Make debt deductions from an employee's pay
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1. When you have to deduct from pay
You have to make deductions from your employee’s wages if a court orders you to. This could be to pay off:
- unpaid maintenance payments
- a county court judgment
There’s a different process if you have to make deductions to pay off a benefit debt or child maintenance.
How it works
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³Û´Ç³Ü’l±ô get a document from the court telling you to make deductions from your employee’s pay.
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Work out how much you have to deduct each time your employee is paid.
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Start making deductions the next time you pay your employee. Pay them their reduced wages on their normal payday.
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Make the payment to the court.
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Stop making deductions when the debt has been paid off.
You and your employee can be fined if you do not deduct their wages, or if you deliberately give false information about their earnings.
2. Getting an order
You and your employee will each get an ‘attachment of earnings order� (AEO) from the court.
You must start making deductions from your employee’s pay from the next time you pay them, unless it’s within the next 7 days.
Write to the court within 10 days if you get an order for someone you do not employ.
What the order tells you
The court order will tell you:
- how much your employee owes
- if it’s a ‘priority order� - if it does not say what it is, it’s a ‘non-priority order�
- how much you have to take from their wages - called the ‘normal deduction rate� (NDR)
- the minimum amount they still have to take home - called the ‘protected earnings rate� (PER)
- how often the payments have to be made (weekly or monthly)
You can be fined if you do not start making the deductions.
Change how often the deductions are made
If a county court made the order, you can ask them to change it, for example from weekly to monthly if that’s how you pay your employee.
If a magistrate’s court made the order, your employee has to ask the court to change it.
Deductions and minimum take-home pay
You cannot make the normal deduction if it would take the employee below the protected earnings rate.
Protected earnings rate is too high
If the protected earnings rate is so high that you’ll never be able to make deductions, write to both:
- the Centralised Attachment of Earning Payments (CAPS) office
- the court who issued the order
Include the:
- court case number
- attachment of earnings order number
- name of the employee
CAPS
PO Box 404
Northampton
NN1 2ZY
Priority and non-priority orders
There are 2 types of orders - priority orders and non-priority orders. The way you calculate deductions for them is different.
| Type of order | What it’s used for | If you cannot make the full deduction |
|---|---|---|
| Priority | Maintenance or fines | Carry the unpaid difference over to the next payday |
| Non-priority | Civil debts | Do not carry the unpaid difference over to the next payday |
If your employee has more than one order
Deduct any priority orders first, in the order the employee got them. Then deduct the non-priority orders in the order the employee got them.
You can apply to the court to combine 2 or more non-priority orders into a single order. This is called a ‘consolidated attachment of earnings order�.
3. Deductions for a priority order
Priority orders are used for unpaid maintenance or fines.
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Calculate your employee’s earnings.
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Take off the normal deduction rate from their earnings.
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Take off an extra £1 towards your administrative costs (if you want to).
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Pay your employee the remainder of their earnings. You must pay them at least their protected earnings rate (this is given in the order). If you cannot deduct the full amount, carry the difference over and deduct it on the next payday.
You can still deduct the £1 if it takes your employee’s income below their protected earnings rate - but not if it takes their income below the National Minimum Wage.
Making a full deduction
Deduct the full amount from your employee’s earnings if it does not take them below their protected earnings rates.
Example Your employee’s earnings this payday are £190. Their protected earnings rate is £150. The normal deduction is £25.
You pay your employee £164 (£190 minus £26). You send £25 to the court and keep £1 towards your costs.
When you cannot make a full deduction
If the full deduction would take the employee below their protected earnings rate, carry the difference over to their next payday.
Example Your employee’s earnings this payday are £170. Their protected earnings rate is £150. The normal deduction is £25.
You can deduct £20 this time. You pay your employee £149 (£170 minus £21). You send £20 to the court and keep £1 towards your costs. You carry the unpaid £5 over to next time’s payday.
On the next payday, their earnings are £190. You add the unpaid £5 to the normal deduction of £25, which is £30.
You pay your employee £159 (£190 minus £31). You send £30 to the court and keep £1 towards your costs.
When you cannot make any deduction
There’s a different process if you cannot make any deduction because the employee’s earnings are below their protected earnings rate.
You have to tell the Centralised Attachment of Earning Payments (CAPS) office you could not make a deduction. Send an email to [email protected] with the:
- court case number
- attachment of earnings order number
- name of the employee
- reason you could not make any deduction
Example Your employee’s earnings this payday are £140. Their protected earnings rate is £150. The normal deduction is £25.
You cannot deduct anything this time. You’re not allowed to deduct £1 for your own costs.
