Direct Earnings Attachments - An Employer's Guide

On 4 March 2013 the Social Security (Overpayment and Recovery) Regulations 2013 were laid before Parliament effectively allowing the Department of Works and Pensions (DWP) and councils to introduce Direct Earnings Attachments (DEAs) to recover money owed. These regulations became statute on 8 April 2013 and are available on the internet.

If you are using a computerised payroll system and you receive a request to set up a DEA you will need to:

  • Manually calculate the amount to deduct from earnings – Visit the How do I calculate the amount to deduct? section.
  • Manually check whether there are any other orders currently in place, the DEA may take priority over these. Visit the What if my employee has other court orders against them? section for a full list of the orders and how they may impact on a DEA.
  • Where the DEA does take priority over another order, consider whether other orders need to cease or deduction amounts be recalculated.
  • Ensure, in cases where other orders cannot be applied, that these are removed manually from the payroll system and subsequently re-instated once a DEA ceases.

The information below is intended to help you understand the main points about DEA and is not a full description or statement of the law.

Introduction to DEAs

The Department for Works and Pensions (DWP) and Local Authorities are responsible for recovery of money owed to the State as a result of debt arising under the Social Security Administration Act 1992.

Where the Secretary of State, or authority administering housing benefit, has been unable to recover money owed to the DWP by customers not currently in receipt of benefit, that money may now be recovered by a deduction from the customer’s earnings.

The Welfare Reform Act 2012, which became law in March 2012, allows DWP Debt Management and Local Authorities to ask you, as an employer, to make deductions directly from a customer’s earnings. We do this by asking you to operate a Direct Earnings Attachment (DEA). We do not have to go through the civil courts to do this, unlike the Attachment of Earnings Order (AOE) process, for example.

A DEA has its own regulations which follow some of the workings of a Deduction from Earnings Order (DEO) and some workings of an Attachment of Earnings Order (AEO). A DEA does not replace any of these other orders and in some circumstances employers may receive requests to implement deductions for a DEO and a DEA for the same employee.

You may be familiar with a DEO if you have ever been ordered to make deductions from an employee’s earnings or pension for the Child Maintenance Group (CMG) (previously known as the Child Maintenance and Enforcement Group (CMEC, or the Child Support Agency (CSA)), as a way of collecting child maintenance from a non-resident parent.

Your responsibilities

As an employer, you have a legal obligation to:

  • Implement a Direct Earnings Attachment when we ask you to by making deductions from the employee’s net earnings.
  • Make payments to us by the 19 of each month following the month the deduction is made.
  • Keep a record of each deduction taken, and the employee from whose earnings it was made.
  • Continue to operate the DEA until the balance is paid in full, we advise you to stop or your employee leaves your employment.
  • If you fail to comply, you may be subject, on conviction, to a fine of up to £1,000.

You must also notify us by writing to the address shown on the DEA request letter within 10 days if:

  • We ask you to operate a DEA for someone who does not work for you.
  • An employee for whom you are operating a DEA leaves your employment.
  • You are a new business, or a micro business (having fewer than 10 employees), as defined in the Regulations. If you are a new or micro business you are not obliged to operate a DEA although you may do so if this is agreed with your employee.
  • Your business ceases trading.

To your employee, you have a duty to notify them in writing of the amount of the deduction taken, including any amount taken for administrative costs (see section on Administrative Costs). If this information is shown on the payslip, it will suffice. You must do this (and record it) no later than the payday after the one on which the deduction for the DEA was taken.

The definition of earnings for DEAs

The table below lists what counts and what does not count as earnings

What counts as earnings for DEAs What does not count as earnings for DEAs
Wages Statutory Maternity Pay
Salary Statutory Adoption Pay
Fees Ordinary Statutory Paternity Pay
Bonuses Additional Statutory Paternity Pay
Commission Any pension, benefit, allowance or credit paid by DWP, a Local Authority or HMRC
Overtime pay A guaranteed minimum pension under the Social Security Act 1975
Most other payments on top of wages Amounts paid by a public department of the Government of Northern Ireland or anywhere outside the United Kingdom
Occupational Pensions (if paid with wages or salary) Sums paid to reimburse expenses wholly and necessarily incurred in the course of the employment
Compensation payments Pay or allowances as a member of Her Majesty’s Forces, other than pay or allowances payable to them by you as a special member of a reserve force
Statutory Sick Pay Redundancy payments and pay in lieu of notice

If the only earnings your employee receives are those in the right hand column, you cannot calculate a DEA deduction. Similarly, if any of these are paid as part of the earnings, they are not to be included as part of the employee’s net earnings.

