When an employee wins an illegal dismissal case, most people think of backwages and reinstatement or separation pay. A Supreme Court ruling released in 2026 confirms that the employer’s obligations go further than that: it must also remit the employee’s Social Security System (SSS) contributions for the entire period covered by the backwages.
The case
In a decision dated February 5, 2026 and written by Associate Justice Maria Filomena D. Singh, the Court’s Third Division ruled against employer LSC in a case brought by a group of employees led by Perrin. The decision was released to the public in August 2026.
The employees had earlier been declared illegally dismissed by the NLRC, the Court of Appeals, and the Supreme Court. After that ruling became final, they asked the company to remit their SSS contributions for the period covered by their backwages, so they could qualify for SSS retirement benefits.
The company refused. It argued that under the Social Security Act of 1997, its duty to pay SSS contributions ended when the employees were separated from employment, regardless of whether the dismissal was legal or illegal.
How the case was decided
- The Social Security Commission (SSC) rejected the employer’s argument and ordered it to pay. It reasoned that because the employees were illegally dismissed, the employer-employee relationship is deemed to have continued during the period they were prevented from working.
- The Court of Appeals affirmed.
- The Supreme Court agreed.
The Court relied on Article 294 of the Labor Code, which entitles an illegally dismissed employee to full backwages and other benefits. Since the dismissal was illegal, the law treats the employment as continuing during the backwage period, and the employer’s obligation to remit SSS contributions continues with it.
The Court also imposed a penalty of 3% per month on the employer for failing to remit the contributions. The penalty runs from the date the contributions became due until full payment.
Why this ruling matters
For employers
- Your exposure in an illegal dismissal case is bigger than backwages. Include SSS contributions, and potentially other mandatory contributions, in your risk assessment and settlement calculations.
- The penalties add up. A 3% monthly penalty on unremitted contributions can quickly increase the total liability, especially in cases that take years to resolve.
- Settle with the full picture in mind. When negotiating settlements or computing judgment awards, account for government contributions to avoid further disputes.
For employees
- If you win an illegal dismissal case, your SSS record should not have a gap for the period you were unlawfully kept from working.
- If your employer refuses to remit, you may bring the matter before the Social Security Commission.
- Check your SSS contribution record after a final judgment, because missing contributions can affect your retirement and other benefits.
Related articles
- Supreme Court: Employers Cannot Force Workers to Retire Before 65 Without Their Consent
- Supreme Court: Forcing an Employee to Resign Under Threat of Criminal Charges Is Illegal Dismissal
- See all Legal Updates
How Recososa Law Firm can help
Our Labor and Employment Law and Litigation teams help employers assess the full cost of labor disputes and stay compliant. We also help employees make sure judgments in their favor are fully carried out. Contact us for advice on your case.
This article is a simplified summary of a reported Supreme Court decision for general information only. It is not legal advice. Read the full text of the decision and consult a lawyer about your specific case.