In practice, we most commonly encounter agreements on wage deductions, through which an employer secures a valid claim it has against an employee. Such an agreement must be concluded in writing. Failure to comply with this form is punishable by law with invalidity. Further details regarding wage deductions are provided by Section 131 of the Labor Code, which specifies what may be deducted from wages and in what order.
Pursuant to Section 131(1) of the Labor Code “The employer shall, as a matter of priority, deduct from the employee’s wages social insurance premiums, advance payments for public health insurance, any balance due from the annual settlement of advance payments for public health insurance, contributions to supplementary pension savings paid by the employee pursuant to a special regulation, withholdings of tax advances or taxes, arrears of tax advances, tax arrears, arrears arising from the taxpayer’s fault on tax advances and taxes, including accessories, and arrears from the annual settlement of tax advances on income from employment.”
Pursuant to Section 131(2) of the Labor Code, “After making the deductions under paragraph 1, the employer may deduct from the wages only:
a) an advance on wages that the employee is required to return because the conditions for granting such wages were not met,
b) amounts subject to enforcement of a decision ordered by a court or administrative authority,
c) monetary penalties and fines, as well as compensation imposed on the employee by an enforceable decision of the competent authorities,
d) amounts of social insurance benefits and old-age pension savings or their advances received without entitlement, state social benefits, benefits in material need and supplements to benefits in material need, cash contributions to compensate for the social consequences of severe disability, if the employee is required to return them based on an enforceable decision pursuant to a special regulation,
e) unaccounted advances on travel allowances,
f) income compensation during the employee’s temporary incapacity for work, or the portion thereof to which the employee has lost entitlement or for which no entitlement arose,
g) wage compensation for vacation to which the employee has lost entitlement or for which no entitlement arose,
h) the amount of severance pay or a portion thereof that the employee is required to return pursuant to Section 76(4).”
Pursuant to Section 131(3) of the Labor Code “Other deductions from wages that exceed the scope of the deductions specified in paragraphs 1 and 2 may be made by the employer only on the basis of a written agreement with the employee regarding deductions from wages, or if the employer’s obligation to make deductions from the employee’s wages and other income arises from a special regulation.”
The cited provisions of the Labor Code define what an employer may deduct from an employee’s wages. However, the question must be addressed as to whether it is possible to include such an agreement on wage deductions in an employment contract that would also cover obligations that have not yet arisen but may arise in the future.
In such a case, the agreement on wage deductions would serve a preventive function, as it would secure obligations that did not yet exist at the time the agreement was concluded.
Employers often resort to a practice whereby they incorporate provisions into employment contracts aimed at covering damages that could potentially arise in the future due to an employee’s actions, or to cover other costs such as meal allowances, accommodation costs, or various penalties in the form of fines and other material damages. However, it is essential to emphasize that this practice by employers is incorrect.
In labor law doctrine, the prevailing view is unequivocal: an agreement on wage deductions can only secure a claim that already existed—i.e., was valid—at the time such an agreement was concluded. However, the due date of such a claim is not decisive. This means that an agreement may be concluded even before the claim becomes due. The due date of the claim is, however, a necessary condition for the implementation of specific wage deductions. An agreement on wage deductions therefore cannot secure claims that will arise in the future. Even if an employment contract were to contain such provisions, it must be noted that such an agreement on wage deductions would be invalid, and therefore it would not be possible to proceed with the wage deductions themselves on that basis. One of the reasons why such an agreement cannot be valid is the fact that an agreement on wage deductions is a security measure of an accessory nature. This means that an agreement on wage deductions must relate to an obligation that existed at the time the agreement was concluded. This view was confirmed, for example, in the decision of the Supreme Court of the Slovak Republic dated March 26, 2015, Case No. 5 Sžo 57/2013, in which the Supreme Court concluded, quote: “An agreement on wage deductions is one of the means of securing rights and obligations arising from employment relationships, as regulated by Section 20 of the Labor Code. Under current law, such security serves to safeguard the employer’s property rights and may be used only to secure a claim that has already arisen. The security of rights thus arises only on the condition that there is an obligation of the employee toward the employer.”
It is also necessary to point out that by following the aforementioned procedure, the employer would circumvent the provisions of the Labor Code regarding liability for damages, under which the employee has, among other things, the right to deny the damage, to defend themselves against the claim that they were the sole cause of the damage, to object that the damage was caused to a lesser extent than the employer claims, and ultimately to agree on the method of compensation. Entering into a “preventive” agreement on wage deductions would, in this case, mean that the employee waives in advance the right to have the employer prove his fault in the event of damage and also acknowledges in advance the damage determined by the employer, as well as the method of its compensation, specifically through the concluded wage deduction agreement. The fact that such an agreement would be invalid under all circumstances is also confirmed by the provisions of Section 17(1) of the Labor Code, according to which “A legal act by which an employee waives his or her rights in advance is invalid.”
The only case in which such an agreement on wage deductions is accepted, including by the Labor Inspectorate, is to secure the employer’s claim to cover the employee’s meal costs. If an employer provides meals to its employees through meal vouchers, the employee is entitled, under the Labor Code, to a meal voucher for every day on which they worked at least four hours. In such a case, however, the employer incurs costs, which it unilaterally recovers through deductions from the employee’s wages. However, this practice contradicts the above interpretation, since, based on the foregoing, the employer would have to enter into an agreement with the employee regarding wage deductions at the end of each calendar month, i.e., at a time when the claim already exists, with settlement occurring only on the next payday. However, such a procedure would clearly be administratively burdensome, and it must be noted that it reflects the inadequate legal regulation of this issue; for this reason, it is tolerated by the Labor Inspectorate.
In conclusion, we state that if, as an employer, you enter into employment contracts with your employees that include such a pre-agreed wage deduction agreement, this agreement is invalid, and you are not authorized to make wage deductions from employees based on it. If you make wage deductions based on such an agreement, please be advised that this constitutes an unlawful act. Under certain circumstances, it is possible that you may be committing the criminal offense of failure to pay wages and severance pay under Section 214 of the Criminal Code, because by doing so, you would be paying the employee a lower amount than they are entitled to.
