Attachment of earnings orders: an employer's guide to deductions from pay
A plain-English guide to attachment of earnings orders (AEOs), DEAs and council tax attachments: employer duties, protected earnings and priority rules.
If one of your employees owes money to a court, a local council, the DWP or the Child Maintenance Service, you may receive a legal instruction to deduct that money from their pay. These instructions are known broadly as attachment of earnings orders (AEOs). This guide explains what they are, the common types you will meet, and the duties that come with them.
What an attachment of earnings order is
An attachment of earnings order is a formal, legally binding instruction that requires an employer to take money directly from an employee’s pay and send it to the body the employee owes. The employee does not choose to have it done; it is imposed to recover a debt they have not paid another way.
You will usually be told, in writing, exactly who to deduct from, how much or on what basis to calculate the deduction, where to send the money, and when to start. The employee is a party to the process, but your instruction comes from the issuing authority, not from them, and you cannot stop deductions just because the employee asks you to.
The common types of order
Several different bodies can require deductions from pay, and they use slightly different names and rules. The main ones are set out below.
| Type of order | Who issues it | What it recovers |
|---|---|---|
| Attachment of Earnings Order (AEO) | The courts | County court judgment debts, unpaid fines |
| Direct Earnings Attachment (DEA) | The Department for Work and Pensions | Benefit overpayments and Social Fund loans |
| Council tax attachment (AEO) | Local authorities | Unpaid council tax |
| Deduction from Earnings Order (DEO) | The Child Maintenance Service | Child maintenance |
Court AEOs come from the county courts or magistrates’ courts and recover things like judgment debts or unpaid fines. Direct Earnings Attachments (DEAs) are used by the DWP to recover benefit overpayments, and unusually they can be issued without going through a court. Council tax attachments are used by local councils to recover unpaid council tax and are calculated using set percentage tables. Deduction from Earnings Orders (DEOs) are used by the Child Maintenance Service to collect child maintenance.
Each type has its own calculation method. Some tell you a fixed amount, and others give you tables or a percentage to apply to the employee’s net earnings for the period. It is important to read each order carefully, because using the wrong method produces the wrong deduction.
The employer’s legal duty
Acting on a valid order is a legal responsibility, not a favour to the authority that issued it. Once you receive a valid order you must:
- Apply it from the date it tells you to start
- Calculate the deduction using the correct method for that order type
- Take the deduction from the employee’s pay each period
- Pay the money over to the issuing authority by the deadline stated
- Keep the deductions going until the debt is cleared or you are told to stop
- Tell the issuing authority if the employee leaves your employment
Getting this wrong has consequences. Failing to make deductions, deducting the wrong amount or not passing on the money can leave the employer liable, and in some cases you can be fined. You should also show the deduction clearly on the employee’s payslip.
Protected earnings
Many orders include a protected earnings amount. This is a floor: a minimum level of take-home pay the employee must be left with after the deduction has been taken. The idea is that recovering a debt should not push someone below what they need to live on.
If the employee’s pay in a particular period is low, for example because of unpaid leave or reduced hours, you may have to reduce the deduction, or take nothing at all, so their pay does not fall below the protected earnings level. Depending on the type of order, any shortfall may be carried forward to the next period. Not every order works the same way, so again the wording of the specific order matters.
Priority and non-priority orders
If an employee is subject to more than one order at the same time, the rules on which comes first matter. Orders are broadly split into priority and non-priority orders.
Priority orders are dealt with first and take precedence over non-priority ones. Where an employee has several orders, you generally apply them in the correct order of priority and by date, making sure that protected earnings are respected throughout. Because the interaction between multiple orders can get complicated quickly, this is an area where mistakes are easy to make, and where getting professional help is worthwhile.
The administrative deduction
For most types of order, the employer is allowed to take a small fixed administrative charge from the employee’s pay each time a deduction is made, to cover the cost of processing it. This charge is taken from the employee, not from the money owed to the authority, so it does not reduce what the creditor receives.
The amount you may take, and whether you can take it at all, depends on the type of order, so you should check the rules for each one rather than assume a single figure applies to everything.
Let us handle your deductions correctly
Attachment of earnings orders are one of the fiddlier parts of running payroll: different types, different calculations, protected earnings and priority rules, all with legal consequences if you get them wrong. When we run your payroll, we apply every valid order correctly, protect the right amount of pay, pass the money to the right authority on time and show it clearly on the payslip. Learn more about our outsourced payroll, or get a quote.