Enforcement is a procedure for the compulsory collection of claims based on enforcement and authentic instruments carried out by courts and notaries.
The enforcement procedure is initiated by the enforcement creditor by proposal or ex officio (when provided by law) based on:
- enforcement instruments (submitted to the court)
- authentic instruments (submitted to the notary).
The latest amendments and supplements to the Enforcement Act have raised questions about whether employers will be relieved of the obligation to enforce wages. It was predicted that wage enforcement would be abolished as early as 2022, but this was postponed to the next year, thus remaining a burden on employers and their accounting departments.
Enforcement on monetary assets
Most enforcement, according to the current system, is carried out by FINA (Financial Agency), but also by HZMO (Croatian Pension Insurance Institute) and employers, who have long objected to this obligation, citing it as a significant administrative burden, as does HZMO.
When is the employer obliged to enforce wages?
Wage enforcement is a procedure for the compulsory collection of claims based on enforcement and authentic instruments carried out by employers on workers' salaries.
The employer enforces the wage and other income based on; a final and enforceable notary decision on enforcement or a debtor's private document (seizure).
When enforcing wages, the employer collects statements (consent) to seizure with the debtor's consent, which are certified by a notary public, and almost no loan is approved in banks without them. Such a document has the nature of an enforcement instrument, according to which the employer must act, or in accordance with Art. 202 of the Enforcement Act, while the bulk of the enforcement the employer carries out on the salary (paid through a bank account) is of that nature.
Restrictions on the enforcement of wages in 2023
The limit up to which enforcement on permanent cash incomes can be carried out in a particular calendar year depends on the published average net salary from the previous year.
The average monthly net salary per employee in legal entities in Croatia for the period January - August 2022 was HRK 7,583 (Official Gazette, no. 125/22). Since 1.1.2023, the euro has become the official currency and legal means of payment in the Republic of Croatia, the relevant amount for the enforcement in 2023 is €1,006.44.
Excluded amounts with respect to income and condition
When the net salary of the worker is equal to or greater than €1,006.44, the following amounts are exempt from enforcement:
- €251.61 if the enforcement is carried out for child support (1/4 of €1,006.44),
- €503.22 if the enforcement is carried out for legal maintenance or compensation for damage caused by impaired health or reduced or lost work capacity, or compensation for lost support due to the death of the support provider (1/2 of €1,006.44),
- €670.96 if enforcement is carried out for the collection of other claims (2/3 of €1,006.44).
When the net salary of the worker is less than €1,006.44, the following amounts are exempt from enforcement:
- 1/4 of the worker's net salary if enforcement is carried out for child support,
- 1/2 of the worker's net salary if enforcement is carried out for legal maintenance or compensation for damage caused by impaired health or reduced or lost work ability or compensation for lost maintenance due to the death of the support provider,
- 3/4 of the debtor's net salary, but not exceeding €670.96 if enforcement is carried out for the collection of other claims.
What is not subject to enforcement?
Not all assets are subject to enforcement. Enforcement cannot be carried out on income based on legal maintenance, compensation for damage caused by impaired health or reduced or lost work ability, and compensation for lost maintenance due to the death of the support provider. In addition, disability pensions, social welfare benefits, benefits received by temporarily unemployed individuals, child allowance, maternity and parental allowances, scholarships, and assistance to students are exempt from enforcement. Benefits for the work of convicts, income based on awards and recognitions, and other income based on special regulations are also protected from enforcement.
If we have income that is exempt from enforcement by law, it is necessary to immediately submit a request to FINA for the opening of a protected account, known as account 35. Those who have funds in multiple banks need to fill out a separate form for each bank. This is an account into which only funds exempt from enforcement are deposited. It cannot be opened in advance, but only after FINA has received an enforcement order. It is important to know that we can dispose of this money without restrictions and that banks do not charge a fee for opening, maintaining, and closing a protected account. When the reasons for the existence of a special account cease, we need to submit a request to FINA for its closure, and FINA will order the bank to do the same.