Lump-sum compensation for employers upon garnishment of wages
On 1 January 2022, an amendment to the Enforcement Procedure Code entered into force, addressing multiple enforcement proceedings against a single debtor and amending the rights of parties to the proceedings. Apart from substantially improving the position of debtors in enforcement proceedings, the amendment also affects their employers, as they gain new rights and responsibilities.
The processing and payment of wages of employees who are subject to enforcement proceedings/garnishment of wages is associated with an increased administrative burden: sometimes, employers even must hire another payroll accountant to deal with all the related paperwork. The legislator has now responded to these increased costs with the above-mentioned amendment, stipulating the employers’ right to lump-sum compensation/reimbursement of costs of CZK 50 per calendar month per each employee subject to enforcement proceedings/garnishment of wages. The lump-sum compensation constitutes the cost of the garnishment of wages and is paid to the employer by the employee as the debtor in the enforcement proceedings. The employer shall deduct the amount directly from the employee’s wages. Within the enforcement proceedings, the employer shall satisfy their receivable together with other receivables from the first third. Importantly, where the employer carries out garnishment of wages to satisfy several claims against a single employee, the employer is only entitled to compensation once.
The law does not oblige the employer to use this option; therefore, if they are not interested (e.g., because of the administrative burden), they do not have to deduct the amount, whereby their entitlement to the lump-sum compensation terminates.
The amendment also brings new responsibilities to employers: they now have an information obligation towards enforcement officers (bailiffs), to whom upon a written request they must provide information on the wages, garnishments, and information on the employment. If the bailiff asks the wage payer to provide this information after 1 January 2024, communication between them shall take place exclusively via a special printed form or electronic data file; the latter means of communication will usually apply to employers falling under the category of qualified wage payers (those who employ at least 50 employees or whose total annual net turnover for the last accounting period reached at least CZK 100 million).