what are protected earnings & how does this work

lynn45

what are protected earnings, and when is this applied.

is it just to deo, or other payment methods.

also, does the level of protected earnings vary, eg if you have kiddies

many thanks

DX2

Example 1 - Old Scheme

Old Scheme - (identified by ten digit reference number)

If the:

• employee’s net earnings are £160 per week
• the normal deduction rate is £30 per week
• this leaves £130 per week
• and the protected earnings rate is £100 per week.

The full deduction of £30 can be made and sent to us. The employer can deduct up to £1 for administration charges and the employee keeps the rest.
The actual amounts will depend on the persons individual circumstances.

What happens if they sometimes don’t earn enough to pay the full amount of child maintenance owed?

The example below shows what happens when there are not enough net earnings to pay the full amount of child maintenance owed .
Again the amounts involved will depend on individual circumstances.

First week


If the:

• employee’s net earnings are £120 per week
• the normal deduction rate is £30 per week
• this leaves £90 per week
• and the protected earnings rate is £100 per week.

Here, you would only be able to take £20 as you can not go under the protected earnings rate of £100. You would carry forward the £10 owed to the next pay period.
It is your responsibility to carry forward any shortfall to the employee’s next payment.
This is how it would work:

Second week


If the:

• employee’s net earnings this week are £130 per week
• The normal deduction is £30 + £10 from the previous week = £40
• This leaves £90
• The protected earnings rate is £100.

You cannot go below the protected earnings rate so you would deduct £30 and send it to us and carry forward the £10 owed to the next pay period.
There may be several weeks where arrears are carried forward before being paid off.

What should I do if the employee sometimes earns less than their protected earnings rate?

If their net earnings are less than their protected earnings rate, the difference between them should be added to the protected earnings rate for the next pay period. This will ensure that over time the employee receives average earnings of at least their protected earnings rate.
You will not be able to deduct anything from their wages and you should not deduct £1 for administration costs.
http://www.csa.gov.uk/en/employers/deo_example1_old.asp

DX2

Example 2 - Current scheme

Current Scheme - National Insurance number used as reference
Full deduction cannot be taken in pay period

First Week

The employee’s net earnings are temporarily reduced to £120 a week. The deduction rate is £32 a week, and the protected earnings proportion is £96.
Net earnings £120
Less the protected earnings proportion £96
Leaves £24
Send us £24
You may keep up to £1 for administrative charges. This amount is in addition to the deduction from earnings order even though it reduces the liable person’s income below the protected earnings proportion. The shortfall of £8 is carried forward to next pay period.
In any period when there are not enough net earnings for the full deduction to be taken, you should carry forward the shortfall. You should add to the deduction to be taken for the next pay period.
However, there may be cases where the shortfall is carried forward for several weeks before being repaid. You will need to keep a record of any ongoing shortfall.
Second Week

The employee’s net earnings are £160 this week. The protected earnings proportion is £96 and the normal deduction is £32.
Net earnings £160
Less the protected earnings proportion £96
Leaves £64
Send us £40
(£32 + £8 shortfall)
You may keep up to £1 towards your administrative costs. This amount is in addition to the deduction from earnings order.
http://www.csa.gov.uk/en/employers/deo_example2_new.asp

lynn45

Do you know if earnings always set at 60%, or is that more depending on the current family (children in particular living with NRP)

many thanks