[Czech Republic] Changes in executions from 1 October 2024

Higher Wage Deductions for Multiple Executions

As of October 1, 2024, an amendment to the Insolvency Act has come into effect, bringing changes to wage deductions. The key change is that employees with four or more ongoing executions can now have up to two-thirds of their remaining net wages deducted. An exception to this rule applies to individuals receiving old-age pensions, disability pensions (second or third degree), or orphan’s pensions. If an employee provides proof to their employer that they receive one of these pensions, and the amount of one-third of their remaining net wage does not exceed a set limit (currently CZK 1,089), a lower deduction of one-third will automatically be applied.

Postponement of the Effects of Execution Orders

Another significant change is that the effects of execution orders will now take place in the following month. Until the end of September 2024, employers were required to implement wage deductions immediately upon receiving an execution order, which was often challenging if the order arrived on the day of the payroll. Now, if an execution order arrives, for example, on November 1, the deduction will only be applied to the wages for November, which are paid in December, even though the employer could theoretically deduct the wages for October, paid on November 15.

This rule applies to all types of execution orders – new deductions, changes in amounts, and the cessation of deductions. In the case of the termination of an execution, it can be more complicated. If a termination order arrives, the law states that deductions must stop in the next payroll. According to some interpretations, deductions can be stopped immediately if it is clear that the execution has been fully terminated.

Continuation of Child Support Payments During Insolvency

Previously, when insolvency proceedings were initiated, employers were required to continue wage deductions, but they withheld the funds and did not remit them to the respective authorities. Now, if the deduction involves regular child support, employers must continue paying it even after the insolvency proceedings begin. Other deductions will still be withheld and retained by the employer.

Advance Payment for Insolvency Costs

Another new provision requires employers to withhold funds to cover insolvency costs if ordered by the insolvency court. These deductions will have priority over others, except for regular child support, which has the highest priority. Similarly, the court may order temporary deductions for insolvency costs after the insolvency process concludes.

These changes will apply to insolvencies initiated after September 30, 2024, meaning employers will likely not encounter deductions for post-insolvency costs for several years.