31 May 2019, 07:00 — 6 min read
Beyond giving fair pay for a day’s work, the government mandates every employer to provide benefits to their employees. These benefits cover the basic necessities, such as health and shelter, and a way to have money for retirement.
Here’s a checklist for hiring employees:
1. Bureau of Internal Revenue (BIR)
Processing timeline: Roughly 1-2 weeks with follow-up; one-time basis
Contribution timeline: None
The Bureau of Internal Revenue, or better known as BIR, ensures that each employer pays the correct tax, and that each employee’s taxable income is given to the government as well. This is why one of the first new employee forms that an employee needs to fill up is for a Tax Identification Number (or TIN) in the Revenue District Office (or RDO) where your company is registered in, or for the employee to transfer their files from their previous employer’s RDO to your company’s RDO.
For those getting a new TIN, the employee needs to fill out the BIR Form 1902 and submit it to your company’s RDO. If the employee has a TIN already but is in a different RDO than your company, they need to file a BIR Form 1905.
Failure to transfer RDOs or get a TIN for your employee might put you in hot water with the BIR for tax evasion.
2. Social Security System (SSS)
Processing timeline: Same day
Contribution timeline: Monthly
Think of the Social Security System, or SSS, as a savings account. Each monthly contribution is a way for you to save just in case it’s time for retirement; you get sick or disabled; or money for your family when you pass away.
If your new hire isn’t registered with SSS yet, they have to register in the same SSS office where your company is registered. For those with an existing SSS number, you can file for the Form R1A, which is a list of your new employees.
Employees are deducted 30% of their monthly salary for the contribution, while you, the employer, cover the rest of the 70%. All payments and contributions can be done online via their website, along with a monthly report given to the SSS of the contributions of their employees.
If an employer fails to remit their employees’ SSS contributions, fines and jail time are in the horizon — to the tune of PHP5,000 to PHP20,000, remittance of all SSS contributions that were lacking, a penalty, and possible prison time of at least six years.
Processing timeline: Same day if done online
Contribution timeline: Monthly
PhilHealth is the healthcare system of our country. The monthly contributions are based on the employee’s monthly salary, and the coverage includes specific but basic procedures, surgeries, inpatient care, medicines, and the like.
Take note that not everything is covered by PhilHealth though, and there’s such a thing as “balance bill,” wherein the coverage is partly covered by PhilHealth, and the rest of the bill will be covered by the employee.
Each new employee will need to fill out a Philhealth Member Registration form or (PMRF), whether they’re a new or existing member. Employers will need to declare new employees to PhilHealth as well by filling out the PhilHealth Report of Employee Members, or the Er2.
If you fail to give the contributions, or deduct the contributions, and don’t remit it to PhilHealth, there are corresponding fines and jail time. While the fines aren’t as painful — PHP500 to PHP1,000 for every employee — the jail time is from around six months to a year. So, never forget about paying on time by doing it online here.
Processing timeline: same day if done online
Contribution timeline: monthly
The Home Development and Mutual Fund, or better known as Pag-IBIG, is a monthly contribution that is set aside to help finance your employee’s home. An employee can choose to withdraw contributions after a certain number of years. Loans are also given to members that can be paid within a time frame of 30 years.
Prior to registering your new employee with the Pag-IBIG fund, they have to be an SSS member first. After settling that, they can register online here, and you can register them here. Monthly contributions is around PHP100 per employee, depending on their salary range.
Failure to remit Pag-IBIG contributions that you've deducted from your employees will incur a penalty of 1% per day of delay.
While most of these paperwork are already payable online or via handy apps, being a small business owner already takes up so much of your hours. It might be best to delegate all the typical new hire paperwork and monthly payments to an accountant or a trusted senior staff.
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Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views, official policy or position of GlobalLinker.
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