Direct Earnings Attachments - Employers

We have a duty to collect any outstanding payments that are owed to us under the rules of the  Social Security Administration Act 1992 .
Local authorities have the power to recover overpaid housing benefit by deductions from earnings without the need to apply for a court order. This is done using Direct Earnings Attachments (DEA).
Local authorities were given this power by  The Social Security (Overpayments and Recovery) Regulations 2013 .

Why we use a DEA

Not everyone enters into a voluntary repayment agreement. DEAs give us the opportunity to recover overpaid benefits from debtors who are employed if they:

• refuse to pay
• are unable to agree an acceptable repayment plan
• have defaulted on a repayment plan

Employer's responsibilities

Employers have a legal obligation to implement a DEA for the council. 

The exception is if you are a:

• new business - for instance, if you started trading within the current financial year
• micro business - having fewer than 10 employees

In these cases you are not obliged to operate a DEA, although you may do so if this is agreed with your employee.

If you fail to comply with your duties, you could be fined up to £1,000.

As an employer, you have a legal obligation to:

• implement a DEA when we ask you to make deductions from the employee's net earnings.
• make payments of the amounts deducted to us by the 15th day of the 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, or your employee leaves your employment.
• make sure you take the right amount from your employee's earnings each week or month and pay it to us.

  You must tell us if:

• we ask you to operate a DEA for someone who does not work for you.
• an employee with a DEA leaves your employment.

You will receive a notice letter from us. You must tell us within 10 days of receiving the letter if any of the above applies to you or if your business ceases trading.

Email us at sundrydebtors@castlepoint.gov.uk 

You must tell your employee in writing of:

• the amount of the deduction taken, including any amount taken for administrative costs (it is enough for this to be shown on their payslip)
• how that deduction was calculated

You must make a record of this by the payday after the DEA deduction was taken.

Working out the amount to deduct

When calculating the DEA deductions amount, you must:

• make sure that your employee has enough net earnings in the pay period for you to calculate a deduction.
• check that the correct percentage rate has been applied against those net earnings.
• check that the total of all the deductions does not leave the employee with less than the protected earnings proportion.
• work out the employee's net earnings.
• use the table at the bottom of this page to find the right deduction percentage rate for the employee's net earnings.
• apply the percentage figure against the net earnings figure to calculate the amount to be deducted.

Which payments are counted as earnings

For the purposes of a DEA, these payments are counted as earnings:

• wages or salary
• fees
• bonuses
• commission
• overtime pay
• statutory sick pay
• occupational pensions if paid with wages or salary
• Compensation payments

Net earnings

You must take the amount for the DEA directly from your employee's net earnings.

Net earnings are the earnings left after deduction of:

• Income Tax
• Class 1 National Insurance contributions

contributions to a work place pension including:

• Additional Voluntary Contributions
• Free Standing Additional Voluntary Contributions
• Stakeholder Pension Contributions

Protected earnings
Deductions must not leave the employee with less than the protected earnings limit of 60% for each pay period.
This includes adjustments for an incorrect deduction and any other deductions in place.

 

Amounts to be deducted by employer

Weekly net earnings	Monthly net earnings	Deduction rate (% of net earnings)
Less than £100	Less than £430	0%
£100 to £159.99	£430 to £689.99	3%
£160 to £219.99	£690 to £949.99	5%
£220 to £269.99	£950 to £1,159.99	7%
£270 to £374.99	£1,160 to £1,614.99	11%
£375 to £519.99	£1,615 to £2,239.99	15%
£520 or more	£2,240 or more	20%

 

Rounding

The exact amount of the net wage is used against the table. If the percentage amount calculated results in a fraction of a penny, it should be rounded to the nearest whole penny. If it is exactly half a penny, it should be rounded down to the nearest whole penny.

  Examples of DEAs

Example A

A person with net earnings of £385 per week and no attachment orders:

• deduction of 15%
• deduction is £57.75 per week

Example B

A person with net earnings of £250 per week with an existing attachment order of £60 per week for child maintenance:

• deduction of 7%
• deduction is £17.50 per week

Example C

A person with net earnings of £1,620 per month with existing priority attachment orders of £486:

• deduction of 15%
• deduction should be £243 per month

However, this would breach the protected earnings limit of 60%. 

