As an employer, you will have certain obligations if the Child Maintenance Service or the Child Support Agency ask you to:
- Provide them with information about an employee (e.g. to help them calculate the correct amount of child maintenance).
- Set up a system for collecting child maintenance (e.g. a deduction from earnings order).
- Respond to enquiries sent by other organisations who also collect payments of child maintenance.
A court might also ask you to make debt deductions from an employee’s pay (e.g. using an attachment of earnings order).
Note: The CSA is in the process of closing cases with a deduction from earnings order (DEO). As a result, they will contact you if there is anything you need to do.
Employer Obligations for Deducting Child Maintenance
The law in the United Kingdom governs the legal obligations of employers when they deduct child maintenance from an employee’s pay. As such, you would need to:
- Give the Child Maintenance Service or CSA any relevant information about your employees (if requested).
- Send the deducted payments to them (without delay). You must send them no later than the 19th day of the month that follows the deduction.
- Notify the CMS or CSA straight away about any problems relating to the payments that you take from the earnings of a paying parent.
- Submit regular payments (failing to send payments without a valid reason can result in a court summons).
Employers also have the responsibility of reporting a change of circumstances for DEOs. For example, you would have ten (10) days to inform the Child Maintenance Service or CSA if the:
- Employee (paying parent) leaves your business.
- Deduction from earnings order (DEO) relates to someone that you do not employ.
The CSA would need to have this information in writing. But, you can choose to put it in writing or telephone the Child Maintenance Service.
Note: The Child Maintenance Service (CMS) and the Child Support Agency (CSA) define the paying parent as the one that does not provide most of the day-to-day care for the child.
Using the Child Maintenance Service Online
Clients and employers can register for the online service (e.g. to manage a case through the Child Maintenance Service). The service allows you to view all deductions (e.g. for the CMS and the CSA) and:
- Report and make changes.
- Send messages.
- View important information sent to you.
What is a Deduction from Earnings Order?
In simple terms, deduction from earnings orders are instructions given to employers. Thus, a DEO instructs an employer to collect child maintenance directly from the earnings or pension of a paying parent.
When Do Employers Get a DEO?
As an employer, you may receive a deduction from earnings order (DEO) if an employee is a paying parent who pays child maintenance direct from their earnings, or they fail to:
- Pay the correct amount of child maintenance at the specified time.
- Pay any money whatsoever.
You would get the DEO from either the Child Maintenance Service (CMS) or the Child Support Agency (CSA).
What Must an Employer Do with a DEO?
The DEO will instruct you to deduct a stated amount of child maintenance from the net earnings (or pension) of your employee. You must then pay the total amount (including any arrears) to the Child Maintenance Service or the CSA.
How to Calculate Deductions from Earnings Order?
There are two rates to consider when making child maintenance deductions from an employee’s pay. The normal deduction rate (NDR) refers to the amount that an employee owes in child maintenance. Hence, employers would deduct this amount from their pay.
The second rate is either the protected earnings rate (PER) or the protected earnings proportion (PEP). It refers to the minimum amount of pay that an employee must take home after deductions.
- PER applies to child maintenance cases opened before the 3rd of March 2003.
- PEP applies to child maintenance cases opened since the 3rd of March 2003.
Note: Unless the deduction is for administrative costs, employers must ensure deductions leave the employee with the amount of their protected earnings.
How Much Can You Deduct?
In some cases, you will not be able to deduct the full normal deduction rate (NDR) from employee pay (see the examples below).
The amount they have left in net earnings (after taking their PER or PEP into account) determines the deduction. Even so, you will be able to deduct up to £1 to cover your administration costs.
Suppose your employee has a net earnings of £1,200 per month and their PER is £1,000 per month (£1,200 minus £1,000 = £200).
If their NDR is £150 a month, you would be able to deduct the full amount.
Suppose your employee has a net earnings of £900 per month and their PER is £750 per month (£900 minus £750 = £150).
If their NDR is £200 a month, you would not be able to deduct the full amount. In this example, you should send £150 to the Child Maintenance Service or CSA and carry forward the shortfall (e.g. £50) to the next pay period.
What if You Cannot Deduct the Full NDR?
In situations where you can’t deduct the full normal deduction rate, you would need to keep an accurate record of the shortfall, and then:
- Carry the deficit forward to the next pay period.
- Send whatever deduction you made to the court, the Child Maintenance Service, or to the CSA.
Furthermore, you should also deduct the full amount of the shortfall along with the NDR owed for the next pay period. Nonetheless, you must still leave your employee with either the PER or the PEP.
In some cases, the shortfall may be carried forward for several weeks before it gets repaid. If so, you must keep a record of the ongoing shortfall.
Note: It is not uncommon for the Child Maintenance Service, the CSA, or the court to want to review an NDR. It happens most when an employee is unable to pay it for a long period of time.
What if Your Employee Gets Holiday Pay in Advance?
In situations where you pay your employee holiday pay in advance, you would need to calculate the total net earnings for your employee for the pay period, and then:
- Multiply the PER (or PEP) as well as the NDR by the number of weeks in the relevant pay period.
