Deductions from wages

Payroll deductions are sometimes voluntary and sometimes involuntary deductions from wages. HR professionals encounter them relatively frequently in practice. At the same time, however, it is not a simple issue and not only the general public is sometimes confused about it. We will try to make this topic clearer and explain the various intricacies that this topic hides.

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Chapters of the article

When can deductions from wages be made?

The law recognises three types of cases when deductions from wages can be made. These are:

  • cases where the law so provides,
  • on the basis of agreements on deductions from wages,
  • for the payment of membership fees by a member of a trade union.

Deductions from wages in cases provided for by law

The main deductions that will affect your salary are deductions for personal income tax and social security and health insurance contributions, as well as pension contributions. These deductions, which are applied on a priority basis, make your gross salary a net salary. All other deductions apply to this net wage.

Tip: We have discussed benefits and payroll deductions in more detail in our article.

The second category of deductions mentioned in the Act are various claims of the employer, such as a salary advance, an unpaid advance on travel reimbursements or other unpaid operating advances. These claims may be deducted by the employer even without the employer’s consent. However, it should not extend this scope further, even in cases where it legitimately thinks it can claim damages and the like against the employee.

Hint: What an employer can and cannot deduct from your salary is covered in a separate article.

The third category is enforcement deductions, i.e. deductions to enforce a decision ordered by a competent authority, whether it was a court, bailiff, tax office or other authorised authority.

Are you dealing with an issue regarding wages or deductions from wages?

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Payroll deduction agreements

Since 2014, new legislation has been in force under which all agreements on deductions from wages are concluded in accordance with the new Civil Code, which is also used for employment relationships. The agreement does not necessarily have to be in writing, but it cannot be recommended that it is. This will avoid a number of potential complications.

Deductions are made in an amount not exceeding half of the relevant income. This limitation is only relevant if the attachable part of the income would exceed half of the relevant income (such limitation does not apply to enforcement deductions, of course).

But what is relevant? If the deductions are not made to satisfy the right of the debtor s own employer directly, the prior consent of the debtor’s employer is required to enter into the agreement. This means that the employer cannot be forced into such an agreement and use its administration to conveniently pay off the debt. There is, however, a technical debate as to what ‘prior approval’ means, since there is apparently no reason to invalidate an agreement if the employer only approves it when it is presented to him as a fait accompli.

Where the employer (i.e. the paymaster) has to pay under several withholding agreements at the same time, it can claim the costs of paying the second and subsequent agreement from the debtor.

Can deductions be applied to other income?

Yes, the law recognises different types of income on which deductions can be applied. These include:

Tip: We have discussed the different types of employment relationship, including employment agreements and performance agreements, in a separate article.

Order of deductions from wages

As already indicated above, the advance personal income tax is deducted from the wages first, followed by health, social security and pension contributions to arrive at the net wage. The following sequence applies to the order of claims and deductions from wages:

  • for claims ordered by a court, bailiff or other competent authority, the key date is the date on which the decision is served on the payroll payer (regardless of the date on which the decision becomes final),
  • deductions from wages based on wage deduction agreements with the employer itself are governed by the date on which the agreement was concluded.
  • for agreements on deductions from wages with another creditor, the key date is again the date on which the agreement was delivered to the employer (paymaster). At the same time, the condition that the employer has consented to the agreement applies.
  • claims of the employer which can be deducted from the wages by the employer without his consent shall become payable on the date on which the deduction commences.

If the creditor’s claim is accompanied by any interest or collection costs, these so-called “accessories to the claim” have the same rank as the claim itself.

Procedure for making deductions from wages

The following procedure is followed for calculating deductions:

  1. Thebasic amount that may not be withheld from the debtoris calculated– the non-withholding amount. This is calculated by deducting from the wages the advance personal income tax withheld from earnings from employment and functional benefits, social security contributions, the state employment policy contribution and public health insurance contributions. The net wage shall also include net remuneration for ancillary activities performed by the employee for whom he is employed. However, it does not include amounts provided for reimbursement of expenses related to work performance, in particular for business travel. The amount which is not chargeable shall be equal to the sum of three-quarters of the sum of the individual’s subsistence minimum and the amount of the standard cost of living for one person according to the special legislation for the person liable, and one-third of the amount which is not chargeable for each person to whom he is obliged to provide maintenance.
  2. Thecalculated non-forfeitable amount shall be deducted from the net salary. The remainder of the wages shall be rounded down to an amount divisible by three.
  3. The rounded-off remainder of the net wages shall be divided by three, i.e. into thirds. However, if the remainder of the net wage exceeds the amount above which the remainder of the net wage is to be deducted without limitation, only that amount shall be divided into thirds (In the case of deductions from wages in 2021, the individual thirds may amount to no more than CZK 6 998). These thirds shall be dealt with as follows
    • Thefirst third shall be used to recover the claims of the beneficiaries,
    • Thesecond third is intended only for the recovery of priority claims and, if there are none, is paid to the debtor,
    • The third third shall be paid to the debtor.

Thus, the debtor receives from the net wages the above-mentioned non-forfeitable amount, the third third of the wages and, if there are no preferential claims, the second third of the net wages.

Priority claims

Priority claims include:

  • maintenance claims,
  • claims for compensation for injury caused to the victim by personal injury,
  • claims for compensation for injuries caused by intentional criminal offences,
  • claims for taxes, fees and other similar monetary benefits,
  • claims for reimbursement of overpayments of sickness insurance, pension insurance and accident insurance benefits,
  • claims for social security contributions and contributions to state employment policy and claims for public health insurance premiums,
  • contribution to the payment of the needs of a child placed in foster care,
  • claims for reimbursement of overpayments of unemployment benefit and retraining aid,
  • claims for reimbursement of overpayments of state social assistance benefits,
  • claims for recourse compensation under the Sickness Insurance Act,
  • claims for reimbursement of wages, salary or remuneration and reduced salary or reduced remuneration granted during the first 14 calendar days

Tip: The calculator on the website can help you to calculate deductions from your wages

Multiple foreclosures on one employee

If one employee has multiple foreclosures and multiple deductions are to be made at the same time, be really careful to follow the correct procedure. The order of repayment is based on the date the employer received the enforcement order. So, you make deductions for the oldest garnishments first until they are satisfied and gradually move on to the newer ones.

If there are multiple garnishments, but none of them is priority, you withhold only one-third of the remaining amount from the employee after deducting the basic non-dischargeable amount. If at least one foreclosure is a priority foreclosure, you make a deduction for it from the other third of the remainder. You then deduct money from the third third of the remainder for the remaining claims in chronological order.

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JUDr. Ondřej Preuss, Ph.D.

Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.

  • Law, Ph.D, Pf UK in Prague
  • Law, L’université Nancy-II, Nancy
  • Law, Master’s degree (Mgr.), Pf UK in Prague
  • International Territorial Studies (Bc.), FSV UK in Prague

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