Example C calculation

• earnings x 40% = £648 (maximum amount for total deductions) 
• existing priority attachment orders = £486 
• DEA deduction = £243 
• £648 - £486 = £162 (maximum amount available for the DEA deduction)

The protected earnings limit means that, in this case, the DEA deduction amount will be restricted to £162.

Employees who are paid every 2 weeks

If an employee is paid every 2 weeks, the total net wage is divided by 2 and the table is used to check the percentage rate.

Employees who are paid every 4 weeks

If an employee is paid every 4 weeks, the total net wage is divided by 4 and the table is used to check the percentage rate.

Holiday pay

If an employee is paid a wage which includes holiday pay paid in advance, the net wage is averaged, and the percentage rate applied to the average figure.

For example:

The employee received one week’s wage and 2 weeks holiday pay.

Total net payment for 3 weeks = £850:

• £850 ÷ 3 = £283.33
• £283.33 x 11% = £31.17

Total deduction from the net wage for 3 weeks of £850 = £93.51 (£31.17 x 3).

Administrative costs

For each pay period when you calculate the DEA deduction, you can charge £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.

Failing to take deductions or making incorrect deductions

You should make corrections on the next payday if you:

• fail to take a deduction from the employee's net earnings when you should have
• take an incorrect amount

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

1. Deduct the amount required for the current pay period.
2. Include the difference between the incorrect and correct amount for the previous period.

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

1. Deduct the amount required for the current pay period.
2. Reduce that deduction amount by the excess previously taken.

If a deduction is reduced because the DEA (along with any other orders) will breach the 60% protected limit, this is not a shortfall.

A shortfall only occurs when an incorrect amount has been deducted in error, or where one or more deductions have been missed.

If your 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 deductions for a DEA. 

If your employee has any other deduction orders against them, there are rules that tell you which money you should take first.

These take priority over a DEA:

• Deduction from Earnings Order from the Child Maintenance Group 
• Attachment of Earnings Order for Maintenance or Fines
• Council Tax Attachment of Earnings Order

Student loans

A student loan repayment also takes priority over a DEA. 

Once these priority orders have been considered in your calculation, a DEA will then take priority in relation to other orders or notices in date order. The amount you can deduct will depend on the available net earnings above the protected earnings limit of 60%.

If your employee does not earn enough

If the weekly or monthly earnings are below the threshold you cannot calculate a DEA deduction.

You must tell the council why a deduction cannot be made by using a DEA payments schedule.

You must continue to calculate whether a DEA deduction can be made each pay period until either:

• we tell you to stop.
• your employee leaves your employment.

If your employee thinks the amount they owe is wrong

If your employee thinks that the amount of money they owe is wrong, tell them to email us urgently at sundrydebtors@castlepoint.gov.uk.

If your employee thinks the deduction is too much

If they think that the amount you have calculated is too much, check that the amount being deducted is correct according to table, based on 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, ask them to contact us.

Making payments to the council

We ask you to make payments in line with your payroll.

If your employee is paid weekly you must calculate and deduct the payment every week. You can pay us every 4 weeks if you prefer.

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

When you get a notice to operate a DEA, you must:

• make regular payments to us until we tell you to stop or the maximum amount to be recovered has been taken from your employee’s earnings
• pay the amount you have taken from your employee's wages to us as soon as possible or by the 15th of the month after you took it

BACS (electronic money transfer)

This is our preferred method of payment, because it is secure and quick.

When setting up a payment, you will need:

• our bank sort code: 30-91-56
• our bank account number: 00465509
• our account Name : Castle Point Borough Council
• reference: Account/Invoice number

If the payment is for one employee, enter the employee's account/invoice no. 

If the payment covers multiple employees, you will need to send multiple payments. Quote each individual invoice number to make sure payments are allocated correctly.

If you are paying by BACS, you will need to send a DEA payment schedule to us so we know who the payment refers to.

DEA payments schedule

  The DEA payments schedule must include the following details for each person:

• their full names - forenames and surname
• their invoice number as shown on the DEA notice you were sent
• the amount of the deduction that has been deducted or the reason why a deduction cannot be made

The amount of the automated credit transfer must be the same as the total amount of deductions shown on the DEA payments schedule. 

Direct Earnings Attachment Payments Schedule [pdf] 114KB

Email the DEA payments schedule to sundrydebtors@castlepoint.gov.uk and the payment can follow. 

Include 'DEA notice' in the subject of your email.

Change of circumstances

If there is a change of circumstances which means that you can no longer operate the DEA, you must tell us within 10 days of that change happening.