Higher Rate Direct Earnings Attachments (DEAs)

10 August 2015

The Department for Work and Pensions has recently provided a document to the Software Industry outlining the requirements for payroll software changes as a result of Higher Rate Direct Earnings Attachments (DEAs).

Where an overpayment is a result of fraudulent activity the debt should be recovered at a higher rate than those that arose through genuine mistakes by the benefit recipient. The higher rate of DEA will only apply where the person has been successfully prosecuted for the offence which led to the overpayment of benefit.

This has resulted in an increase in the maximum rate of deduction from on-going benefit payments as well as a higher rate of deduction under DEA. These changes were introduced in the Social Security (Overpayments and Recovery) Amendment Regulations 2015 [SI 499/2015].

In addition to the increased rates, there were some other minor changes brought in by the regulations which include the ability for employer to stop deductions when the debt balance is cleared.

Originally this action had been discounted as early legal advice prevented the sharing of the amount of the debt with the employer. However, going forward the balance of the debt will be included within all DEA notices and for employers who are able to, because their software allows it and because they choose to, they will be able to stop the deductions when the debt is fully repaid, rather than to wait until they receive DWP confirmation and thus reducing the risk of over payment by the employee. DWP will continue to monitor the reducing balance as deductions are made.

The original regulations required the employer to issue a notification to the employee about how the deduction had been calculated, but in reality payslips have sufficed in providing this information and the regulations have now been amended to reflect this common sense approach, however, the employee does retain the right to request a full written explanation of how the deduction has been calculated.

The new regulations introduce two new tables, C and D which are the new higher rate tables to be applied to weekly and monthly pay respectively. The regulations require an employer to apply the correct one.

The legislation came into force from April 2015 however, it is anticipated that implementation will be from April 2016.

With the exception of ‘less than £100 net earnings’ which is 0 percent in tables A and B but increases to 5 percent in tables C and D – the rates for the higher rate deduction will double to a maximum of 40 percent for those with an amount of net earnings in excess of £520 weekly paid or £2,240 monthly paid.


CIPP comment


We would remind employers that under normal circumstances, and setting aside the requirements for the higher rate DEA’s to apply, DEAs are issued where the debtor has failed to engage with DWP’s Debt Management section and have not made an acceptable offer to repay. We continue to be assured that the option to enter in to a voluntary repayment arrangement remains open to the employee debtor even once a DEA has been issued to the employer.

We have contacted the team at the Department for Work & Pensions and have been informed that updated guidance for employers should be available by no later than January 2016.