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Direct Earnings Attachment: A guide to DEA

March 21, 2023If you’re an employer, chances are you may be asked to deduct any overpayments an employee owes the Department for Work and Pensions (DWP) from their pay. This is known as a Direct Earnings Attachment, or DEA for short.Should you find yourself in this situation, the DWP get in touch to tell you which employees are affected. Although DEA is only applied to a small proportion of people who owe money to the DWP, as an employer, you should be aware of the scheme.Read on to learn more about how the scheme works, the types of payments classified as earnings for DEA deductions and your responsibilities as an employer.

What is a Direct Earnings Attachment?

A Direct Earnings Attachment, or DEA, is a means of recovering overpayment of benefits and is administered by the DWP. They can also be used by local authorities in order to recover overpayment of housing benefit.If an employee has been overpaid benefits or tax credits, the amount they owe may need to be deducted from their payslip when you run payroll.It’s important to note that no court order is required for a DEA. If you’re an employer with an affected employee, the DWP will notify you of how much you need to deduct from their pay. In the case of housing benefit overpayments, you’ll instead be contacted by the local authority.It’s worth noting that a Direct Earnings Attachment, brought in under the Welfare Reform Act 2012 and part of the Social Security (Overpayment and Recovery) Regulations 2013, is only in applicable in England, Scotland and Wales, and doesn’t apply to Northern Ireland, the Channel Islands and the Isle of Man.

How does a DEA work?

As previously explained, if an employee has been overpaid benefits or tax credits, a DEA deduction will be made from their monthly earnings.In this scenario, the Department for Work and Pensions will write to you and your employee to inform you of the DEA and payment schedule.The employee may be able to avoid the DEA if they agree to make manual payments themselves, either in instalments or pay the total balance owed upfront before any action is taken.The amount to be deducted is calculated based on how often the employee is paid and how much they earn. Deductions can be calculated at one of two rates – standard or higher — which we’ll explore in more detail later in this post.

What are my legal responsibilities if I receive a DEA for an employee?

If you receive a DEA for one or more of your employees, you’ll be sent a formal DEA notice instructing you to implement the Direct Earnings Attachment.This is a legal obligation, and failure to do so can land you a fine of up to £1,000 per notice.

On any correspondence between you and HM Revenue and Customs (HMRC)In the payment reference field if you make an online BACS paymentOn the back of a cheque if you make a cheque paymentIf you’re making card payments

If you’re informed an employee has a DEA, you have 22 days to set up the payment schedule.After receiving your letter from the DWP, you’ll need to take the following steps:

Notify your employee in writing that money will be deducted from their payslip, including the amount of the deduction and how the deduction amount was calculatedCalculate your employee’s DEA deduction based on their net wages or earnings for each pay dateCheck if your employee has other debt orders to pay and whether they take priority over DEAPay the relevant departments by the specified pay date every month, with DEA payments made no later than the 19th day of the month following payroll deductionsEnsure each repayment to DWP Debt Management carries your employee’s National Insurance numberContinue to make DEA payments until the debt is repaid in fullKeep records for each employee who has a DEA

You can deduct up to £1 from your employee’s earnings cover any administrative costs that come with repaying DEA deductions. If you choose to do this, be sure to inform your employee long before payday that this is the case.However, if an employee’s weekly or monthly earnings fall below the threshold for a DEA deduction, you won’t need to implement a DEA deduction until:However, if you receive a DEA notice for an employee who no longer works for you, you have 10 days to notify DWP Debt Management that the employee no longer works for you, and the date from which they ceased to be in your employment.To do this, you can contact the employer helpline telephone number on 0800 916 0614 between 8am-7:30pm Monday to Friday.

How to calculate DEA

To work out exactly how much to deduct from your employee’s paycheck, you’ll need to:

Work out their earnings after taking Income Tax, Class 1 National Insurance contributions (NICs) and workplace pension contributions from their total payDeduct a percentage based on their earnings and whether they need to pay DEA at a Standard Rate or Higher RateCheck to make sure the employee has no other debt orders that take priority over DEA

How much can be deducted if a DEA is applied?

Following the administration of a DEA, the DWP or local authority can apply for the Direct Earnings Attachment at 3 different percentage rates:

Standard Rate (up to 20%)Higher Rate (up to 40%)Fixed rate

If the total deductions are more than 40% of the employee’s net earnings, you’ll need adjust the DEA to ensure the employee is left with at least 60% of their net earnings.This is what’s known as the Protected Earnings limit, and refers to the total amount an employee must have after Income Tax, National Insurance contributions and pension contributions have been deducted.

Direct Earnings Attachment Payment Schedules

When you receive notification of a DEA, DWP will let you know which rates you’ll need to apply. If this rate changes at a later date, DWP will send a letter to inform you of the change.Depending on whether the Direct Earnings Attachment has been applied for at either the Standard Rate or Higher Rate, a sliding scale is used to calculate deductions based on a percentage and how much the employee earns on a daily, weekly or monthly basis.

Standard DEA rates

Higher DEA rates

What are classed as earnings for a DEA?

Wages or salary, including bonuses and overtime payOccupational pensions, if paid with wages or salaryFees and commissionCompensation paymentsStatutory sick payPayment in lieu of noticeMost other payments on top of wages

The following payment types don’t count as DEA:

Statutory maternity payStatutory adoption payOrdinary statutory paternity payStatutory Shared parental payAny pension, benefit, allowance or credit paid by DWPA guaranteed minimum pension under the Pensions Scheme Act 1993(b)Statutory Redundancy PaymentsExpenses or sums paid to fully reimburse expensesAllowances as a member of HM Forces, other than allowances payable to them as a special member of a reserve force

What if my employee has other priority orders in place?

Whether it’s your employee telling you they’ve got another deduction order in place, or another letter for another deduction order comes through after calculating DEA deductions, you’ll need to make these deductions a priority over the DEA.The priority orders vary across the United Kingdom, with the following taking priority over DEA:

England and Wales

Deduction from Earnings Order (DEO) from Child Maintenance Group (CMG)Attachment of Earnings Order (AEO) for Maintenance or FinesCouncil Tax Attachment of Earnings Order (CTAEO)

Scotland

Deduction of Earnings Order (DEO) from CMGConjoined Arrestment Order (CAO)Earnings Arrestment (EA)Current Maintenance Arrestment (CMA)

Once these priority orders are taken into account, you can then look at making contributions towards a DEA, followed by any other non-priority orders or notices.Student loans aren’t considered to be an order, but is treated the same was as a priority order.

How to repay DEAs

After you’ve made your calculations, you can now look to repaying your employees’ DEAs. You can choose between 3 payment methods:

BACSChequeCard

You'll also need the following information to make your payment.

What if I’ve my DEA payments are wrong?

If you’ve overpaid DEA on behalf of an employee, you’ll need to contact DWP Debt Management or the HMRC tax credits helpline.

How a DEA can help employees

For employees who find themselves facing debt, a DEA can help them by using government legislation to write off unsecured debt, reduce their monthly debts and also alleviate some of the pressure they may be facing from those to whom they owe money.In addition, as a DEA does not appear on an employee’s credit report, it won't affect their credit rating as is the case with most debt recovery options.