We are bringing you more detailed information about attachment of earnings agreements introduced by the Civil Code. This change was already presented in our newsletter on new rules effective from 1 January 2014. As this is an important matter, we now provide you with more details.
Attachments under the Civil Code
Attachment of earnings agreements are governed by the following two regulations:
- (1) the Labour Code (Sections 145 through 150)
- (2) the Civil Code (Sections 2045 through 2054)
Since 2004, any debt (save for distraint and alimony) owed by an employee can be secured by an attachment of earnings agreement but up to no more than half of the employee’s wage or wage compensation (alternatively bonuses or salary). However, the employer must grant its consent to the agreement. The costs associated with remitting the amount are borne by the wage payer. Where there are more agreements related to one employee, the costs associated with the payment of other attachments for the other and any additional agreement are borne by the debtor, i.e. the employee. The creditor acquires the right to the payment of attachments at the moment the agreement is presented to the wage payer (employer), if accepted.
Attachments under the Code of Civil Procedure
Another method is attachments under the Code of Civil Procedure. Such attachments are made from net wages. The net wage is deemed to include wages and bonuses (net) for additional jobs carried out by the employee at its employer, i.e. from other parallel employment including additional jobs and other forms of employment.
Attachments must not be made to an extent larger than that permitted by the Code of Civil Procedure, even if the debtor consents to it.
The amount above which the remainder of the net wages is deducted without any limitation (that is, less the protected earnings base) is determined similarly, i.e. as the sum of an individual’s living wage and the prescribe rate of housing costs per person, i.e. the sum of CZK 3,410 and CZK 5,873, which is CZK 9,283. (This amount is currently CZK 9,097).
The protected earnings base that may not be deducted from the debtor’s wage (under Act No. 595/2006 Sb.) is:
- the sum of two thirds of the living wage of an individual and the sum of the prescribed rate of housing costs per person, which is CZK6,188.67 (9,283 : 3 x 2)
- 25% of the protected earnings based per person to which the debtor is required to provide alimony, i.e. CZK1,547.17.
Calculation of the protected earnings base in respect of a man with a spouse and two dependent children:
Protected earnings rate per debtor CZK 6,188.00
Protected earnings rate per spouse CZK 1,547.17
Protected earnings rate per child 1 CZK 1,547.17
Protected earnings rate per child 2 CZK 1,547.17
Protected earnings base CZK 10,830.18
Please do not hesitate to contact us if you have any questions regarding these issues.