contract-law employment
Prohibition of pledges and assignments
<p>In lay-mans terms, what does a clause in a contract mean when it says:</p>
<blockquote>
<p>The employee is generally prohibited from assigning or pledging salary requested to third parties.</p>
<p>The employer shall charge a reimbursement of expenses in the lump of 15 EURO for the initial processing and for each subsequent transfer of a pledge in case remuneration is pledged.</p>
</blockquote>

<p>If the translation is correct, an assignment or pledge is an irrevocable pre-dispute grant of a property interest in future wages, and such an arrangement will not honored by the employer in the absence of a specific exception to the general rule of law prohibiting such arrangements (these arrangements are functionally equivalent to indentured servitude which is just a short step removed from slavery).</p>

<p>An assignment is an irrevocable transfer of the right to future income that will be paid to the assignee that is a property right in that income. A pledge grants an irrevocable property right to future income to the beneficiary of the pledge in the event that a debt is not paid as agreed without the need to resort to filing a lawsuit (it is functionally equivalent to a confession of judgment paired with a garnishment).</p>

<p>Assignments and pledges of income from property or a business is allowed, but you can't generally do that with wage or salary income as a matter of public policy.</p>

<p>For example, you cannot make an irrevocable transfer of 25% of your future income for five years or until the car is paid off to pay for a new car. You can sign a promissory note to pay a certain amount of money that happens to be equal to 25% of your income, and can receive the money from your employer and pay it to the creditor. But, that is a contract right and not a property right, which means that you can unilaterally breach it subject to being sued for non-payment, that the contract debt will not survive a bankruptcy, and that a lawsuit has to be commenced and won to collect that debt involuntarily. If the car loan is not paid as agreed, and you don't go bankrupt, the creditor can sue you, win and garnish your wages after winning, but only then.</p>

<p>But, there are exceptions to the general rule prohibiting the assignment or pledge or future wage and salary income, however, on various legal theories (e.g. that future wages and salary are community property of spouses). </p>

<p>For example, sometimes this kind of wage assignment is permitted in the context of a divorce settlement. And, if it is permitted by law, the company will charge you to set it up, just as it would if your wages were garnished to collect on a post-dispute judgment.</p>

<p>In the absence of more context --and perhaps there being some translation inaccuracy--, my understanding is that the clause entitles the employer to charge the employee a fee of 15 Euros (or deduct it from from employee's paycheck) each time the employer complies with employee's request to set up transfers (such as donations) of some amount or portion of his subsequent paychecks. The 15 Euro fee is applicable only for setting up a distribution, not each time this distribution is executed.</p>

<p>Suppose an employee wants to donate to his church 40 Euros from each monthly paycheck. The employee asks his employer to set up that distribution. The employer will charge the employee 15 Euros to set that up. Henceforth, the employee's paychecks will be his monthly salary minus 40 Euros. Those 40 Euros will be deposited directly by the employer to the church.</p>

<p>Months later, the employee changes his mind. He no longer wants to donate to the church. Instead, he wishes to donate 50 Euros/month to his political party. He notifies his employer of his change of mind, thereby <em>transferring</em> his pledge to the political party. The employer will charge another 15 Euros and henceforth the deposits will be made to the political party.</p>

<p>Later on, the employee changes his mind again. Now he want to split his donations: 30 Euros to his political party, 10 Euros to a hospital, and 10 Euros to a museum. This involves two transfers of pledge: one benefiting the hospital, and one benefiting the museum. The employer will charge the employee 30 Euros for implementing these two <em>transfers of [employee's] pledge</em>.</p>

<p>(side note: the employee's motive to have his employer implement the salary pledges instead of him making the donations by himself might be (1) to streamline his tax filings; and (2) to simplify his burden of proof that his actual tax bracket shall be lower than what is apparent from payroll records)</p>
