number of days when a member is unable to work due to sickness or injury.

Maternity:

A daily cash allowance granted to a pregnant member who is unable to work due to childbirth or miscarriage.

 

Disability:

A cash benefit granted either as a monthly pension or a lump sum amount to a member who becomes permanently disabled, either partially or totally.

 

Retirement:

A cash benefit granted either as a monthly pension or a lump sum amount to a member who can no longer work due to old age.

 

Death:

A cash benefit granted either as a monthly pension or a lump sum amount to the beneficiaries of a deceased member.

 

Funeral:

A cash benefit that is given to whoever paid for the burial expenses of the deceased member.

 

Employee Compensation Program:

Cash benefits, medical and rehabilitation services for temporary sickness, assistance to work-related injuries or injury, and death.

 

Salary:

A cash loan granted to a member provided that he or she met the qualifying conditions.

 

What are the requirements?

1. Completely filled out SSS R1 application form
2. Completely filled out SSS R-1A application form
3. Filled out SSS – 501 form for authorized signatory
4. For employees with no SSS number, you may ask them to fill out an application form at sss.gov.ph website.
5. Photocopy of SEC certificate, Articles of Incorporation and By-Laws.
6. Photocopy of Mayor’s Permit and BIR certificate of Registration.

 

What are the steps?

1. Submit all requirements to the Corporate Accounts Division for evaluation.
2. For authorized representative, prepare a letter of authorization.
3. Wait for the release of the SSS certificate and log in details for their online system within 1 week time.
4. SSS should be the first thing you need to accomplish in the employee’s benefits section since the other agencies will use this as a reference in your application.

 

Home Development Mutual Fund (Pag Ibig)

 

The Home Development Mutual Fund, or most popularly known as “Pag-Ibig” fund is a government-owned corporation who is in charge of the national savings program, focusing particularly in affordable financing option for housing programs. Similar to SSS, it is mandatory for the employers to remit 2% of their monthly salary to their employee’s Pag-Ibig fund. Non Compliance will result in corresponding penalties. Here’s an excerpt of the memorandum:

1. Refusal or failure without lawful cause or with fraudulent intent to comply with the above provisions, particularly with respect to the registration of employees, collection and remittance of employee contributions as well as the required employer counterpart, or the correct amount due, within the time set herein, shall constitute an offense punishable by a fine of not less than, but not more than twice, the amount involved or imprisonment of not more than six (6) years; or both such fine and imprisonment at the discretion of the court. These shall be apart from the civil liabilities and/or obligations of the offender or delinquent employer.

2. When the offender is a corporation, the penalty shall be imposed upon the members of the governing board and the President or General Manager without prejudice to the prosecution of related offenses under the Revised Penal Code and other laws, revocation and denial of operating rights and privileges in the Philippines and deportation when the offender is a foreigner.

 

What are the benefits:

 

Housing Loan:

Members can avail of the affordable housing loan assistance with an interest rate of 4.5% for a Php 450,000 loan, with payment terms up to 30 years. The maximum loan that a qualified member can avail is up to Php 6 million.

 

Short Term Loan

The short-term loan option for Pag Ibig are classified into 2, which are:

 

1. Multi-purpose loan: provide financial assistance to members for house repair, minor home improvement, home enhancement, tuition or educational expenses, health and wellness, livelihood; or other purposes.
2. Calamity loan: as the name implies, members that were affected by calamities or natural disasters can loan up to 80% of their total accumulated value, subject to approval.
3. Provident Savings: since Pag-Ibig fund is a member’s savings, it can also be withdrawn at the maturity date.

 

What are the Requirements:

1. Photocopy of SEC certificate, Articles of Incorporation and By-Laws.
2. Photocopy of Mayor’s Permit and BIR certificate of Registration.
3. Employer’s Data Form (EDF [HQP-PFF-002])
4. Specimen Signature Form (SSF [HQP-PFF-003])
5. SSS Certification  and a copy of SSS form R1 and R-1A

 

What are the Steps:

1. Submit all requirements for evaluation at the corporate accounts division.
2. The certificate can be released in less than 1 week.

 

Philippine Health Insurance Corporation (Philhealth)

Philhealth is the arm of the Department of Health assigned to provide a national health insurance coverage to Filipinos since its inception in 1995. Employers are required to contribute 2.75% of their employee’s monthly salary to Philhealth.

 

What are the requirements:

1. Completely filled out form ER2 form.
2. Completely filled out ER1.
3. Copy of SEC Registration, Mayor’s Permit, BIR and SSS certificate.

 

What are the Steps:

1. Submit all requirements to the corporate accounts division.
2. After evaluation, the certificate can be released within the day. However, it is only in their Manila and Caloocan offices that they can issue certificates.

 

It is important that we take care of our employees like our family since, without them, our business would not possible to thrive, let alone survive. Should you require assistance or even some sound advice, get in touch with our consulting team now, since you only have 30 days to process all the necessary requirements to make your business fully-operational!