You must continue to calculate a DEA deduction, if applicable, each pay period until the balance is paid in full, we tell you to stop or your employee leaves your employment.

Net Earnings

You must take the amount for the DEA directly from your employee’s net earnings. (Net earnings are the amounts the employee earns after taking off income tax, National Insurance and contributions to a pension, including Additional Voluntary Contributions, Free Standing Additional Voluntary Contributions and Stakeholder Pension Contributions).

Operating a DEA

How do I operate a DEA?

We will send you a letter (notice) which tells you to apply a DEA for your employee. This notice will include a payment schedule which will inform you of:

  • when to send us payments
  • where to send us payments
  • how you can pay us.

We will include the National Insurance number of our customer on all our letters we send to you.

We will ask you to make deductions in line with your payroll frequency. However, payments can be remitted monthly to us.

It is your responsibility to ensure you take the right amount from your employee’s earnings each week or month and pay it to us.

When you calculate the DEA deduction amount, you must:

  • Ensure that your employee has enough net earnings in the pay period for you to calculate a deduction (see 'table of amounts to be deducted by employer' below).
  • Check that the correct percentage rate has been applied against those net earnings.
  • Check that the total of all deductions does not leave the employee with less than the protected earnings proportion , which is 60% of their total net earnings during the calculating period to which the deduction relates.

If there is already a DEO in place from CMG, or other priority orders are in place, please refer to the section 'Examples of DEA in practice' below.

Table of amounts to be deducted by employer (PDF)[37kb]

How do I calculate the amount to deduct?

You will need to:

  • Work out the employee’s net earnings as defined previously.
  • Use the table below to find the deduction percentage rate for the employee’s net earnings.
  • Use the percentage figure against the net earnings figure to calculate the amount to be deducted.

Table of amounts to be deducted by employer

Holiday pay

If an employee is paid a wage which included holiday pay paid in advance, the net wage is averaged, and the percentage rate applied to the average figure, as follows:

Employee received one week’s wage and two weeks holiday pay.

Total net payment for three weeks = £850
£850/3 = £283.33
£283.33 x 11% = £31.17

Total deduction from net wage of £850 - £93.51 (£31.17 x 3)

Rounding

The exact amount of the net wage is used against the Table of amounts to be deducted by employer (PDF)[37kb]. If the percentage amount calculated results in a fraction of a penny, it is rounded to the nearest whole penny, with a result of exactly half a penny being rounded down to the nearest whole penny below, as follows:

Net wage £235.63 per week
£235.63 x 7% = £16.4941
Weekly deduction = £16.49
Net wage £1,547.99 per month
£1,547.99 x 11% = £170.278
Monthly deduction = £170.28

Administrative costs

For each period when you calculate the DEA deduction, you may also take up to £1 from your employee’s earnings towards administrative costs. You can take this even if it reduces the employee’s income below the protected earnings proportion.

Failure to take deductions or incorrect deductions made

If you fail to take a deduction from the employee’s net earnings when it is appropriate to make a deduction, or take an incorrect amount you should correct this on the next payday or paydays.

Where the incorrect amount is because the deduction was less than the amount specified under the regulations then you should first:

  • deduct the amount required for the current pay period
  • then include the difference between the incorrect and correct amount.

Please note that the total to be deducted, including adjustments for an incorrect deduction, along with other deductions in place, must not leave the employee with less than the protected earnings limit of 60% for each pay period.

Where the incorrect amount is because the deduction was more than the amount specified under the regulations then you should first:

  • deduct the amount required for the current pay period
  • then reduce the deductions amount by the excess previously taken.

It is important to note that if a deduction is reduced in any week or month simply because the DEA along with other orders in place will breach the protected earnings limit of 60% (Example 3 of 'examples of DEA in practice below' refers) this is NOT a shortfall as described. A shortfall only occurs when an incorrect amount has been deducted in error, or when one or more deductions have been missed.

Examples of DEA in practice

Example 1

A weekly paid earner with no prior attachment orders. A person with net earnings £385 per week will have a deduction of £57.75 per week (in accordance with the deduction rates table at 15%)

Example 2

A weekly paid earner that already has an existing attachment order for child maintenance deductions. A person with net earnings of £250 per week with an existing attachment order of £60 per week for child maintenance will have a deduction of £17.50 (in accordance with the deduction table at 7%)

Example 3

A monthly paid earner with existing priority attachment orders totalling £486. A person with net earnings of £1,620per month should have a DEA deduction of £243 (in accordance with the deduction table at 15%).

