Wage attachment notices: a nerve-wracking added workload for accountants

Years ago, employers generally received the enforcement agent’s attachment of wages notice when enforcement proceedings were initiated against a person. Enforcement agents received information about the person’s employment when their employment taxes were declared. Thus, the person’s employment may have already been terminated, or the first wages paid before the enforcement agent even received the information.

The introduction of the Employment Register made enforcement agents’ lives much easier

The arrival of the Employment Register (TÖR) made life easier for enforcement agents and, as practice shows, created a huge amount of extra work for employers and accountants. I remember attending one of the early meetings on the creation of the TÖR. I realised quite soon how much joy the enforcement agents would receive from the creation of TÖR and how much hassle and trouble the accountants would have to face. This is exactly how it has turned out.

Since then, the enforcement agents have automated the process for making enquiries and drawing up notices in the Employment Register. As a result, as soon as an employer registers an employee in the TÖR, dozens, if not hundreds, of attachment notices start flooding in.

To make matters worse, the notices of each enforcement agent are different, several pages long and full of provisions of the law as well as warnings. That’s right – warnings that if the employer fails to withhold wages, then non-compliance levies will be imposed on them.

Many accountants certainly have their own work processes and accounting methods, and they are generally not shocked or surprised by the enforcement agents’ attachment notices.

Unfortunately, the reality is that many accountants continue to have their heart rates raised by these documents.

The first reason is the enforcement agent’s attachment notice itself. Secondly, for example, an employee comes to you and says that if their wages are attached, then they will leave the job. Or the employee tells the court how they have, in fact, already signed a payment plan or that the claim is unfounded and nothing needs to be attached. And what is the accountant supposed to do in a messy situation like this? There is only one answer – they must perform the enforcement agent’s notice!

I will hereby try to explain the questions and problems that arise most frequently in practice.

Why does an employer have to do the work of an enforcement agent?

In an ideal world, people would not get into debt, and there would be no need for enforcement agents. Unfortunately, we live far away from this ideal. There is nothing in the law to prevent employers from transferring a person’s wages to a third party’s account. If the state were to make the change that wages had to be paid into the employee’s own account (in a similar way to how the first payments under the second pension pillar were regulated), there would, in theory, be no need for attachment of people’s wages. However, there is no such regulation, nor will there be. Therefore, enforcement agents have no option but to send the employers attachment notices.

Today, there is no single national database that can be used to obtain information on a person’s enforcement proceedings and the size of claims against them.

Many enforcement agents have set up their own IT systems, and the state continues to work towards a single enforcement register for enforcement agents. Let’s hope that in the process of setting this up, employers will also be considered. Hence count this as a call to the Ministry of Justice to involve employers’ representatives in the process and to invite employers to submit their proposals on this matter.

In what order should the attachment notices be performed?

Wage attachment notices are performed in the order in which they are received. The notice that arrived first in the employer’s mailbox must be performed first. The question as to which one comes first really arises if, for example, one enforcement agent sends three attachment notices in the same letter. You should start by performing one of them, or, to avoid any confusion later, send a clarifying e-mail to the enforcement agent asking which notice should be performed first.

The maintenance claim automatically takes precedence over the other claims and, therefore, should be satisfied first.

In practice, it is very common for a person to have several child maintenance claims. In addition, these different claims may also be enforced by different enforcement agents. In a case like this, these notices must be performed simultaneously and equally. This means that the amount to be attached must be calculated, divided by the number of children, and the corresponding amount must be transferred to satisfy each claim.

What amount should be attached?

For the employer, the most important question is surely how much to attach. Until 2008, it was simple – in short, anything above the minimum wage was subject to attachment. The exemption for employees with children as dependants also applied back then.

Today, you must take into account the amount of the estimated subsistence minimum figure calculated by Statistics Estonia on the basis of last year’s data, and the amount absolutely not to be attached. In addition, up to 20% of the minimum wage can be attached if the claims cannot be satisfied otherwise. This turns out to be quite a complex mathematical exercise.

The person’s wages, the estimated subsistence minimum, and the minimum wage, which change every year, must therefore be taken into account. In addition, the enforcement agent’s attachment notice itself – whether the agent has requested that a percentage of the minimum be attached, how many children the enforcement agent has entered in the notice, etc. – must also be taken into account.

In practice, there are many cases where people are raising children of their spouses, but they are not dependents by law, and the non-attachable amount does not increase on their consideration. However, it is also possible that the enforcement agent has not entered the number of children in the notice (either has forgotten or the debtor has since had a new child or new children). The information provided by the enforcement agent must therefore be taken as a basis, and if it does not correspond to the reality (e.g., the number of children), the enforcement agent can be asked to amend the notice.

Several calculators are available free of charge and in the public domain to help you calculate the amount to be attached. I encourage accountants to use these calculators:

1. On the website of The Estonian Chamber of Enforcement Officers and Trustees in Bankruptcy (KPK), there is an Excel spreadsheet prepared by the Chamber, available HERE in Estonian.

2. On the website of enforcement agents Elin Vilippus and Oksana Kutsmei, there is a wage attachment calculator, available HERE.

3. There is also a good calculator on the website of the United Enforcement Agents (Ühinenud Kohtutäiturid), available HERE in Estonian.

4. The website of enforcement agent Natalja Malahhova has a wage attachment calculator, available HERE in Estonian.

5. The website of enforcement agent Andrei Krek has a calculator, available from the link HERE in Estonian.

Attention should be paid to whether the calculator shows net or gross wage. Unfortunately, the Excel spreadsheet on the website of the Chamber of Enforcement Officers and Trustees in Bankruptcy (KPK) and the calculator of enforcement agent Andrei Krek do not allow to indicate the percentage that the enforcement agent wishes to withhold from the minimum rate.

