An attachment of earnings order can be a way to ensure regular and ongoing payments are made by an individual debtor to clear a debt. An attachment of earnings order (AEO) instructs the debtor's employer to take money directly from their salary, this money is then paid to the court who then sends money onto the creditor. There is an administrative fee of £1 per payment, paid by the debtor to the employer, plus whatever the amount that has been determined by the court.
How to apply for an attachment of earnings order
To apply for an attachment of earnings you should complete Form N337, this form can be downloaded here.
You will need to ensure you complete the form accurately and ensure you include relevant information in a factual way. You can only apply for an attachment of earnings order if you are owed more than £50.
When can deductions be made from an employee?
Deductions can only be made for unpaid maintenance and for County Court Judgments, the employer will receive an ‘attachment of earnings order’ from the court. The employer should start making deductions form the next salary payment. The order will detail the following information:
- How much your employee owes
- How much you must deduct from their salary
- The minimum they still must take home, this is called the protected earnings rate (PER)
- How frequently the payments need to be made (weekly or monthly)
There are two types of orders; priority, which is used for maintenance or fines; and non-priority used for civil debts such as council tax or business rates.
If an employer fails to adhere to an attachment of earnings order they can be fined, they can also be fined if they deliberately give false information regarding employee earnings.
Benefits of an attachment of earnings order
- If the debtor remains employed, you will receive regular payments
- The threat of an attachment of earnings order and their employer becoming aware may be enough to elicit payment
However, there are can be some negatives. If, for example, the debtor loses their job then payments will immediately stop and you will need to re-evaluate the best way to recover the money owed going forward. Additionally, if the debt is over £600 then enforcement is more likely to be a cost effective option.
An AEO may prevent other forms of enforcement
Using an AEO may preclude other forms of enforcement such as a writ of control, warrant of execution, third party debt order or charging order. HMRC’s guidelines are that other forms of enforcement should be tried first before applying for an AEO.
The Attachment of Earnings Act 1971 states that “so long as the [attachment of earnings] order is in force, no execution for recovery of the [judgment] debt shall issue against any property of the [judgment] debt without the leave of the Country Court.”
David is an authorised High Court Enforcement Officer and our Director of Corporate Governance