Deductions from wages

Change to the Insolvency Act

• § 109 –  deductions from wages for ordinary maintenance will now be paid to the beneficiary or enforcement authority from the commencement of insolvency proceedings (currently deductions are deposited until the approval of the insolvency proceedings).
• § Section 136(3) – the court may order the employer of the debtor's salary or other income to make deductions to cover the insolvency administrator's remuneration and expenses for the period until the approval of the insolvency arrangement (until now the debtor has paid these amounts himself). 
• § Section 406(3) – in the period after the end of the repayment calendar the debtor is obliged to pay advances on the insolvency administrator's remuneration and expenses for a period of 2 months after the filing of the report for exemption, and the debtor's employer is ordered to make deductions for the purpose of paying these advances.

Amendment to the Code of Civil Procedure

• § 279, § 280 and § 301 – introduces a new method of calculating the amount of enforcement deductions in the event that at least 4 enforcement proceedings are conducted against the debtor and the employer has been served with a resolution on ordering enforcement of a decision or a resolution containing a notice on ordering enforcement of a decision.

If the condition of at least 4 executions is fulfilled (regardless of whether the claims are priority or non-priority), the employer will make deductions from the wages of the debtor in the amount of 2 thirds of the remaining net wages by adding the second third to the first third. Where priority claims are recovered in the enforcement proceedings in addition to non-priority claims, the second third shall be satisfied first of the priority claims (in accordance with the procedure laid down in Article 280(2)) and the remainder shall be added to the first third. 

This calculation rule does not apply if the debtor provides the employer with proof of an old-age pension, a second- or third-degree invalidity pension or an orphan’s pension. If the debtor stops fulfilling the condition for the award of one of these pensions, he must notify the employer without delay.

• § Section 282a – this is a new section and it sets out when the employer is obliged to apply the new method of calculating the amount of enforcement deductions. It can be deduced from its wording that the employer will start to apply the new method of deductions from the wages of the debtor in the month following the delivery of the fourth enforcement order. If the employer receives notice that the fourth enforcement order has been terminated (i.e. that the employee’s wages will again be affected by only three enforcement orders), the employer will stop to apply the new rule in the month following receipt of the notice.

The amendment also applies to existing enforcements, therefore, enforcements conducted with the employer before the amendment came into effect are counted towards the required number of four enforcements.

Author: Martina Farářová, HR & Payroll Services, Manager