Without the employee’s approval, the net wage may be charged only based on resolutions of bailiff. The resolution of bailiff can be either a court resolution or an administrative resolution, for instance in the case of child support, fine - as a result of offence -, or public due.
In the light of experience over recent years, the number of garnishment orders of wages raised.
It happens quite often, that there is more than one garnishment order - concerning the same employee - issued by the bailiff’s office.
The regulation of withholdings is included in Act LIII of 1994.
It is important to emphasise that the employer is obliged to implement the withholding based on resolution of bailiff. If the employer fails to implement the withholding, the employer shall be object to joint and several liability toward the judgment creditor up to the amount which is not withheld.
It is the obligation of the employer to notify the employee of the garnishment on the working day following receipt of the withholding order. It may be a practical solution that the employee signs the garnishment order, notes the date and indicates that „I acknowledge the fact of the withholding”. The employer shall forward the certificate about the implementation of the withholding to the bailiff within eight days. If there is more than one garnishment order, the employer shall forward the certificate about the expectable date of the implementation of the withholding.
It is also the obligation of the employer to notify the organ issuing the order regarding any obstruction to implementation.
The implementation of the withholding
The base of the garnishment is the net wage (the gross wage after deducting the personal income tax and the contributions). For the purpose of the implementation of the withholdings, all cash payments – other than non-wage benefits – made by the employer arising out of or in connection with the employee’s employment relationship, or the termination thereof, which are subject to the obligation of payment of personal income tax advance by the private individual to whom they are paid shall be treated as employee’s wages.
The health insurance benefit provided in cash may not be considered as base of the garnishment (taking sick pay, child-care allowance, maternity support, child-care benefit into account), except if the reason of the withholding is either child support or health insurance benefits received without entitlement. In this case no more than 33 per cent may be withheld from the health insurance benefit provided in cash.
The rate of the withholding
From the net wages no more than 33 per cent may be withheld, deduction of no more than 50 per cent may be effected from employee’s wages in the case of child support, in the case of more than one garnishment order, the amount withheld may not exceed 50 per cent of the employee’s wages.
In the case of more than one garnishment order, the sequence is the following:
- child support,
- other form of statutory maintenance,
- employee’s wages and other emoluments construed as such,
- sums payable to the State established by judgment against the judgment debtor in a criminal, penal enforcement or contravention procedure, claims arising from confiscation of assets (with the exception of civil law claims),
- tax and social security claims and other public dues,
- other claims,
- disciplinary fines imposed during the enforcement procedure.
It is very important, that portion of net wages paid monthly which corresponds to the minimum amount of the old age pension (28 500 HUF) shall be exempt from garnishment. Such exemption shall not apply in terms of withholding for child support.
The portion of monthly wages in excess of five times the minimum amount of the old age pension may be subject to garnishments without restrictions – based on former experience this case is less frequent. This means that the portion of monthly net wages above this amount (142 500 HUF) shall be subject to garnishments without restrictions.
Upon termination of employment, the employer shall issue a statement of the employee’s maintenance- and/or garnishment order by indicating the title, the rate (or amount) and the case number of the obligation. The employer shall notify the bailiff that there is no way to continue the implementation of the withholding by its side as a result of the termination of the employment relationship.
If we do not have all necessary and exact information of the garnishment – for instance upon the termination of employment, the previous employer provided an incomplete statement -, it is required to agree with the bailiff. The bailiff contacts the judgment creditor who provides a declaration of the outstanding debt. The employer shall withhold 33 per cent of the wage until receiving all necessary data.
The employer is not obliged to implement the garnishment if the judgment creditor is either financial- or credit institution, including the situation when the employee contributed to the withholding when establishing the credit agreement (in the case of not paying the instalment of the credit amount). The employer shall implement the garnishment only based on the resolution of bailiff.
Verification of the employer
The bailiff may control whether the employer fulfilled its obligations with regard to the implementation of the withholding. During the verification, the bailiff controls if the employer forwarded the certificate to the bailiff within the given deadline, if the employer notified the employee about the fact of the garnishment, furthermore if the employer calculated the amount of the withholding in the correct way and whether the employer took care of transferring the amount of the withholding.