MANILA — Employees who are illegally dismissed are entitled not only to full backwages but also to the remittance of their Social Security System (SSS) contributions for the period covered by their backwages, the Supreme Court (SC) has ruled.

In a decision penned by Associate Justice Maria Filomena D. Singh, the SC Third Division held that an employer’s obligation to remit SSS contributions continues during the period an employee is illegally dismissed.

The case involved four employees of Lopez Sugar Corporation (LSC) who were illegally dismissed and later ordered reinstated with full backwages.

After the ruling became final, the employees asked LSC to remit their SSS contributions covering the period for which they received backwages so they could qualify for retirement benefits.

LSC refused, arguing that under the Social Security Act of 1997, its obligation to pay SSS contributions ended when the employees were separated from employment, regardless of whether the dismissal was lawful.

The Social Security Commission (SSC) rejected the company’s position and ordered LSC to pay the contributions. The Court of Appeals later affirmed the ruling.

The SC upheld the lower tribunals’ decisions.

Under Article 294 of the Labor Code, employees who are illegally dismissed are entitled to full backwages and other benefits. The SC explained that an illegally dismissed employee is considered to have remained employed during the period covered by the backwages.

As a result, the employee remains entitled to employment-related rights and benefits that would have accrued during that period, including SSS coverage.

“Thus, LSC remained obligated to remit the employees’ SSS contributions for the period covered by their backwages,” the court said.

The SC also imposed a 3% monthly penalty on LSC for failing to remit the required contributions, computed from the date the contributions became due until full payment.