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As an employer, you can be asked to deduct money from an employee’s pay if they have been overpaid benefits by the Department for Work and Pensions (DWP). This is called a Direct Earnings Attachment.
The first you’ll be aware of this is if you are contacted by the DWP Debt Management team asking you to make deductions directly from your employee’s earnings by operating a DEA.
DWP Debt Management have been allowed by law to do this since March 2012, in England, Scotland and Wales, and they do not need to go through the Civil Courts.
Local authorities can also recover monies by issuing a Direct Earnings Attachment under the legislation – for example to recover Housing Benefit overpayments (you will receive separate notifications from them about this).
A Direct Earnings Attachment is ordered if the DWP is unable to recover money from individuals who are not in receipt of a benefit and who have not voluntarily agreed to repay the debt.
There are other deduction orders that we won’t cover here, such as a Deduction from Earnings Order, and Council Tax Attachment of Earnings Order – all can be received for the same employee at the same time as a DEA. Generally a Deduction of Earnings Order from the Child Maintenance Group will take priority for payment over a Direct Earnings Attachment.
DWP Debt Management will send you a formal notice for each affected employee asking you to implement a DEA. This notice will have basic instructions on how to do this and will include the employee’s National Insurance number, which you will need to quote on any correspondence or payments you make.
Net earnings means after the deduction of Income Tax, Class 1 NIC and any Pension contributions. Earnings means wages, salary, fees, bonuses, commission, overtime pay, SSP, payment in lieu of notice. But, Statutory Maternity/Adoption/Paternity/Shared Parental Pay and Statutory Redundancy payments do not count as earnings; neither do pensions; benefits or allowances paid by the DWP, local authority or HMRC; or sums paid to reimburse expenses incurred during employment.
Micro-businesses that existed before 8th April 2013 are exempt from making a DEA until they employ 10 or more people for the majority of a six month period. This exemption ends six months from the date that you first had 10 or more employees.
More detailed Guidance from the DWP (with examples) is provided here. They have an employer helpline which is 0345 600 0685.
If you are an employer and need ongoing professional help with any staff/freelance issues, or a Contractor/Freelancer/Employee with a complicated employment related problem, then talk to Lesley at The HR Kiosk – a Human Resources Consultancy for small businesses – our fees are low to reflect the pressures on small businesses and you can hire us for as much time as you need.
Please note that the advice given on this website and by our Advisors is guidance only and cannot be taken as an authoritative or current interpretation of the law. It can also not be seen as specific advice for individual cases. Please also note that there are differences in legislation in Northern Ireland.
Darren Fell, CEO of Crunch, said: "We welcome the government's commitment to adopt the recommendations from the Taylor report. We would however, urge caution that any response does not introduce more red tape, or reduce the ability for entrepreneurs to employ people flexibly."
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