The difference between their earnings and protected earnings rate (£10) gets carried forward and is added to their protected earnings rate next time. The £25 deduction is also carried forward.
Email the CAPS office to tell them.
On the next payday, their earnings are £190. Their protected earnings rate is now £160 (the usual rate plus the £10 you carried forward).
You’d need to deduct £50 (2 of the normal deductions), but you can only deduct £30 because of their protected earnings rate.
You pay your employee £159 (£190 minus £31). You send £30 to the court and keep £1 towards your costs.
You carry forward the unpaid £20 to the next payday.
Paying your employee for a different pay period
Recalculate the protected earnings rate and normal deduction rate if you pay your employee for a different period than usual.
Example You normally pay your employee on the last day of the month. Their protected earnings rate is £550. The normal deduction is £70.
You include an extra pay day on 9 December.
For the 9 days, you calculate your employee’s:
- earnings (£792.22 divided by 31 days, multiplied by 9 days = £230)
- protected earnings (£550 divided by 31 days, multiplied by 9 days = £159.68)
- deduction (£70 divided by 31 days, multiplied by 9 days = £20.32)
You pay your employee £206.68 (£230 minus £21.32). You send £20.32 to the court and keep £1 towards your costs.
Holiday pay in advance
Use the same process if you’re paying your employee holiday pay in advance.
³Û´Ç³Ü’l±ô need to work out the different rates for:
- the month when you give pay in advance
- the following month when you pay them less than normal
Example You normally pay your employee on the last day of the month. In July you include 5 weeks� worth of pay. Their protected earnings rate is £550. The normal deduction is £70.
For the normal month plus the extra week (38 days), calculate your employee’s:
- earnings (£792.95 divided by 31 days, multiplied by 38 days = £972)
- protected earnings (£550 divided by 31 days, multiplied by 38 days = £674.19)
- deduction (£70 divided by 31 days, multiplied by 38 days = £85.81)
You pay your employee £885.19 (£972 minus £86.81). You send £85.81 to the court and keep £1 towards your costs.
In August, use the same process to work out their earnings, protected earnings and deduction. You’d work it out for 24 days (31 days minus 7 days you’ve already paid them for).
4. Deductions for a non-priority order
Non-priority orders are used for debts from a county court judgment (CCJ).
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Calculate your employee’s earnings.
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Take off the normal deduction rate from their earnings.
-
Take off an extra £1 towards your administrative costs (if you want to).
-
Pay your employee the remainder of their earnings. You must pay them at least their protected earnings rate.
You can still deduct the £1 if it takes your employee’s income below their protected earnings rate - but not if it takes their income below the National Minimum Wage.
Making a full deduction
Deduct the full amount from your employee’s earnings if it does not take them below their protected earnings rates.
Example Your employee’s earnings this payday are £190. Their protected earnings rate is £150. The normal deduction is £25.
You pay your employee £164 (£190 minus £26). You send £25 to the court and keep £1 towards your costs.
When you cannot make a full deduction
Do not carry any unpaid difference over to the next payday if the full deduction would take the employee below their protected earnings rate.
Example Your employee’s earnings this payday are £170. Their protected earnings rate is £150. The normal deduction is £25.
You can deduct £20 this time. You pay your employee £149 (£170 minus £21). You send £20 to the court and keep £1 towards your costs.
On the next payday, their earnings are £190. You deduct the normal amount of £25.
You pay your employee £164 (£190 minus £26). You send £25 to the court and keep £1 towards your costs.
When you cannot make any deduction
Do not carry the deduction over to the next payday if the employee’s earnings are below their protected earnings rate.
You have to tell the Centralised Attachment of Earning Payments (CAPS) office you could not make a deduction. Send an email to [email protected] with the:
- court case number
- attachment of earnings order number
- name of the employee
- reason you could not make any deduction
Example Your employee’s earnings this payday are £140. Their protected earnings rate is £150. The normal deduction is £25.
You cannot deduct anything this time. You’re not allowed to deduct £1 for your own costs. Email the CAPS office to tell them.
On the next payday, their earnings are £190. You deduct the normal amount of £25.
You pay your employee £164 (£190 minus £26). You send £25 to the court and keep £1 towards your costs.
Paying your employee for a different pay period
Recalculate the protected earnings rate and normal deduction rate if you pay your employee for a different period than usual.
Example You normally pay your employee on the last day of the month. Their protected earnings rate is £550. The normal deduction is £70.
You include an extra pay day on 9 December.
