An employers guide to Direct Earnings Attachments (DEAs)

On this page
Overview
Your responsibilities
Definition of earnings
How to calculate a DEA
How to prioritise a DEA amongst other orders
Failure to deduct a DEA
Handling employee queries
Making payment to the council
Step by step checklist

Overview

Reading Borough Council must collect any unpaid amounts owed to us, as required by the Social Security Administration Act 1992.

We have the authority to recover overpaid Housing Benefit directly from wages without needing a court order. This process is called a Direct Earnings Attachment (DEA).

This power was granted to local authorities by the Social Security (Overpayments and Recovery) Regulations 2013.

DEAs allow us to recover overpaid Housing Benefit from employed individuals if they:

• refuse to repay
• cannot agree a suitable repayment plan
• have failed to follow a voluntary repayment agreement

Your responsibilities

Unless you are exempt, as an employer, you have a legal obligation to:

• implement a DEA when we request deductions from an employee’s net earnings
• send us the deducted amounts by the 19th day of the month after the deduction is made (for example, if you deduct the amount on 22 September, you must send it to us before 19 October)
• keep a record of each deduction and the employee it was taken from
• continue the DEA until the full amount is paid or the employee leaves your company
• make sure you deduct the correct amount from your employee’s earnings each week or month and pay it to us

You must notify us within 10 days of receiving a DEA letter if:

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

You must inform your employee in writing about:

• the amount deducted, including any administrative costs (this can be shown on their payslip)
• how the deduction was calculated

You must have made a record of this information before the next payday after the DEA deduction.

Exemptions

You are not obliged to operate a DEA if you are a:

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

Definition of earnings

Which payments count as earnings

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

• wages or salary
• fees
• bonuses
• commission
• occupational pensions (if paid with wages or salary)
• overtime pay
• regular compensation payments
• statutory sick pay
• occupational pensions if paid with wages or salary

Which payments do not count as earnings

For the purposes of a DEA, these payments are not counted as earnings:

• statutory maternity pay
• statutory adoption pay
• ordinary statutory paternity pay
• any pension, benefit, allowance or credit paid by the DWP, a local authority or HMRC
• a guaranteed minimum pension under the Pensions Scheme Act 1993
• payments made by a public department of the Government of Northern Ireland or from outside the UK
• reimbursements for expenses incurred during employment
• pay or allowances as a member of the HM forces, unless paid by you for reserve forces
• lump sum redundancy payments
• pay in lieu of notice

Net earnings

You must deduct the amount for the DEA directly from your employee’s net earnings.

Net earnings are what remains after deducting:

• income tax
• class 1 national insurance contributions
• contributions to a workplace pension including:
• additional voluntary contributions
• free standing additional voluntary contributions
• stakeholder pension contributions

How to calculate a DEA

When calculating DEA deductions, you must:

• work out the employee’s net earnings
• 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 is applied against their net earnings
• check that the total of all the deductions do not leave the employee’s pay below the protected earnings amount
• use the table at the bottom of this page to find the correct deduction percentage rate for the net earnings
• apply the percentage rate to the net earnings figure to determine the amount to deduct

Protected earnings

Deductions must not reduce the employee’s pay below the protected earnings limit 
of 60% for each pay period.

This includes adjustments for an incorrect deduction and any other deductions in place.

Deduction amounts

Rounding

If a deduction is calculated and 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.

Example deductions

Example A

An employee with net earnings of £385 per week and no existing attachment deductions:

• deduction rate of 15%
• £385 x 0.15 = deduction of £57.75 per week

Example B

An employee with net earnings of £250 per week with an existing attachment deduction of £60 per week for child maintenance:

• deduction rate of 7%
• £250 x 0.07 = deduction of £17.50 per week

Weekly deductions for this employee will combine the £60 child maintenance amount and the DEA deduction of £17.50, giving a total of £77.50. This figure does not breach the employee’s protected earnings limit of 60%.