Therefore, if the attachment notice states that the attachment also includes a percentage of the minimum wage, these calculators cannot be used.

The KPK website also provides a scheme for the attachment of wages in maintenance claims.

Can the debtor file objections to the employer?

The debtor may lodge objections, but the employer cannot modify the attachment itself. As pointed out above if the enforcement agent has made a mistake in the attachment notice regarding the number of children, the employee should inform the employer. The employer can then make a request to the enforcement agent to check the number of children and, if necessary, amend the notice. The employee themself can inform the enforcement agent by submitting the respective application. The employee must submit any objections to the enforcement agent.

Can the employer make changes to the amount of the attachment?

The employer does not have the right to modify the amount to be attached. The employer must comply with the enforcement agent’s orders. To reduce the workload, it is advisable to use the calculators referred to above. Using a calculator also makes it possible to avoid potential disputes with the employee on the amount to be attached.

Can a payment plan be set up, and how?

It is sensible to discuss the situation with your employee and propose a payment plan to the enforcement agent. In practice, it is possible that the enforcement agent and the party seeking enforcement will agree to a payment plan if the monthly payment is made by the employer.

If there is a payment plan, the employer will pay the enforcement agent the agreed €50/100/200. This solution ensures that the enforcement agent receives the monthly payment, the employer does not have to calculate the amount to be attached each month, and the debtor can be sure that the claim is being satisfied and that the enforcement agent will not use other means of enforcement. This solution is possible if all parties are willing to cooperate.

The situation is considerably more complex, where there are many claims. For example, if a debtor obtains a payment schedule in one enforcement procedure and the employer pays €100 to the enforcement agent, but €300 could be attached, the employer would have to pay €200 to perform the next attachment.

Therefore, if there are several notices, an agreement must be reached with all the parties seeking enforcement, or the wages must be attached in accordance with the law – in the prescribed amount according to the order in which the notices are received.

What to do if the attachment has already been performed?

It is recommended to ask the enforcement agent to verify the final balance of the claim before considering the attachment to be performed. In civil claims, interest on arrears is often added to the main claim. If the enforceable claim increases because of interest, the enforcement agents will make a new decision on the main amount about their own fee. Therefore, it should be clarified with the enforcement agent whether the attachment can be considered as performed or whether it has been increased by interest.

In this way, the employer will ensure that the enforcement agent does not issue an enquiry (and a non-compliance levy notice) several months later on the non-performance of the attachment notice.

What is a non-compliance levy?

The law provides for the possibility of imposing a non-compliance levy on an employer if the latter fails to comply with an enforcement agent’s notice. For example, if the employer, after receiving the enforcement agent’s order, does not pay the amount to the enforcement agent but transfers it to the account of the debtor’s child.

A non-compliance levy is the most effective coercive instrument that an enforcement agent can use to “discipline” an employer.

The first non-compliance levy ranges from €192 to €767 and the subsequent one can be up to €1917. It is important to note that the non-compliance levy does not go towards settling the debtor’s claim or the enforcement agent’s fee but is paid into the national budget. Thus, only the debtor and the state benefit from the non-performance of the enforcement agent’s notice. There is no rational reason why an employer should contribute to the state budget in this way.

What to do if the enforcement agent does not answer your letters, calls or give you advice?

Accountants have often voiced concerns about the unavailability of enforcement agents, who do not answer letters or phone calls. I would recommend sending a written request to the enforcement agent. The enforcement agent has a duty to reply as soon as possible but not later than 30 calendar days. If there is indeed no reply, there is always the possibility of lodging a complaint against the enforcement agent. I agree that this adds to the workload of the employer, but until someone complains about the enforcement agent’s actions, the Ministry of Justice, for example, will not know that there is a problem with an enforcement agent in the first place.

How to make the accountant’s job easier?

First, I recommend using the calculators mentioned above. Next, it is possible to order a consultation for accountants on how to deal with wage attachment notices. Our firm advises accountants on attachment notices as well as, in general, on enforcement proceedings and labour law matters.

In addition, I recommend that you draw up a specific manual for an employee in debt within your company. Together with our attorneys, we have advised accountants and compiled multilingual guides that can be given to the employee, explaining in a simple and straightforward way what the different options are for the employer and the employee themselves.

Enforcement agents’ notices are complex in their drafting and wording, and it is understandable that the employee will have questions and concerns. If the company has a manual, it can be given out to the employee, and the employee will get simple and concrete answers and forms for (scheduled) applications. Again, I agree that this should be done by the enforcement agents, but it is just one way in which the employer can reduce some of their workload and the frustration expressed by employees.

Be encouraged to ask enforcement agents for help and clarification

In conclusion, no one would argue that the performance of attachment notices adds to the workload of accountants. To avoid this burden, it is worthwhile to clarify the situation on hand with the employee immediately and, if possible, to reach an agreement on the terms of a payment schedule.

It is a good idea to ask the employee before they start to work whether and how many attachment notices can the employer expect to receive and what are the employee’s plans thereof. Honesty and openness are important. The aim is to find a compromise that is satisfactory to all parties, and for this to happen, both the employee and the employer must be willing to work together.

The enforcement agent can and should be asked for clarification, help and support. A fair balance must be struck between the conflicting interests of the debtor, the party seeking enforcement and the employer, but the law also requires the debtor to be diligent and active in the enforcement proceedings. The employer can support the debtor, but the input and the will to resolve their own affairs must come from the debtor themself. We wish accountants and employers understanding and patience in dealing with these matters.

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