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, 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.
The Diligence against Earnings (Variation) (Scotland) Regulations 2015 17 December 2015
Changes to the deduction from earnings tables have been published in advance of the Regulations coming into force on 6 April 2016.
A review of the Diligence against Earnings Regulations was conducted earlier this year. This resulted in The Diligence against Earnings (Variation) (Scotland) Regulations 2015 being laid in Parliament at the beginning of November 2015. The Parliamentary process is now complete and these new Regulations will come into force on 6 April 2016. The Debtor Scotland Act 1987, Schedule 2, sets out the amount that can be deducted from a debtor’s wages in an earnings arrestment. An earnings arrestment is when a debtor’s employer receives an instruction to deduct an amount from an employee’s wages and pays it direct to their creditors. Ministers gave an undertaking to review the tables every three years.
The deduction tables will be amended (reproduced below) with effect from 6 April 2016.
Table A: Deductions from Weekly Earnings Net Earnings
Deduction
Not exceeding £113.68
Nil
Exceeding £113.68 but not exceeding £410.90 Exceeding £410.90 but not exceeding £617.82
£4 or 19% of earnings exceeding £113.68, whichever is the greater
£56.47 plus 23% of earnings exceeding £410.90
Exceeding £617.82
£104.06 plus 50% of earnings exceeding £617.82
CIPP Policy News Journal
25/04/2016, Page 26 of 453
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