Make debt deductions from an employee's pay

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Deductions for a priority order

Priority orders are used for unpaid maintenance or fines.

  1. Calculate your employee’s earnings.

  2. Take off the normal deduction rate from their earnings.

  3. Take off an extra £1 towards your administrative costs (if you want to).

  4. Pay your employee the remainder of their earnings. You must pay them at least their protected earnings rate (this is given in the order). If you cannot deduct the full amount, carry the difference over and deduct it on the next payday.

  5. Send the deduction to the court.

You can still deduct the £1 if it takes your employee’s income below their protected earnings rate - but not if it takes their income below the National Minimum Wage.

Making a full deduction

Deduct the full amount from your employee’s earnings if it does not take them below their protected earnings rates.

Example Your employee’s earnings this payday are £190. Their protected earnings rate is £150. The normal deduction is £25.

You pay your employee £164 (£190 minus £26). You send £25 to the court and keep £1 towards your costs.

When you cannot make a full deduction

If the full deduction would take the employee below their protected earnings rate, carry the difference over to their next payday.

Example Your employee’s earnings this payday are £170. Their protected earnings rate is £150. The normal deduction is £25.

You can deduct £20 this time. You pay your employee £149 (£170 minus £21). You send £20 to the court and keep £1 towards your costs. You carry the unpaid £5 over to next time’s payday.

On the next payday, their earnings are £190. You add the unpaid £5 to the normal deduction of £25, which is £30.

You pay your employee £159 (£190 minus £31). You send £30 to the court and keep £1 towards your costs.

When you cannot make any deduction

There’s a different process if you cannot make any deduction because the employee’s earnings are below their protected earnings rate.

You have to tell the Centralised Attachment of Earning Payments (CAPS) office you could not make a deduction. Send an email to [email protected] with the:

  • court case number
  • attachment of earnings order number
  • name of the employee
  • reason you could not make any deduction

Example Your employee’s earnings this payday are £140. Their protected earnings rate is £150. The normal deduction is £25.

You cannot deduct anything this time. You’re not allowed to deduct £1 for your own costs.

The difference between their earnings and protected earnings rate (£10) gets carried forward and is added to their protected earnings rate next time. The £25 deduction is also carried forward.

Email the CAPS office to tell them.

On the next payday, their earnings are £190. Their protected earnings rate is now £160 (the usual rate plus the £10 you carried forward).

You’d need to deduct £50 (2 of the normal deductions), but you can only deduct £30 because of their protected earnings rate.

You pay your employee £159 (£190 minus £31). You send £30 to the court and keep £1 towards your costs.

You carry forward the unpaid £20 to the next payday.

Paying your employee for a different pay period

Recalculate the protected earnings rate and normal deduction rate if you pay your employee for a different period than usual.

Example You normally pay your employee on the last day of the month. Their protected earnings rate is £550. The normal deduction is £70.

You include an extra pay day on 9 December.

For the 9 days, you calculate your employee’s:

  • earnings (£792.22 divided by 31 days, multiplied by 9 days = £230)
  • protected earnings (£550 divided by 31 days, multiplied by 9 days = £159.68)
  • deduction (£70 divided by 31 days, multiplied by 9 days = £20.32)

You pay your employee £206.68 (£230 minus £21.32). You send £20.32 to the court and keep £1 towards your costs.

Holiday pay in advance

Use the same process if you’re paying your employee holiday pay in advance.

You’ll need to work out the different rates for:

  • the month when you give pay in advance
  • the following month when you pay them less than normal

Example You normally pay your employee on the last day of the month. In July you include 5 weeks’ worth of pay. Their protected earnings rate is £550. The normal deduction is £70.

For the normal month plus the extra week (38 days), calculate your employee’s:

  • earnings (£792.95 divided by 31 days, multiplied by 38 days = £972)
  • protected earnings (£550 divided by 31 days, multiplied by 38 days = £674.19)
  • deduction (£70 divided by 31 days, multiplied by 38 days = £85.81)

You pay your employee £885.19 (£972 minus £86.81). You send £85.81 to the court and keep £1 towards your costs.

In August, use the same process to work out their earnings, protected earnings and deduction. You’d work it out for 24 days (31 days minus 7 days you’ve already paid them for).

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