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Slovakia: Agreement on employee wage deductions - employer as hostage?

A brief summary on what to watch out for and when to contact your employment law attorney
 

Almost all consumer credit contracts include an agreement on wage deductions. Employers have neither the legal right nor the authority to check whether an agreement on wage deductions or a related consumer credit contract is valid and effective. In this situation, employers as wage-payers have the position of third parties who must make deductions and transfer them to creditors as soon as the agreement is presented to them.


The form of agreement is decisive

The Consumer Protection Act and established jurisprudence agree on the form of agreement. An agreement that is part of a credit contract ‒ i.e. not a separate document ‒ is invalid. However, since wage deduction agreements are bilateral agreements between creditors and debtors, employers as third parties cannot arbitrarily omit wage deductions without legal entitlement or the consent of the creditor. This would violate their legal obligations. Wage deductions can only be prohibited/suspended by the court, for example by means of a preliminary injunction.

But what happens if it is clear from the document submitted that the agreement on wage deductions is not a separate document? Must employers blindly respect the law even if it is clear that this agreement is invalid? Shouldn't the principle of proportionality and employee protection be applied here?

Our labor law experts recommend that clients refrain from deducting wages in this situation. In view of the long-standing practice of the courts, we consider this decision to be correct. Of course, the risk of legal action on the part of the financial institution that granted the employee the loan cannot be excluded. If you are in this situation, then that is the right time to contact your employment law lawyer.

We also advise our clients to draw their employees' attention to the legal possibilities of resolving their situation and to claim the invalidity of these agreements in court by means of a lawsuit or a temporary injunction until a final decision on the matter has been reached.

Amount of deductions

Employers are liable for proper execution of wage deductions and should therefore not base the amount of wage deductions on the information in the agreement but on legal rules. An agreement in which deductions are higher than those laid down by law would be invalid.

Agreements on wage deductions primarily concern the employee's wages, but they may also relate to "other income". The term "other income" must be interpreted in line with the Income Tax Act, which makes an employee's severance or retirement payment also subject to wage deductions.