An extremely important topic for employees is related to the various types of salary deductions, a practice some employers resort to without this being in accordance with the law. As a result, employees find themselves in a situation where their salaries are unilaterally reduced by the employer for various reasons.

However, salary deductions are subject to very strict regulations governed by current legislation. These are found both in labor law and in the Civil Procedure Code, as well as in the Fiscal Procedure Code.

Thus, the main types of legal deductions that can be applied to the salary are:

a) Contributions and income tax on salary;

b) Union dues – only at the place where the employee has their main position, up to 1% of the gross income;

c) Contributions to the voluntary pension pillar (when this is paid by the employee) – up to 15% of the monthly gross salary income;

d) Amounts representing material guarantees – only in the case of managers;

e) Damages caused to public property through illicit acts;

f) Garnishments – deductions made within the forced execution procedure, i.e., based on an enforceable title: court judgments, authentic documents (notarial), loan contracts, acts issued by tax authorities, etc.

f1) Child support – indicated by a court decision enforced under the forced execution procedure; it can be a fixed amount or a percentage of the net salary. In the case of a fixed amount withheld from the salary, it must be updated quarterly with the inflation index (Civil Code, Article 531 paragraph 1).

f2) Other garnishments – taxes, fines, credits, etc.

These garnishments are not based on a court decision since loan contracts and enforcement decisions issued by tax/local authorities are enforceable titles.

According to Emergency Ordinance no. 99/2020 published in the Official Gazette, in the case of budgetary claims subject to forced fiscal execution (except for forced executions applied to recover budgetary claims established by court judgments pronounced in criminal matters), forced executions are suspended until December 31, 2020, inclusive.

Budgetary claims, according to the Fiscal Procedure Code, are those claims that give the right to collect any amount due to the consolidated general budget, representing the main budgetary claim and the accessory budgetary claim: taxes, contributions, fines, and other budgetary revenues, as well as their accessories.

Amounts representing the value of benefits CANNOT be garnished! Calculation method: the value of the benefit is added to the gross amount for taxation purposes, and after taxation, the after-tax value of the benefit is subtracted, leaving the net value of the income (“remaining payable amount”). Garnishment is applied to this value.

g) Damages caused to the employer – damages caused by the employee to the employer are also a type of legal deduction.

If the employer finds that their employee has caused damage through fault and in connection with their work, they can request the employee, through a notice of finding and evaluation of the damage, to recover its equivalent, by mutual agreement, within a period not less than 30 days from the date of communication. According to Article 254 paragraph 3 of the Labor Code, the notice of finding and evaluation of the damage (presuming it is legally and correctly prepared) has the power of an enforceable title ONLY concerning the employment relationship with that employee – who caused the damage – and the future employer (if any).

Although, based on the notice of finding, a payment agreement should be made for the damage stated in the NOTICE, the agreement is not an enforceable title on the basis of which salary deductions can be made (within the limits provided by Article 254 paragraph 4 of the Code).

The deduction made by the employer based on the NOTICE is a legal deduction.

Garnishable and Non-Garnishable Income

According to Article 729 of the Civil Procedure Code, salaries and other periodic income, pensions granted within social insurance, as well as other amounts periodically paid to the debtor intended to ensure their means of subsistence, can be garnished as follows:

1. Up to half of the net monthly income for amounts owed as maintenance obligations or child allowances;

2. Up to one-third of the net monthly income for any other debts.

Moreover, in paragraph 2 of the same article, it is stated that if there are multiple garnishments on the same amount, garnishment cannot exceed half of the debtor’s net monthly income, regardless of the nature of the claims, except where the law provides otherwise.

The calculation base for deductions (in the case of garnishments) is the net salary (in the understanding of the Civil Procedure Code, the net salary referred to is “the remaining payable amount”).

Thus, amounts representing the value of benefits CANNOT be garnished! Calculation method: the value of the benefit is added to the gross amount for taxation purposes, and after taxation, the after-tax value of the benefit is subtracted, leaving the net value of the income (“remaining payable amount”). Garnishment is applied to this value.

However, there are incomes that cannot be garnished or can be garnished to a limited extent:

a) Income that cannot be garnished: state allowances and child benefits, assistance for caring for a sick child, maternity benefits, benefits granted in case of death, scholarships granted by the state, per diems, and any other such special purpose benefits established according to the law;

b) Limited garnishable income: assistance for temporary work incapacity, compensation granted to employees in case of termination of the individual labor contract based on any legal provisions, as well as amounts due to the unemployed according to the law, can only be garnished for amounts owed as maintenance obligations and compensation for damages caused by death or bodily injury. Garnishment can only be made up to half of their amount.

It is also worth mentioning that if the income obtained by the debtor is lower than the minimum net salary on the economy, they can only be garnished on the part that exceeds half of this amount.

In the situation of multiple creditors, amounts are retained and distributed in the following order:

– Claims resulting from the legal maintenance obligation, child allowances, or the obligation to pay other periodic amounts intended to ensure means of subsistence;

– Fiscal claims resulting from taxes, contributions, and other amounts established according to the law, owed to the state budget, the social insurance budget, local budgets, and special funds budgets;

– Claims resulting from loans granted by the state;

– Claims representing compensation for damages caused to public property through illicit acts;

– Claims resulting from bank loans, product deliveries, service provision, or work execution, as well as from rents or leases;

– Claims representing fines owed to the state budget or local budgets;

– Other claims.

If there are claims with the same order of preference, unless otherwise provided by law, the realized amount is distributed among creditors proportionally with each one’s claim.

Obligations of the Third-Party Garnishee

Within 5 days of communicating the garnishment, and in the case of future amounts, from their due date, the third-party garnishee is obliged to:

1. Deposit the amount of money if the garnished claim is due, or, as the case may be, make unavailable the garnished incorporeal movable property and send proof to the judicial executor;

2. Pay directly to the creditor the amount withheld and due, in the case of amounts owed as maintenance obligations or child allowances, as well as in the case of amounts owed as compensation for damages caused by death, injury, or health damage.

If multiple garnishments are established, the third-party garnishee is obliged to communicate, as the case may be, to the executor or creditors the name and address of the other creditors, as well as the amounts garnished by each.

The employer is prohibited from making salary deductions based on debt decisions. If they have monetary claims to cover any damage caused by the employee, the employer is obliged to address the civil court, so according to common (civil) law, with an action for claims.

In the civil process, the employer must prove the existence of the employee’s commission or omission act, their guilt, the causative consequences of damages, and the concrete extent of the losses suffered.

Only on the basis of the final and irrevocable court decision obtained can they later make deductions from the salary of the guilty employee.

Even on the basis of a payment commitment signed by the employee, the employer does not have the right to make salary deductions. However, the employee may, according to the signed commitment, voluntarily pay the amounts established to be paid monthly until the full coverage of the damage caused to the employer after receiving the full salary.