- Set aside the combined PER (or PEP) and subtract the combined NDR in the normal way.
Example: When Including Holiday Pay in Advance
We use earnings of one (1) week of pay plus two (2) weeks of holiday pay paid in advance for this particular example. Supposing the net earnings for your employee is £160 per week.
The NDR is £32 per week and the PEP is £96 a week (e.g. 60% of their net income). The net earnings would be £160 x 3 = £480 (1 week of pay + 2 weeks of holiday pay).
You would need to subtract the PEP of £96 x 3 (£288) to leave a sum of £192. Thus, you would need to send the full NDR of £96 (£32 x 3) to the CSA.
What if You Get Several DEOs for Your Employee?
In some child maintenance cases, a paying parent can have more than one DEO (or AEO). Hence, they may be paying child support for more than one child (e.g. by different receiving parents).
Even so, there would only be one DEO in a case opened since the 3rd of March 2003. So, you would only make one (1) payment to the Child Maintenance Service or CSA and they would divide it afterwards.
But, you may need to make several payments for more than one DEO if the case opened before the 3rd of March 2003.
You must pay AEOs in the order of the issuing date. As a result, you may need to finish deducting payments for one AEO before making them for another. Even so, AEO maintenance payments need paying before any AEOs for civil debts.
What Counts as Earnings for DEOs?
Employers can be instructed to make a deduction from earnings order (DEO) or an attachment of earnings order (e.g. make debt deductions from an employee’s pay). But, they can only deduct money from employee earnings when it’s taken from (any):
- Wages (including bonus, commission, fees, overtime pay, or payments on top of wages)
- Private or occupational pensions and compensation payments
- Statutory Sick Pay (SSP)
- Sick pay
- Maternity pay
- Paternity pay
- Adoption pay
- Redundancy pay
Note: Employees have entitlement to statutory pay according to employment laws in United Kingdom. Whereas, contractual pay is something agreed to ‘over and above statutory pay’ between employers and employees.
What Does Not Count as Earnings?
There are some situations where an employee cannot pay child maintenance by DEO or AEO. Typical examples would be when their only earnings are (any):
- Amounts paid by a public department of the government of Northern Ireland or any country outside the United Kingdom
- Any social security pension, allowance, or benefit
- 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
- Tax credits
Making DEO Payments to CMS or CSA
As an employer, you can use the Banks Automated Clearing System (BACS) to make DEO payments to the Child Maintenance Service and the Child Support Agency (CSA).
You can manage payments for CMS cases online through the Child Maintenance Service. You will get a monthly schedule and be able to send a single bulk BACS payment for all your deductions. You can also pay by cheque, internet banking, and telephone banking.
Note: Failing to pay the amount on a deduction from earnings order (DEO) can result in a prosecution. Contact the CSA or CMS helpline for further information (details above).
When to Make a DEO Payment?
You will need to send your payment to the Child Maintenance Service or the CSA to arrive no later than the 19th day of the month following the month you deducted it.
The service that deals with the case will send a letter to you [the employer] and to your employee every year. It will show the amount that needs paying – and when.
Making Deductions for Administrative Costs
Employers can take no more than £1 to cover their administrative costs for each deduction (on top of the amount stated in the deduction from earnings order).
Note: You can still take up to £1 even if it reduces the income of your employee below the PEP or PEP rate (see above).
Informing Your Employee
When you give your employee their pay statement, you will also need to provide them with written information (no later than employee pay day following the deduction) about:
- Each deduction taken from their pay.
- The amount deducted for your expenses (if applicable).
Note: Contact the Child Maintenance Service or the CSA if you pay your employee the wrong amount (or find some other error).
Reporting a Change of Circumstance for DEO
Employers must inform the Child Maintenance Service or Child Support Agency (CSA) if certain circumstances change for their employee (within 10 days). A typical change of circumstances for DEOs might include:
- Your business stops trading.
- You change the working hours for your employee.
- The employee leaves your employment.
A change of circumstances would then result in a revised deduction from earnings order (DEO) being sent to the employer and the employee.
If the CMS or CSA Cancels a DEO
You must not stop taking child maintenance deductions from your employee’s pay unless the Child Maintenance Service or CSA tells you to do so (in writing).
Thus, if either of the child maintenance services cancels a DEO they will write to the employer and the employee with a date for the deductions to stop.
What if an Employer Fails to Help with a DEO?
The Child Maintenance Service or the Child Support Agency (CSA) may send inspectors to interview a ‘paying parent’ at their workplace. If this happens, you must allow them to interview your employee.
If you are an employer instructed with a deduction from earnings order (DEO), offences include failing to provide information (where required), and:
- Making a false statement or representation.
- Knowingly providing false information.
- Deliberately delaying or obstructing an inspector.
- Refusing (or failing) to answer any questions or supply any information or to produce any document when asked to do so.
Note: Being found guilty of any of these offences can result in a £1,000 fine. Failing to carry out the instructions in an attachment of earnings order (AEO) can result in a fine of £250 or a prison sentence of up to fourteen (14) days.