/ 4 November 2013

Don’t let employer collect debts, says Godsell

Don't Let Employer Collect Debts, Says Godsell

Former AngloGold Ashanti chief executive Bobby Godsell wants a ban on garnishee orders. "It is not the job of the employer to collect somebody else's credit." 

Court-ordered deductions from South African workers' wages to repay debt to creditors should be banned, he stated.

"The extender of credit should do his own work in collecting," Godsell, who is also chairperson of Business Leadership South Africa, said in an interview in Johannesburg. "I do not think it's in principle the job of the employer to collect somebody else's credit, deducted at the source."

High levels of debt among workers was a reason behind the violent strike at Lonmin's Marikana mine in August 2012, according to the government.

So-called garnishee orders compel employers to deduct debt payments from workers' paychecks before wages are paid, often resulting in a smaller take-home amount.

It is possible that a worker with a gross earnings of R10 000 a month takes home only R2 000 – R3 000 because of these deductions, said Godsell, who served as chief executive of AngloGold from 2004 to 2007.

"It's the person who extends the credit who should be thinking about the amount of credit extended, how it's going to be repaid and who is responsible for the repayment," Godsell said on Monday. "They should not become a sort of privileged creditor of the payroll." – Bloomberg