How Attachment of Earnings Orders work

Payroll Specialist Nicola Cantrill explains what happens when one of your employees owes money that needs to be deducted at source.

What is an Attachment of Earnings Order?

When an employee owes any court or governing body (such as Child Support Agency) a fee or payment but have not paid, that institution will notify the employee that they will be sending their employer an Attachment of Earnings Order to deduct their pay.

The company or organisation then receives a notice to take payments from the staff member's wages, which they then should pay straight over to the court by cheque or bank transfer.

What should I do if I receive an Attachment of Earnings Order for an employee?

When you receive a letter to deduct any pay from your employee, please send a copy to the payroll department, who will then ensure the sufficient funds are deducted each month through the payroll software.

You may also want to let your employee know you have received this Attachment of Earnings Order.

When the payroll department have completed your payroll, you will receive your reports as normal and will also receive a report called AEO, which will show you how much has been deducted. You then need to pay this amount over to the court or governing body. All the details will be shown on the letter you have received previously.

Along with paying over the amount deducted, you also need to send a schedule to the court showing who you have sent payment for, its reference number, amount, and the date it was sent. You also need to notify them if the employee has left the company.

What will this mean for your employee?

On your employee's payslip, they will see a figure on the deductions side underneath tax, NI and pension deductions which will be the AEO.

They may also see an admin fee of £1 deducted. This will only apply to those earning over national minimum wage.

How can Page Kirk's payroll team help you?

If you would prefer to leave this process to a professional, Page Kirk can help with the following services on a cost-per-month basis:

• Creating schedules for you to send to court/governing body. This will include the following:

• Name of employee
• Reference
• Amount to pay over
• Comments (e.g. leaver, paid in full)
• Date by which to pay
• Bank account to pay into
• Payee and address if paying by cheque

• Sending over a schedule with payroll reports for you to forward with cheque
• Sending the schedule to the court if you're paying by BACS
• Keeping all schedules electronically
• Liaising with court if they have any queries

If you are interested in finding out more, please contact us on 0115 955 5500 or email enquiries@pagekirk.co.uk.