Pay your housing benefit overpayment in the Hambleton area

The Welfare Reform Act 2012 allows us to ask employers to make deductions directly from a customer's earnings if their money owed has not been recovered any other way.

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

1. Manually calculate the amount to deduct from earnings - please see how to do this in the section ‘How do I calculate the amount to deduct?’.
2. Manually check whether there are any other orders currently in place - as the DEA may take priority over these - please see a full list of the orders and how they may impact on a DEA in the section ‘Employee has other Court Orders against them’.
3. In cases where the DEA does take priority over another order, consider whether other orders need to cease or deduction amounts be recalculated.
4. 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. 

If you have any queries please contact us.

The Department for Work and Pensions (DWP) is responsible for recovering 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 be recovered by deduction from the customer's earnings.

The Welfare Reform Act 2012, which became law in March 2012, allows us 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.

The Welfare Reform Act, the legislation covering DEAs, is part of Social Security (Overpayment and Recovery) Regulations 2013, came into force on 8 April 2013. You can view the social security regulations on the government website.

A DEA has its own regulations which follow some of the workings of a Deduction from an 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.

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, for instance, after the deduction of:

• income tax
• Class 1 contributions
• amounts deductible by way of contributions to a workplace pension scheme which provides payment of annuities or lump sums
• to the employee on retirement at a specified age or on becoming incapacitated at an earlier age
• on the employee's death, to the personal representative, widow, surviving civil partner, relatives or dependants

You also need:

• make payments to us by the 19th day 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 we advise you to stop or your employee leaves

If you fail to comply, you may be subject, on conviction to a fine of up to £1,000.

You have a duty to notify us 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 (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 employer

You must write to us at the address shown on the DEA request letter within 10 days if any of the above applies to you.

To your employee - you have a duty to notify your employer in writing of the amount of the deduction taken, including any amount taken for 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.

You should let us know if your business ceases trading.

If you have any problems or queries in setting up the DEA, please contact us.

What counts as earnings for a DEA

• wages
• salary
• fees
• bonuses
• commission
• overtime pay
• most other payments on top of wages
• occupational pensions, if paid with wages or salary
• compensation payments
• statutory sick pay

What does not count as earnings for a DEA

• statutory maternity pay
• statutory adoption pay
• ordinary statutory paternity pay
• additional statutory paternity pay
• any pension, benefit, allowance or credit paid by DWP, a local authority or HMRC
• a guaranteed minimum pension under the Social Security Act Pensions Act 1975
• amounts paid by a public department of the Government of Northern Ireland or anywhere outside the United Kingdom
• sums paid to reimburse expenses wholly and necessarily incurred in the course of the employment
• 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
• 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 either we tell you to stop or your employee leaves your employment.

You must take the amount for the direct earnings attachment 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.

We will send you a letter (notice) which tells you to apply for 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 in all the letters we send to you.
We will ask you to make payments in line with your payroll, so if your employee is paid weekly or monthly, you should pay us at the same time. However, if your employee is paid weekly you must still calculate and deduct the payment weekly, but you can pay us monthly if you prefer.

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
• 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 direct earnings order in place from CMG, or other priority orders are in place, please refer to the examples below.

If you wish to discuss this or if you receive a request from CMG after we have asked you to implement a deduction, and you have any questions please telephone the DWP on 0800 731 0469.

How do I calculate the amount to deduct? 

• work out the employee’s net earnings as defined previously
• use table A/A 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 the employer

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

If an employee is paid four weekly, the total net wage is divided by 4 and table A 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 is applied to the average figure, as follows:

The employee receives one weeks wage and two 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 of £850 = £93.51 (£31.17 x 3).

Rounding

The exact amount of the net wage is used against tables A and B. 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 £253.63 per week
£235.63 x 7% = £16.4941
Weekly deduction = ££16.49

Net wage £1547.99 per month
£1547.99 x 11% = £170.278
Monthly deduction = £170.28

Administrative costs

For each pay period when you calculate the DEA deduction, you may also take up to £1 from your employee’s earnings towards administrative costs. Where you decide to apply an administration charge of £1, this deduction may bring the employee's pay below the National Minimum Wage. Employers should check the national minimum wage and living wage information on the government website, or contact the ACAS helpline for advice.

It is a criminal offence for employers to not pay someone the National Minimum Wage or National Living Wage.

The administration charge of £1 is only applied when a DEA deduction is actually made, and cannot be deducted for any pay period when no DEA deduction is made.

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 that 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 

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 amount of the deductions 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 refers) this is not a shortfall as described above. A shortfall only occurs when an incorrect amount has been deducted in error, or when one or more deductions have been missed.

Examples of direct earnings attachment in practice

Example 1 

A weekly paid earner with no prior attachment orders.

A person with net earnings of £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 with an existing attachment order for child maintenance.

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 orders totalling £486.

A person with net earnings of £1620 per 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 limit of 60%. The maximum deduction you can make in this instance would be £162.

Calculation:

Earnings x 40% = £648 (maximum 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 me to make the deduction?

If the weekly or monthly earnings are below the threshold (see tables A and B) 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.

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

• make regular payments to us until informed by us to stop
• pay the amount you take from the employee's wages to us as soon as possible, but no later than the 19th day of each 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)

Details of how to pay us can be found on your letter, or you can pay online here:

Pay online now

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 & 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)

Student Loans 

A student loan repayment also takes priority over a DEA. This applies to both England & Wales and Scotland. 

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.

If your employee thinks that the amount of money they owe is wrong, you should advise them to contact us on the telephone number at the top of the letter they received about the Direct Earnings Attachment.

If they think that the amount you have calculated is too much, you should first check that the amount being deducted is the amount directed by DWP according to table A or B, 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.

Once you have started operating a DEA, you must continue to make payments to us until we tell you stop. We shall contact you when deductions are 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.

If you need more information about, or help to operate a Direct Earnings Attachment, please ring the DWP dedicated employer helpline on 0800 731 0469​​​​​​​. 

The employer helpline will be open from 9am to 5pm, Monday to Friday.