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Court Orders – Changes to the calculation of Scottish arrestments
Wednesday, November 25th, 2009
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The Scottish courts raise current maintenance arrestments (CMAs) to enforce the payment of maintenance, and earnings arrestments (AEs) to recover civil debts, fines and unpaid Council Tax. If two or more concurrent arrestments are raised for the same person, they are combined into a single conjoined arrestment order (CAO). These court orders are applied by Scottish employers, but also by many employers throughout the UK, in respect of Scottish residents.
From 6 April 2010,
- the daily protected earnings threshold for CMAs, and for CAOs comprising two or more CMAs, increases from £12 to £13.64, and
- the deduction Tables for EAs are replaced with new Tables that require a different method of calculation.
The last time the threshold and Tables were changed was April 2006. However, in March 2009, the Scottish Parliament approved Regulations that would have introduced these new calculation procedures from 6 April 2009. In response to complaints about the impossibly short notice that this gave developers to change their computerised payroll systems, the Regulations were revoked before they came into force. They are now being re-introduced a year later but with a longer lead time. The deductions under CMAs (or under CAOs comprising two or more CMAs) are calculated using the daily deduction rate specified in the arrestment. For example, if a CMA specifies a daily deduction rate of £10, an employee receiving a monthly salary in a month with 31 days would have protected earnings, from 6 April 2010, of £422.84 (i.e. £13.64 × 31) and a deduction of £310 (i.e. £10 × 31).
The changes to the calculation of EAs are more radical. These orders are currently calculated using a Table that defines specific amounts that must be deducted for earnings between defined values. It is a complex Table with nearly 30 different deduction steps and daily, weekly and monthly deduction amounts. From 6 April 2010, this Table is replaced with three Tables that involve percentage calculations, as follows:
Table A: Deductions from Weekly Earnings
| Net Earnings | Deduction |
| Not exceeding £95.77 | Nil |
| Exceeding £95.77 but not exceeding £346.15 | £4 or 19% of earnings exceeding £95.77, whichever is the greater |
| Exceeding £346.15 but not exceeding £576.92 | £47.57 plus 23% of earnings exceeding £346.15 |
| Exceeding £576.92 | £100.65 plus 50% of earnings exceeding £576.92 |
Table B: Deductions from Monthly Earnings
| Net Earnings | Deduction |
| Not exceeding £415 | Nil |
| Exceeding £415 but not exceeding £1,500 | £15 or 19% of earnings exceeding £415, whichever is the greater |
| Exceeding £1,500 but not exceeding £2,500.00 | £206.15 plus 23% of earnings exceeding £1,500 |
| Exceeding £2,500 | £436.15 plus 50% of earnings exceeding £2,500 |
Table C: Deductions from Daily Earnings
| Net Earnings | Deduction |
| Not exceeding £13.64 | Nil |
| Exceeding £13.64 but not exceeding £49.32 | £0.50 or 19% of earnings exceeding £13.64, whichever is the greater |
| Exceeding £49.32 but not exceeding £82.19 | £6.78 plus 23% of earnings exceeding £49.32 |
| Exceeding £82.19 | £14.34 plus 50% of earnings exceeding £82.19 |
The structure of the new Tables allows the thresholds to be adjusted in line with increases to median annual earnings contained in the Office for National Statistics’ Annual Survey of Hours and Earnings. The minimum threshold (£13.64 per day) under which there may be no deduction can be raised or lowered according to changes in the economy. Alternatively, the rate of deduction may be increased or decreased by changing the percentage bands within the tables.
Precise rounding rules are specified for the deduction calculation. When applying a percentage the calculation should be made to two decimal places of a penny and the result rounded to the nearest whole penny, with an exact half penny being rounded down.
Examples – using the Monthly Table:
| Arrestable (net) earnings | Unrounded deduction | Rounded deduction |
| £415.00 | £0.00 | £0.00 |
| £415.01 | £15.00 | £15.00 |
| £493.97 | £15.0043 | £15.00 |
| £493.98 | £15.0062 | £15.01 |
| £500.00 | £16.15 | £16.15 |
| £1,000.00 | £111.15 | £111.15 |
| £1,500.00 | £206.15 | £206.15 |
| £1,500.02 | £206.1546 | £206.15 |
| £1,500.03 | £206.1569 | £206.16 |
| £1,600.00 | £229.15 | £229.15 |
| £2,000.00 | £321.15 | £321.15 |
| £2,500.00 | £436.15 | £436.15 |
| £2,600.00 | £486.15 | £486.15 |
| £3,000.00 | £686.15 | £686.15 |
Although the Regulations come into force from 6 April 2009, the Debtors (Scotland) Act 1987 does not allow employers to apply changes to the daily protected earnings rate to existing CMAs or to the Deduction Tables for existing EAs until specifically instructed to do so in writing by either the creditor or the debtor. As a result, employers must continue to calculate existing arrestments using the old rules until instructed otherwise but all new arrestments must use the new rules.
This final paragraph has been corrected in a later newsletter – see
http://www.paypershop.com/payrollblog/court-orders-changes-001/
Further information:
The Diligence against Earnings (Variation) (No. 2) (Scotland) Regulations 2009
Executive Note to the Diligence against Earnings (Variation) (No. 2) (Scotland) Regulations 2009
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