Garnishees: mystery of the disappearing salary

Susan Erasmus
2015-06-08 13:55
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Cape Town - Many consumers have complained about abuses in the garnishee order deduction mechanism.

In 2013, several articles appeared on Fin24, explaining what garnishee orders were, why they were sometimes problematic, and making suggestions about curbing abuses in this regard.

Read some of them here:

The garnishee problem
Garnishee order system ‘deeply flawed’

Here follows an update on garnishee orders, and the mechanisms used to control this deduction mechanism off salaries.

Below are the answers to some questions we posed to Clark Gardner, CEO of Summit Financial Partners, a company that provides financial wellbeing solutions to employees that includes relief from indebtedness and protection around collection abuse.

Have there been any legal developments in trying to curb abuses of the garnishee order deduction mechanism?

We have yet to see any proposed changes to the Magistrates Court Act that will prevent the Emolument Attachment Order (EAO) abuse that currently takes place. However there have been Magistrate processes and clarity brought about by high profile court cases that have improved some of the problems, but definitely not all. The oversight required by Magistrates and not clerks of the court in granting an EAO has slowed the granting process down, but not necessarily stopped the abuse.

What constitutes abuse of a garnishee order deduction mechanism?

Much of the abuse takes place after the order has been granted in that payments are demanded until the collector instructs the employer to stop the deduction. The collector tries to justify such repayments by adding significant fees and exaggerating balances that result in alarming abuses. Click here to see how this outstanding bill for R99 became a bill for almost R12 000.

Similarly, Administrators are deducting instalments from employee salaries to manage seemingly unaffordable debts but keep up to 40% for themselves. The results is that the deductions will continue to take place for many, many years.

The high court cases initiated by some fantastic people in our society have certainly had the greatest impact including the Stellenbosch law clinic case providing clarity and bite on collectors using the incorrect jurisdiction in obtaining these orders and Amplats taking on Administrators' excessive fees.

Have matters deteriorated in the last three years? If so, how?

No, I think they have improved. The media and high profile cases have brought about some restraint by these unscrupulous collectors and the number of orders being granted at court has been reduced owing to the bottle-necks created by the need for involvement by a Magistrate, and the need for using the correct jurisdiction.

There has been talk of only allowing maintenance payments to be taken off salaries: what’s happening on that front?

I am not aware of any developments on stopping Emolument Attachment Orders relating to debt. I have not thought through the unintended consequences that may result from such drastic action, but perhaps the industry must propose self-regulation, rules and policing before this becomes the only option to solving the abuse taking place. I am skeptical of the industry’s ability to self-regulate and would rather recommend clear and easily enforced law changes that will stop this nonsense.

Which measures do you think would be effective in curbing the abuse of these deductions for gain?

My recommendations would include the following law amendments to the Magistrates Court Act:
•    Only allowing the salary deduction mechanism for outstanding debt greater than a certain amount (let us say R7 500)
•    Provide clarity on the application of S103 of the NCA referred to as the ultra in duplum rule ensuring no debt can exceed two times capital outstanding on default (with judgment not interrupting this calculation).
•    Issuing EAOs together with a repayment plan which is sent to the employer showing the number of deductions and the amount clearly. This prevents the continual addition of fees and similar exaggerations.
•    Providing a cap on the value of EAO deductions to net salary – for instance EAOs cannot exceed 25% of net income. If so, the last received EAO is not processed until affordability is increased.
•    Create easily enforced and clear accountability laws where collectors breach regulations.

If someone has a judgment against them, which other mechanisms are there for collecting the debt?

One can obtain a warrant of execution against the judgment debtor’s property/assets to be sold by the Sheriff. This is certainly not the route we would like unsecured creditors to follow.

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