Companies plagued by worker foreclosures

Employers are to be reimbursed from next year for at least part of their costs in calculating and sending the amounts deducted from employees from foreclosures. This is due to an amendment to the Enforcement Code approved by the House of Assembly this year. But companies complain that the Justice Department has assessed them too low an amount for compensation.

The ministry drafted a decree that would give employers CZK 50 per month per employee in execution.

According to the approved amendment, companies will now be able to request a lump-sum compensation for the costs associated with administration. “The payroll payer, i.e., the employer, is obliged to carry out several tasks by deducting wages,” Michal Pleskot from the Ministry of Justice described the reason for the change.

For example, employers must calculate the correct amount of deductions from wages according to the execution order, document a summary of income and records of active liabilities, provide bailiffs with the information they require, and, in the case of multiple executions, monitor the order in which debts are to be paid.

“Moreover, the state has previously transferred its obligation to provide the bailiffs with assistance in the execution of an employee to employers under the threat of a CZK 50,000 fine,” said Miroslav Diro of the Chamber of Commerce.

Up to 100 executions per employee

According to the latest data from the Chamber of Executors from November last year, 720,000 people are under execution in the Czech Republic. “A survey we conducted among employers in 2019 showed that there are companies that are dealing with over a hundred foreclosures per employee,” said Jitka Hlaváčková of the Confederation of Industry and Transport. Of the 150 companies surveyed, only eight had no experience with foreclosures of their employees.

“In determining the amount of the lump-sum compensation, we based it on data provided by the Confederation of Industry and Transport, the Chamber of Commerce and statistics from the Ministry of Labour and Social Affairs,” Pleskot explained how the ministry arrived at the CZK 50 per month figure.

“The Ministry of Industry and Trade, based on its survey in 2019, calculated the cost of one employee with multiple executions at CZK 400 per month,” Hlaváčková pointed out.

The Chamber of Commerce will comment on the proposal at the end of the comment procedure on the decree, which will end in the coming days. However, it estimates that companies spend CZK 450 per month on the administration of one execution.