Deductions from employee wages and deductions from sickness benefits are among the most complex areas of HR and payroll. Although both types of payments are made by the employer, they are governed by different legal regulations, meaning they cannot be handled in the same way. Increasingly, employers are choosing to entrust these responsibilities to professional HR and payroll teams to ensure compliance with law, limits, and proper procedures.

Failing to follow the regulations can lead to serious consequences, including:

• financial penalties,
• civil liability,
• issues with regulatory authorities.

It’s important to remember that wage deductions and sickness benefit deductions are separate matters, each governed by distinct rules. They require different approaches and a thorough understanding of the applicable regulations.

Types of deductions from sick pay and sickness benefit

Employers categorize deductions into three types: alimony-related, non-alimony-related, and voluntary. Each category is subject to its own legal regulations, and employers must adhere to strict limits without exceptions.

Alimony deductions secure funds for entitled individuals, typically children or former spouses. These deductions can amount to up to 60% of net wages (after taxes and contributions). They require a legal basis, such as a court order or a bailiff’s decision.

Non-alimony deductions include other financial obligations like unpaid loans, fines, or taxes with a maximum limit of 50% of net wages. Employers process non-alimony deductions after alimony deductions, always based on a legal basis.

Employers can only make voluntary deductions with the employee’s written consent, including private insurance contributions, company loans, or other voluntary obligations. Even these deductions must respect statutory limits to protect employee rights.

Alimony deductions: priority and limits

Alimony-related deductions take priority over all other deductions. They are executed first, and the maximum allowed is 60% of the net wage, ensuring the financial protection of entitled parties. A valid execution title such as a family court judgment or bailiff’s decision is required.

Non-alimony deductions: rules and restrictions

Non-alimony deductions cover obligations unrelated to alimony, such as fines, tax arrears, unpaid loans, or other civil obligations. The legal limit is 50% of net wages, and they cannot take precedence over alimony deductions. Employers must ensure that:

• these deductions do not conflict with ongoing alimony deductions,
• legal limits are not exceeded,
• the order of deductions follows the legal hierarchy.

Violating the order or limits can lead to serious legal consequences.

When are voluntary deductions allowed?

Voluntary deductions are possible only with the employee’s written consent and can include:

• contributions to private insurance,
• repayment of company loans,
• membership fees or other agreed obligations.

Even with consent, deductions must not reduce wages below the legal minimum, and employers must carefully assess the employee’s financial situation and legal limits.

Deductions from sick pay and sickness benefits

Deductions from sick pay and sickness benefits are governed by the Labor Code and the Act on Pensions and Disability Benefits from the Social Insurance Institution (ZUS). Although both benefits relate to incapacity for work, different rules apply to each. Errors can lead to serious financial and legal consequences.

Sick pay: deductions under the Labor Code

The employer pays sick pay for short-term incapacity. Article 87 of the Labor Code specifies:

• types of allowed deductions,
• their execution order,
• maximum limits.

Typically deductions from sick pay follow this sequence:

• alimony obligations (priority),
• other obligations like employee loans or advances.

Non-compliance may result in employer liability, making strict adherence essential.

Sickness benefits: Deduction limits under ZUS law

ZUS pays sickness benefits once the sick pay period ends. Article 140 of the Pensions and Disability Benefits Act regulates these deductions, setting limits to protect the employee’s income during illness. Deductions cannot exceed a set percentage of the benefit, ensuring funds for basic needs.

Exemption amounts from deductions

These exemptions help employees keep basic financial security and guide how enforcement actions proceed.

Determining deduction amounts

Calculating the deductible amount requires considering net wages, statutory limits, and exemption amounts. Both wage deductions and sickness benefit deductions differ, and each requires a separate approach.

Gross vs. net benefits:

• gross amount – used to calculate the maximum deductible sum
• net amount – the actual sum from which deductions are made.

Employers must also account for mandatory contributions and tax advances before calculating deductions, including:

• income tax advance,
• pension, disability, and sickness contributions,
• health insurance contributions.

Ignoring these steps may lead to legal or financial liability.

Minimum wage as a basis

The minimum wage determines deduction exemptions and statutory limits. Employers cannot reduce wages below this level. Employers must stay updated with current rates to ensure compliance.

Deduction priority and execution order

When multiple deductions coincide, alimony takes priority. Non-alimony obligations follow. Employers must follow this hierarchy to avoid legal issues, repayment obligations, or disputes with employees or creditors.

Employer responsibilities

Employers cannot deduct amounts at their discretion. Compliance with the Labor Code and relevant laws is mandatory. Even in the case of garnishment, employees must retain funds for basic needs. Mistakes may result in:

• financial liability,
• legal disputes,
• damage to employee trust.

Employers should implement internal controls, regular training, and consult experts to ensure accuracy. Proper execution safeguards both the company and its employees.

Deductions after employment ends

After termination, deductions are limited to :

• overpaid wages,
• unreturned company property,
• other obligations with employee consent.

Employers must always obtain written consent and act carefully to avoid legal claims.

Accountability for correct deductions

The employer is fully responsible for correctly calculating and executing deductions. Internal procedures, staff training, and expert consultations are essential to avoid errors, fines, or conflicts. Proper management ensures compliance, legal security, and a positive workplace environment.

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Text based on: INFORLEX