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South Africa: Legislation to Stop Predatory Wage Deductions Underway
08 July 2016
Debt collectors have been exploiting involuntary and uninformed agreements with debtors
The National Assembly is considering an amendment bill to the Magistrates' Court Act 32 of 1944 to curb predatory wage garnishment orders. Officially known as emolument attachment orders (EAO's), these are court orders that require employers to deduct payments from the salary of an employee to service debts.
Debt collectors have been exploiting involuntary and uninformed agreements with debtors
The National Assembly is considering an amendment bill to the Magistrates' Court Act 32 of 1944 to curb predatory wage garnishment orders. Officially known as emolument attachment orders (EAO's), these are court orders that require employers to deduct payments from the salary of an employee to service debts.
Under current South African law, there is no limit on how much of a person's salary can be garnished. Most countries place limits on the percentage or amount that can be garnished. For example, Rwanda sets limits on garnishments at 33% of a person's wage, while Australia requires that a debtor access at least AU$447 from their weekly salary.
The proposed legislation would limit wage garnishments to a maximum of 25% of a person's salary. It would also restrict creditors to only filing EAO orders in the local court where the debtor resides. Creditors will be required to notify employers and debtors of their intent to file an EAO, and will have to provide a free monthly statement of the amount of debt remaining. Employers will be required to end wage garnishments once the debt has been paid off. The bill will also provide for rescinding or abandoning court orders without incurring prohibitive legal costs.
Source: GroundUp
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