What is Direct Earning Attachment- A Guide For Microbusiness
An employer is authorised to deduct money from an employee’s pay if the Department of Work and Pension grants them excessive pay. This is termed as Direct Earning Attachment. The first time you get this update is when you are contacted by the DWP Debt Management Team, asking you to deduct the employee’s salaries by operating a DEA.
In England, DWP Debt Management has allowed salaries to be deducted from Scotland and Whales since March 2012, so they don’t need to go through the Civil Courts. Local authorities can recover money by issuing a DEA under the legislation to recover Housing Benefit overpayments, and you will receive separate notifications from them.
A direct earning attachment is ordered if the DWP can’t recover the money from individuals who have yet to receive a benefit and agreed to repay the debt.
Also, there are deductions that we will not discuss here (all can be received for the same employee at the same time as DEA). Generally, a deduction of earning order from the child Maintenance Group will take priority over a Direct Earning Attachment from payment.
Click on the links in the table of contents below to navigate directly to any section
- What type of legal responsibilities does an employer have?
- Calculation of Deductions
- Protected Earnings
- Payments to DWP
- Stop The Deductions
- Additional Duties For Employees
- Inform the DWP:
- Inform Employees:
- Admin Cost:
- Concerns of Employee:
- Exemption of Micro Business
- What are the Responsibilities of DWP Debt Management?
- Wrapping Up
What is the process of receiving an employee’s Direct Earning Attachment (DEA) notice?
DWP Debt Management will notify you by sending a formal notice to every affected employee and ask you to implement a DEA. This notice will have basic processing instructions and the employee’s national insurance number, which you must quote for any similarity or the payments you make.
What type of legal responsibilities does an employer have?
Calculation of Deductions
Every deduction calculation is based on net earnings for every pay date, or it can be fixed based on the amount calculated by DWP.
Protected Earnings
Employees must have at least 60% of their net wage after the following deductions, which are called protected earnings. So, if the DEA deductions take their pay below this amount, you must adjust the order amount so they are left with 60% of net earnings.
Payments to DWP
You must pay the amount deducted to the DWP by the 19th of the day following the month when the deduction is made. You can make these payments by BACS, cheque, or card.
Keep Track of the Employee Records
Also, a record of every employee whose DEA has been made must be kept.
Stop The Deductions
Calculate every Direct Earning Attachment deduction every payday until the DWP tells you to stop, the employee leaves or dies, the amount to recover is no longer outstanding, or the amount recovered changes.
Additional Duties For Employees
Inform the DWP:
Notify the DWP if the employee leaves or no longer works in your company.
Inform Employees:
Inform employees about the deductions and how they were calculated.
Admin Cost:
Employers can deduct up to £1 daily from employees’ earnings for administrative expenses.
Concerns of Employee:
If an employee believes that the employer has deducted more, the employer should calculate again and explain all deductions to the employee.
Exemption of Micro Business
Small businesses with less than ten employees are exempt from DEAs until they grow larger.
What are the Responsibilities of DWP Debt Management?
The DWP must follow up with the employee if the payments are missed. They will also send the refund directly to the employees if the debt is zero or to the employers if no Direct Earning Attachment has been made. However, the DEA Payment will not be made if it was applicable or calculated at a higher rate.
Wrapping Up
Whether you are an employee or an employer, you must know DEAs. This is especially important when you want to comply with all the legal requirements.