Can employer pay up front and have employee pay it back?
Question: An employee has a debt of $4,000 and his wages are going to be garnished to pay the creditor. Can the employer pay the sum upfront and then garnish wages until the debt is repaid to the employer? Can garnishment be used as a factor in dismissal?
Answer: The process of garnishment or attachment of wages is generally one of the final steps taken by a creditor. Garnishment is a process that invokes the jurisdiction of the court to assist the creditor in collecting the debt. The applicable legislation and its specific content vary from jurisdiction to jurisdiction. In Alberta, the process is governed by the Civil Enforcement Act and regulations and the Rules of Court.
The availability and scope of the garnishment procedure may also depend on the type of debt being enforced. For example, maintenance orders may be governed by different rules than those governing the recovery of ordinary commercial debts. Unpaid taxes and workers’ compensation claims may also be treated differently. In some cases, a garnishee summons may be issued prior to final judgment.
In an ordinary case, a creditor will garnish a debtor’s wages once the creditor has obtained a judgment for the amount owing. The creditor will then apply to the court for the issuance of a garnishee summons — a court order directed to the garnishee, such as the debtor’s employer, that requires the garnishee pay some portion of the net wages of the debtor to a designated administrative officer. The amount to be paid will be determined according to the statute or regulation governing exemptions and the individual circumstances of the debtor.
As recipient of a garnishee summons, the employer is under a judicial compulsion to comply. The employer does not have the option of negotiating payment with the creditor and assuming the creditor’s role as garnishor. An employer who did so would run the risk of having to make the same payment twice, as the obligation to pay into court would otherwise remain unsatisfied. In some jurisdictions, the issue is specifically covered; see, for example, Rule 60.08(18) of the Ontario Rules of Civil Procedure, which states: “Where, after service of a notice of garnishment, the garnishee pays a debt attached by the notice to a person other than the sheriff, the garnishee remains liable to pay the debt in accordance with the notice.”
Payment of the garnished funds into court allows for determination of the garnishor’s entitlement against other potential creditors and ensures the process is appropriately supervised. It also ensures the debtor is granted the exemptions to which she is entitled and accommodates any change in the debtor’s circumstances.
The employment standards legislation in each jurisdiction typically provides that an employer cannot suspend or terminate an employee because the employee’s wages are garnished. For example, the Alberta Employment Standards Code states:
“No employer or other person may suspend, lay off or terminate an employee for the sole reason that garnishment proceedings are being or may be taken against the employee.” Most statutes also levy significant penalties for employers who have terminated or suspended an employee based on receipt of a garnishee summons.
Tim Mitchell is a partner with Laird Armstrong in Calgary who practices employment and labour law. He can be reached at [email protected] or (403) 233-0050.
Answer: The process of garnishment or attachment of wages is generally one of the final steps taken by a creditor. Garnishment is a process that invokes the jurisdiction of the court to assist the creditor in collecting the debt. The applicable legislation and its specific content vary from jurisdiction to jurisdiction. In Alberta, the process is governed by the Civil Enforcement Act and regulations and the Rules of Court.
The availability and scope of the garnishment procedure may also depend on the type of debt being enforced. For example, maintenance orders may be governed by different rules than those governing the recovery of ordinary commercial debts. Unpaid taxes and workers’ compensation claims may also be treated differently. In some cases, a garnishee summons may be issued prior to final judgment.
In an ordinary case, a creditor will garnish a debtor’s wages once the creditor has obtained a judgment for the amount owing. The creditor will then apply to the court for the issuance of a garnishee summons — a court order directed to the garnishee, such as the debtor’s employer, that requires the garnishee pay some portion of the net wages of the debtor to a designated administrative officer. The amount to be paid will be determined according to the statute or regulation governing exemptions and the individual circumstances of the debtor.
As recipient of a garnishee summons, the employer is under a judicial compulsion to comply. The employer does not have the option of negotiating payment with the creditor and assuming the creditor’s role as garnishor. An employer who did so would run the risk of having to make the same payment twice, as the obligation to pay into court would otherwise remain unsatisfied. In some jurisdictions, the issue is specifically covered; see, for example, Rule 60.08(18) of the Ontario Rules of Civil Procedure, which states: “Where, after service of a notice of garnishment, the garnishee pays a debt attached by the notice to a person other than the sheriff, the garnishee remains liable to pay the debt in accordance with the notice.”
Payment of the garnished funds into court allows for determination of the garnishor’s entitlement against other potential creditors and ensures the process is appropriately supervised. It also ensures the debtor is granted the exemptions to which she is entitled and accommodates any change in the debtor’s circumstances.
The employment standards legislation in each jurisdiction typically provides that an employer cannot suspend or terminate an employee because the employee’s wages are garnished. For example, the Alberta Employment Standards Code states:
“No employer or other person may suspend, lay off or terminate an employee for the sole reason that garnishment proceedings are being or may be taken against the employee.” Most statutes also levy significant penalties for employers who have terminated or suspended an employee based on receipt of a garnishee summons.
Tim Mitchell is a partner with Laird Armstrong in Calgary who practices employment and labour law. He can be reached at [email protected] or (403) 233-0050.
