Housing Benefit Overpayment: Direct Earnings Attachment (DEA)
The Welfare Reform Act 2012, which became law in March 2012, allows local authorities 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.
Within the Welfare Reform Act, the legislation covering DEAs, part of the Social Security (Overpayment and Recovery) Regulations 2013, came into force on 8 April 2013.
A DEA has its own regulations which follow some of the workings of a Deduction from Earnings Order (DEO) and some workings of an Attachment of Earnings Order (AOE). A DEA does not replace any of these orders and in some circumstances employers may receive requests to implement deductions for a DEO and a DEA for the same employee.
Your legal obligation as an employer
Your responsibilities as an employer.
- Implement a Direct Earnings Attachment by making deductions from the employee’s net earnings, ie after deduction of:
- Income Tax
- Class 1 contributions
- Amounts deducted for work place pension scheme.
- Make payments to us by the 19th day of the 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 either the Council advise you to stop, the balance is paid or your employee leaves.
If you fail to comply, you may be subject, on conviction, to a fine of up to £1,000.
Who you must notify
Cherwell District Council within 7 days if any of the following applies to you
- 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 (which starts between 08/4/13 and 31/03/14), or a micro 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 employee.
- If your business ceases trading.
Write to us at the address shown on the DEA request letter.
Your employee
Notify your employee in writing of the amount of the deduction taken, including any amounts taken for administrative costs (see section on 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.
The definition of earnings for DEAs
What counts as "earnings" for 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 doesn't count as "earnings" for 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 or Pensions Act 1975
- Amounts paid by a public department of the Government of Northern Ireland or anywhere outside the UK
- 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 that don't count as earnings for DEA then 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 (in which case you must notify us).
Net Earnings
You must take the amount for the Direct Earnings Attachment directly from your employee’s net earnings.
Note: 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.