Garnishee Management
The difference between an Emoluments Attachment Order (EAO) and a Garnishee Order: Emoluments Attachment Orders are commonly but mistakenly referred to as ‘Garnishee Orders’. A true Garnishee Order refers to the attachment of a debt owed to the employee by a third party, and it is usually a once-off arrangement.
In the case of an Emoluments Attachment Order (EAO), the employer is obligated by law to deduct monthly instalments from the salary of the debtor/employee against whom the Emoluments Attachment Order (EAO) has been issued. In legal terms, the employer who administers the Emoluments Attachment Order (EAO) is referred to as the ‘garnishee-employer’.
The application includes an affidavit and supporting documentation such as proof of the judgment. A creditor must make an application to a court of the district in which the garnishee resides, carries on business, or is employed within the district.
The debtor will be issued with a notice telling him/her to appear before the court on the date specified in the notice. If the court entertains an ex parte application by the creditor, it means the debtor will not be required to appear in court.
The court will inquire into the financial position of the debtor and make an order as it may see just and equitable, for example the court may order payment by instalments. The court order against the garnishee includes the amount of the debt (for the past, present and future), legal costs and commission.
In terms of section 65(J)(10) of the Magistrate’s Court Act, the employer (garnishee) may recover from the judgement creditor a commission of up to 5% of all amounts collected on his behalf from the amount payable to him. In practice, a situation regularly occurs where the employer deducts his 5% over and above the 10% commission collected by the attorney. This means commission of 15% has been deducted, instead of 10%.
There is an alarming prevalence in overcharging of interest and other commissions. Employers are, therefore, urged to caution their employees, who are often financially and legally illiterate, not to sign blank forms, not to consent to judgement, or to enter into credit agreements without first obtaining legal or financial advice.
When an employee is drowning in debt they have low employee engagement scores, low morale and this results in an unproductive workforce. Financial stress is the biggest cause of sicknesses and substance abuse. These factors can affect the company’s productivity and income.
Employers have to be actively involved in the solution to over indebtedness. When control is put back into the hands of the employer with the SynRec System, the issue of over indebtedness can be dealt with much more efficiently and is ultimately better for the employees and employer.
All the credit providers big or small are only interested in one thing and that is to make profit and unfortunately it is always at the expense of the consumer or your employee. SynRec’s unique solution allows for the following benefits:
As a result of these investigations, it was decided to centralise the administration of these orders and to investigate possible systems to administer these orders. The investigation led to the implementation of a new computer system, the SynRec System, to regulate payments in terms of court orders nationally at their head office and chief administrative centre in Cape Town.
The advantages of the system were:
- Centralised payment management and fully trained staff dedicated to managing these order, so that only orders which had been properly issued and served would be implemented;
- The system would make sure that the deductions ceased when payment due under the order had been made in full;
- Regular electronic payments would be made to the judgment creditors, accompanied by a statement setting out amounts outstanding, thereby limiting unnecessary interest being added to the amount owing;
- Immediate on-line account recall to place the staff in a position to answer queries from staff on any outstanding balances; and
- Computer calculated account balances based on the instructions given in the court order regarding, inter alia, collection commission, interest rate, etc.
Peter Schmitt and his team assisted the forensic investigation with their extensive hands-on knowledge of the administration of these orders and their assessment and reconciliation of manual and electronic information, and were invaluable to the successful completion of our mandate. The appointment of SynRec to administer and manage all garnishee orders is testimony to the successful partnership that has been established.
- Peter Allrwight (SHG Forensics)
“Parmalat SA (Pty) Ltd acquired the services of Synrec in March 2009 to administer the Garnishee orders of our employees. Since then the deductions for Garnishee orders (including Maintenance and Administration orders) have decreased by ± R3500.00 per month.
In essence, the administration process Synrec uses is effective for the employee and for the Company. If the employees’ debt decreases it has a positive effect on them in private capacity as well as at the workplace.
Well done Synrec and thank you for the excellent service you provide!”
- Sandra Kamfer (Payroll Manager)
“Last year SynRec saved Lewis stores employees R246 675.63 in attorneys client cost which we had written off which their employees would have paid if it was not for SynRec consolidating, forecasting and controlling the balance on a monthly basis.
There are 61 cases which gives us the total mentioned above we store all the documentation per case including the taxation report SynRec sends the attorney and the SynRec forecast which includes the audited amount payable, the amount of R146 675.63 is calculated by all the balance updates which we have attorneys write off after being presented with the audited forecast which we keep on our system and updated on a monthly basis after reconciliation until paid in full. These 61 cases mostly apply to new stop orders which are set up and forecast correctly from the start on the SynRec System by our trained and capable professionals.
If you would like to contact Lewis Stores for a reference I have attached the contact details, they also ran our system side by side with another system and shall be able to provide a brilliant comprehensive reference”
- Joycelyn Early (Head of Payroll)