The Social Security System deduction reflected on employee pay slip every payday may seem like a necessary inconvenience in order to comply with government labor regulations.
The total amount of an employee’s SSS contribution is computed as 11% of the monthly salary (not more than Php16,000), but this is actually shared between the employee and the employer - the employee shoulders 3.63% while the employer pays for the remaining 7.37%.
The SSS uses a table to determine the amount that should be deducted from an employee based on his monthly income.
Source: SSS website
For instance, a person earning Php10,000 will have a contribution of Php1,100.
Out of this amount, only Php363.30 will be paid by the employee. The remaining Php736.70 (+ Php10 for employee compensation or EC fee) will be shouldered by the employer.
This computation can become more complex on the end of employers as the company grows bigger and as salaries adjust every now and then because of promotions and other changes that necessitate salary adjustments. To help make the computations easier and simpler, employers can choose to use payroll software such as Sprout Payroll.
This will automate SSS computation while providing employees with a pay slip format that they can easily understand.