Emolument Orders A GUIDE TO EMPLOYERS AND - TopicsExpress

Emolument Orders A GUIDE TO EMPLOYERS AND EMPLOYEES Introductory Note: These are commonly, and inaccurately, referred to as ‘garnishees’. What are they? They are orders of court instructing employers to deduct a monthly/weekly amount from a debtor’s pay and pay it over to a collecting agent. What is the procedure to be followed prior to the issuing of an order? The collecting agent (or creditor) has to make formal application to the court. If consent to an order (ie a deduction by the employer) has been signed by the debtor, the order in the amount contained in the signed consent is issued by a clerk. There is no hearing. If there is no such signed consent, the debtor is advised by delivery by the sheriff of a hearing conducted by a magistrate. This is the opportunity for the debtor to be heard so that the deduction required by the order may be set at a reasonable level. The magistrate provides a ruling and a clerk issues the order. In both cases orders are then delivered to the employer by the sheriff. Does the order cover the entire debt? In practice this is not so. The mandatory deduction of a set amount in each month/week for the specified period will not cover the additional costs of recovery and interest. Strictly, therefore, the collecting agent should apply to the court for the order to be re-issued so that the additional amount may be recovered. This is not subject to a hearing and the re-issuing is done by a clerk on the basis of the amount provided by the collecting agent. Is the employer entitled to any fee for assisting in the collection? Yes. The employer is entitled to retain 5% of the amount deducted before the instalment is paid to the collecting agent. (It is wrong to add 5% to the amount for the employer to retain because it will mean that the judgement debtor is paying the 5% and not the creditor as stipulated in the Act.) Problem areas and how to deal with them 1. Because the process of acquiring an order is so much easier and quicker if consent by the debtor is given up front, this is the route that many lenders take. Often, the debtor is required to sign a blank form even before the loan is granted (it may be conditional). Under these circumstances, there is no hearing and the debtor has no chance of stating a case. However, following the imposition of any order, a debtor may make application for it to be amended. Whenever the debtor wishes to be heard his/her financial circumstances should be verified by a sworn affidavit or, at least, a statement by the employer. Under no circumstances should a debtor sign a blank form, nor an appendix to any form. In fact, it would be unwise to sign consent at all. 2. In at least 75% of cases, the debtor does not respond to the notice of an impending hearing. Thus, the magistrate virtually takes instruction from the creditor without the debtor’s input. The debtor’s circumstances cannot be taken into account if there is no representation. 3. The notice of a hearing is sometimes erroneously taken to be the order. This is not the case and employers should await the proper delivery of the court order. Appendices should be ignored unless it is clear that they too are properly stamped. (It is possible for an appendix to be attached by a staple so that it appears to be part of the official order. For example, a collecting agent may well attach an appendix to the order instead of going through the formal process of having an order re-issued. Such an appendix is not binding on the employer.) 4. Every document purporting to be an order should be scrutinised very carefully. Some lenders persuade debtors to sign a document that is printed to look like a valid order of court so that employers will do the debt collection on their behalf. Each page of a valid order should have the court’s stamp and, more importantly, have been sent or delivered by the office of the sheriff. 5. Employers are only obliged to honour valid court orders. If they wish to assist by making deductions requested in other documents, they are obviously free to do so, but the Chamber does not recommend this. What you need to tell employees 1. Borrow only from lenders that can prove registration with the Micro Finance Regulatory Council. 2. Do not sign any consent to a ‘voluntary’ order. 3. Do not sign any document which is not fully completed, ie without an amount filled in. 4. Attend the hearing with proof of income so as to ensure that the amount to be deducted in terms of the order is affordable. 5. Make application for the order to be amended if the amount to be deducted is unreasonably in excess of what can be afforded. A NOTE ABOUT MAINTENANCE ORDERS In the case of Maintenance Orders, the payment is made to the court. Normally, these are dealt with by the sheriff only if hand delivery is necessary. The 5% commission is not deductable by the employer in the case of Maintenance Orders.