Example C

An employee with net earnings of £1,620 per month with existing priority attachment deductions of £486:

• deduction rate of 15%
• £1,620 x 015 = deduction of £243 per month – however, this is in breach of the protected earnings limit of 60%

To correct this, first calculate the total deductible earnings (40% of the employee’s monthly net earnings):

• £1,260 x 0.4 = £648

We also know the employee already has an existing priority attachment order of £486. To calculate the maximum amount available for DEA deduction, perform the following calculation:

• total deductible earnings – total existing attachment deductions
• £648 – £486 = £162

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

Employees who are paid every two weeks

If an employee is paid every two weeks, divide the total net earnings by two and then use the table to check the percentage rate.

Employees who are paid every four weeks

If an employee is paid every four weeks, divide the total net earnings by four and then use the table to check the percentage rate.

Holiday pay

If an employee’s pay includes holiday pay that’s been paid in advance, calculate the average of the net earnings, then use the table to check the percentage rate and apply it to the average figure.

Holiday pay example

The employee received one week’s pay and 2 weeks’ holiday pay. Total net earnings for 3 weeks = £850:

• calculate the average: £850 ÷ 3 = £283.33
• check the table, and apply the percentage rate: £283.33 x 11% = £31.17
• total deduction from the net earnings 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 deduct this even if it reduces the employee’s income below the protected earnings proportion.

How to prioritise a DEA amongst other orders

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%.

Failure to deduct a DEA

You should make corrections on the next payday if you:

• fail to deduct a DEA when you should have
• deduct the wrong amount

If you deducted less than the required amount

1. deduct the correct amount for the current pay period
2. add the difference between the incorrect and correct amounts for the previous period

If you deducted more than the required amount

1. deduct the correct amount for the current pay period
2. reduce the deduction by the excess amount previously taken

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

A shortfall only occurs when an incorrect amount is deducted by mistake, or where one or more deductions are missed.

Handling employee queries

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 email benefits@reading.gov.uk to explain 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 at benefits@reading.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 by emailing benefits@reading.gov.uk

Making payments to the council 

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

Before making payments, please ensure you are aware of your responsibilities and have calculated the correct amount by reviewing the information above. 

DEA payment schedule 

With each payment made to the council, you need to include a DEA payment schedule. This is a list that shows details of the payments you’ve made. Use our DEA payment schedule template, or create your own.  

The DEA payment schedule must include the following details for each employee you have deducted earnings from: 

• full name(s) (forenames and surname) 
• invoice number as shown on the DEA notice  
• total deduction amount (in pounds sterling) or 
• the reason why a deduction cannot be made 

The amount paid to the council must be the same as the deduction total shown in your DEA payment schedule. 

Step by step checklist 

1. Does the person named in the notice work for you? 
   Yes – go to 2 
   No – tell the council within 10 days  

2. Are you a new or micro business? 
   Yes – contact the council on 0118 937 3707 
   No – go to 3  

3. Are there any orders for deductions already in place that will take priority over the DEA and prevent it being set up? 
   Yes – tell the council within 10 days 
   No – go to 4  

4. Calculate your employees net earnings for DEA purposes  

5. Does your employee earn enough to allow deductions to be made? 
   Yes – go to 6 
   No – tell the council within 10 days  

6. Calculate the deduction amount 

7. If you deduct that amount, will they be left with less than 60% of their wages – the protected amount? 
   Yes – Adjust the deduction amount to ensure the employee is left with 60% of their net earnings, or within 10 days, tell the council that no deductions can be made. 
   No – go to 8  

8. Make sure the deduction amount (for current and previous deductions) does not exceed the total amount stated in the notice.  

9. Make the necessary arrangements to your payroll for the deduction to be made.  

10. Notify your employee of the deduction amount no later than the day they are paid. 

11. Make payment to the council by the 19th day of the month after the deduction is made. Include a DEA payment schedule with your payment.