For the 9 days, calculate your employee’s:
- earnings (£792.22 divided by 31 days, multiplied by 9 days = £230)
- protected earnings (£550 divided by 31 days, multiplied by 9 days = £159.68)
- deduction (£70 divided by 31 days, multiplied by 9 days = £20.32)
You pay your employee £206.68 (£230 minus £21.32). You send £20.32 to the court and keep £1 towards your costs.
Holiday pay in advance
Use the same process if you’re paying your employee holiday pay in advance.
³Û´Ç³Ü’l±ô need to work out the different rates for:
- the month when you give pay in advance
- the following month when you’d pay them less than normal
Example You normally pay your employee on the last day of the month. In July you include 5 weeks� worth of pay. Their protected earnings rate is £550. The normal deduction is £70.
For the normal month plus the extra week (38 days), calculate your employee’s:
- earnings (£792.95 divided by 31 days, multiplied by 38 days = £972)
- protected earnings (£550 divided by 31 days, multiplied by 38 days = £674.19)
- deduction (£70 divided by 31 days, multiplied by 38 days = £85.81)
You pay your employee £885.19 (£972 minus £86.81). You send £85.81 to the court and keep £1 towards your costs.
In August, use the same process to work out their earnings, protected earnings and deduction. You’d work it out for 24 days (31 days minus 7 days you’ve already paid them for).
5. What counts as earnings
You can only make a deduction from the following earnings:
- wages, fees, bonuses, commissions, overtime pay or any payments on top of wages
- private or occupational pensions and compensation payments
- Statutory Sick Pay
- contractual sick pay
- contractual maternity pay
- contractual paternity pay
- contractual adoption pay
- contractual redundancy pay
Statutory pay is money that your employees are entitled to by law. Contractual pay is what you agree with your employees in addition to statutory pay.
What does not count as earnings
You cannot make a deduction from any of the following:
- amounts paid by a department of the government of Northern Ireland or any country outside the UK
- any social security pension, allowance or benefit
- tax credits
- any pension or allowance paid for disability
- guaranteed minimum pension within the Social Security Pensions Act 1975
- Statutory Maternity Pay
- Statutory Paternity Pay
- Statutory Adoption Pay
- Statutory Redundancy Pay
6. Making payments
The order that you get for the employee will tell you whether you have to pay:
- the magistrates� court
- the Centralised Attachment of Earnings Payments (CAPS) office
Tell your employee each time
You must tell your employee in writing about each deduction. Do this when you give them their payslip.
Paying the magistrates� court
Send a cheque made payable to ‘HM Courts & Tribunals Service�.
You can pay with a single cheque if you’re paying 2 or more orders issued by the same court.
Some courts let you pay by Bacs transfer. Contact the court for their account details if you want to pay this way.
When you send the payment, you must include a note of:
- the employer name
- the employee’s name
- the case number from the order
- how much money you’re sending
Paying the CAPS office
You can only pay by:
- cheque
- Bacs transfer
You cannot pay by standing order or Direct Debit.
Pay CAPS by cheque
Send a cheque made payable to ‘HM Courts & Tribunals Service� to CAPS.
CAPS
PO Box 404
Northampton
NN1 2ZY
Pay CAPS by Bacs
You must register before you can pay by Bacs. Download and fill in the registration form and email it to [email protected].
To make a Bacs payment, send:
- a bank payment request form to your bank
- the Bacs payment schedule form to [email protected]
The payment will be sent back if you do not fill in the schedule correctly. You can be fined if you do not send the schedule.
Contact CAPS about a payment
You need to give these details when you contact CAPS about a payment:
- case number
- your name (as stated on your bank statement)
- your bank account number
- your sort code
- amount of payment
CAPS office
Bacs payments: [email protected]
Other payments: [email protected]
Telephone: 0300 123 1058
Monday to Friday, 9am to 4pm
Find out about call charges
7. Change of circumstances
Write to the Centralised Attachment of Earning Payments (CAPS) office within 10 days if the employee stops working for you.
Include the:
- court case number
- attachment of earnings order number
- name of the employee
- date they stopped working for you
- name of their new employer (if you know it)
CAPS
PO Box 404
Northampton
NN1 2ZY
The court changes the order
The Civil National Business Centre will tell you in writing if the normal deduction rate or protected earnings rate changes. They can change it for 4 weeks.
When the 4 weeks is over, you have to go back to the original rates in the order.
The court cancels the order
The Civil National Business Centre will tell you in writing if the order has been ‘discharged� (cancelled).
You can still make the deduction if you’re due to pay your employee within the next 7 days. Your employee will get a refund from CAPS.
You must stop making deductions if you’re due to pay your employee 7 days after you got the cancellation notice.