Payment Guidelines for Contractual Employees' Benefits

The circular is issued to implement statutory compulsory coverage and mandatory government shares involving GSIS Act of 1997 (Republic Act No. 8291), including Section 3 (Compulsory Membership).
Section 3 of Republic Act No. 8291 mandates compulsory GSIS membership for all employees receiving compensation who have not reached compulsory retirement age, subject to statutory exemptions.
The circular cites RA 8291 Implementing Rules and Regulations, Section 2.1.2, which clarifies that contractuals and other employees with an employee relationship with an employer are covered under compulsory GSIS membership.
The circular is issued in relation to Republic Act No. 7792, which makes PAG-IBIG Fund coverage mandatory for employees covered by SSS and GSIS and their respective employers.
The circular also aligns with statutes requiring mandatory health and compensation insurance for contractuals, including RA 7875 (health insurance) and PD 626 (employment compensation insurance benefits).
The circular is further tied to fiscal authorization rules in Section 44 (Employment of Contractual Personnel) of RA 8745 (FY 1999 General Appropriations Act), which limits compensation inclusions for contractual personnel to government-determined caps.

The circular reconciles Republic Act No. 8291, Republic Act No. 8745, and other pertinent laws on how to pay the government share of premiums for RLIP, ECIP, MEDICARE, and PAG-IBIG for contractual personnel.
The circular sets policies on payment of government statutory expenditures under Personal Services for contractual personnel.
The circular prescribes guidelines for the grant and computation of premium pay to contractual personnel, consistent with fiscal limitations.

“Contractual personnel” are those hired in accordance with a specific contract for a specific period with definite expected output, to undertake a particular work or project.
Contractual personnel must have an employee-employer relationship with the hiring agency, created by the hiring arrangement.
The circular covers “government statutory expenditures on Personal Services” which are the government share of premiums for:
- RLIP (retirement and life insurance),
- Medicare (health insurance),
- ECIP (employees’ compensation insurance),
- PAG-IBIG.
The circular treats the government share as Personal Services expenditures for the benefit of contractual employees.

Payment of the government share of premiums on RLIP, ECIP, MEDICARE, and PAG-IBIG for contractual personnel shall be effective January 1, 1999.
For January 1, 1999, the required government share is paid out of the 20% premium granted under Section 44 of the 1999 GAA.
No additional funds are released by the DBM for the purpose of paying the government share required under the circular.
The premium pay to be received by a contractual employee must be adjusted net of the government statutory expenditure on Personal Services consistent with the January 1, 1999 rule that the government share comes from the 20% premium.
The circular requires that the employee’s share for RLIP, MEDICARE, and PAG-IBIG is paid by the individual contractual employees.
Both employee and government shares must be remitted by the agency directly to the GSIS within the prescribed period under Republic Act No. 8291.

The conditional requirements governing the grant of premium pay for contractual personnel apply in succeeding years when the General Appropriations Act provides or authorizes the grant of premium pay for contractual personnel.

The circular’s premium-sharing framework applies upon the start of January 1, 1999 for the required government share of premiums on RLIP, ECIP, MEDICARE, and PAG-IBIG.
The circular takes effect immediately, meaning compliance with its payment-and-remittance framework is required from issuance forward.
The circular adopts no separate funding source beyond the 20% premium in the 1999 GAA for the government statutory expenditures under Personal Services.