Africa-Press – Namibia.
A local microlending company, Entrepo Finance was found in favour over its suit against the government through the finance ministry after the Windhoek High Court on Friday ordered the continuation of the payroll deductions on the government’s Payroll Deduction Management System (PDMS).
The case stems from the Ministry of Finance issuing a directive on 28 August, which informed government employees and financial institutions that all discretionary payroll deductions through the PDMS, which is operated by Avril Payment Solutions, will be discontinued from 30 November 2025.
The directive had indicated that after 30 November, no new discretionary payroll deductions may be loaded onto the PDMS and that only existing loans already linked to the system will continue to be serviced until they are fully repaid. However, statutory deductions such as employee tax payments, pension and social security contributions remained uninterrupted on the system.
The micro-lender through an urgent application had claimed that the decision to discontinue deduction codes from being loaded onto the government’s payroll deduction management system was “irrational, irregular and unreasonable.”
It requested the court to keep the codes active until it reviews the ministry’s decision in its entirety. The finance ministry had counter-argued that payments made through the PDMS to microlenders did not qualify as payments permitted under the Labour Act. It further claimed that according to the Act, employers are not permitted to make such deductions directly from an employee’s paycheck monthly without permission and that payments can only be permitted in situations such as a court order, an arbitration award, or an agreement made in writing.
The phasing out of the PDMS had meant that lenders will be required to conduct proper affordability valuations and carry more risk themselves. In a ruling delivered last Friday, the court granted the continuation of the government’s payroll deduction system, allowing approved deductions, such as loan repayments, to remain in force until determination of the relief sought by Entrepo.
The court directed the finance ministry from interfering in the loading of new deductions onto the PDMS and also to desist from issuing instructions that no new deductions may be loaded onto the system.
It further ordered the continued operation of the system, with or without Avril Payroll Deduction Management (Pty) Ltd, as of 17h00 on 29 August, pending the determination of relief sought by the microlender.
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