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.
The law recognises three types of cases when deductions from wages can be made. These are:
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.
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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.
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.
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:
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.
The following procedure is followed for calculating deductions:
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 include:
Tip: The calculator on the justice.cz website can help you to calculate deductions from your wages
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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