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Far-reaching developments surrounding emolument attachment orders

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On the 8th of July 2015 the Cape High Court came to far-reaching findings in a class action brought by the University of Stellenbosch’s Legal Aid Clinic on behalf of several employees. In this judgement some of the provisions of the Magistrate’s Court Act were found to be unconstitutional.

An effective way for micro-lenders to recover money owed to them has been to arrange for it to be deducted from employees’ salaries. They would approach a debtor to sign a consent for an emolument attachment order (EAO), also known as a ‘garnishee order’, to be issued by the magistrates’ court. An employer served with an EAO would have no choice other than to give effect to such order, sometimes resulting in an employee having hardly any money to take home after deductions.

Flaws

Several flaws in the system were highlighted in the course of this hearing. These included that:

- there was no statutory limit on the total amount to be deducted from an employee’s wages (as was the case in several other countries).

- on the facts presented, the ‘consent’ forms were not signed on a voluntarily or informed basis.

- EAOs could be issued by the Clerk of the Court, without prior judicial oversight (by a Magistrate) as to whether the issuing of EAOs were just and equitable;

- EAOs were often obtained in remote courts, outside the jurisdiction of the court where the employees resided or worked.

Consequences

Although the application was brought in respect of a group of 15 people, it is significant that, among many criticisms regarding the abuse of the system, the Court also found that certain of the provisions of the Magistrates’ Court Act pertaining to EAOs were unconstitutional. This means that the effect of the judgement is not limited to the applicants in this case.

So the question is: Are EAOs still enforceable and what should employers do? There is likely to be much controversy surrounding the practical consequences of this judgement. Our advice is that, at least for now, employers should seek legal advice before disregarding emolument attachment orders. 2

For a copy of the judgement, see http://www.labourwise.co.za/wp-content/uploads/2015/07/Emolument-attachment-orders_2015_Univ-Stellenbosch-Legal-Aid_HC.pdf

Article written by Jan Truter of Labourwise

www.labourwise.co.za is an on-line labour relations service aimed at assisting employers with the implementation of effective labour relations. They can be contacted via the website or info@labourwise.co.za.

Copyright © Sanlam, 2016

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