However, this deduction in addition to the existing deductions of £486, will breach the protected earnings limit of 60%. The maximum deduction we can make in this instance would be £162.

Calculation:
Earnings x 40% = £648 (max amount for total deductions)
Existing priority attachment order in place = £486
DEA deduction is £243
£648 - £486 = £162 (maximum amount available for the DEA deduction)

Therefore, although the deduction rates table states that a deduction of £243 should be taken, the protected earnings limit means that the amount will be restricted to £162.

What if my employee does not earn enough for a deduction?

If the weekly or monthly earnings are below the threshold (see table of amounts to be deducted by employer (PDF)[37kb]) you cannot calculate a DEA deduction.

You must continue to calculate a DEA deduction, if applicable, each pay period until either we tell you to stop or your employee leaves your employment.

Making payments to us

On receipt of a notice to operate a DEA, you must:

  • Make regular payments until you calculate the balance is cleared.
  • Or make regular payments to us until informed by us to stop.
  • Pay the amount you take from your employee’s wages to us as soon as possible, but no later than the 19th day of the month following the month in which you have taken it. For example, if you take the money on 30 September, you must send it to us before 19 October; if you take the money on 1 October, you must send it to us before 19 November.

You can make a payment to us by the following methods:

  • telephone using a debit or credit card
  • internet
  • bank transfer
  • cheque.

Our bank details are as follows:

Account: HSBC Basingstoke and Deane General Account
Sort Code: 40-09-18
Account Number: 51521691

When making payment, by any method, quote the employee’s invoice number

To pay by cheque, make it payable to ‘ Basingstoke and Deane Borough Council ’ and write the employee’s Invoice Number on the back of the cheque. Please send cheques to:

Basingstoke and Deane Borough Council
Civic Offices
London Road
Basingstoke
RG21 4AH

Please provide a payment schedule if you are making payment in respect of more than one employee at the same time.

Frequently asked questions

What if my employee has other court orders against them?

Courts can make orders that mean you must take money directly from your employee’s earnings in a similar way to how we ask you to make deductions for a DEA. Your employee may have an Attachment of Earnings Order (England and Wales), Earnings Arrestment (Scotland) or a Deduction from Earnings Order (for Child Maintenance), for example. The DEA can be imposed without a court order, but if your employee has any other deduction orders against them there are rules that tell you which money you should take first.

If your employee has one or more of the following in place, these will take priority over a DEA:

England & Wales

  • Deduction from Earnings Order (DEO) from CMG
  • Attachment of Earnings Order (AEO) for Maintenance or Fines
  • Council Tax Attachment of Earnings Order (CTAEO)

Scotland

  • Deduction of Earnings Order (DEO) from CMG
  • Earnings Arrestment (EA)

England, Wales & Scotland

  • Student Loans – A student loan repayment also takes priority over a DEA

Once these priority orders have been taken into account in your calculation a DEA will then take priority in relation to other orders or notices in date order (in Scotland this will be the date they were received). The amount you can deduct will be subject to the available net earnings above the protected earnings limit of 60% of net earnings.

What if my employee thinks the amount they owe is wrong?

If your employee thinks that the amount of money they owe is wrong, you should advise them to contact us on 01256 844844 (select option 2).

What if my employee thinks the amount of the deduction is too much?

If they think that the amount you have calculated is too much, you should first check that the amount being deducted is the amount according to the table of amounts to be deducted by employer (PDF)[37kb], on the basis of their earnings and other orders in place. If the amount is correct, you should explain that you have made the deduction as instructed to do so. If they feel that this is too much for them to manage, you should advise them to contact us.

What happens once I am operating a DEA?

Once you have started operating a DEA, you must continue to make payments to us until we tell you to stop, or until the invoice balance has been paid in full. We shall contact you if we require the deductions to cease.

If there is a change in circumstances which means that you can no longer operate the DEA, you must notify us in writing within 10 days.

Please contact us on 01256 844844 if you require any further information or help in operating a DEA.

Contact us

  • Contact us online
  • 01256 844844
  • Civic Offices
    London Road
    Basingstoke
    RG21 4AH
  • Opening hours
    Monday to Thursday
    8.30am to 5pm
    Fridays
    8.30am to 4.30pm
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