Deduction from earnings orders
153. If a non-resident parent (NRP) fails to comply
with a maintenance assessment or is in arrears, the main compliance
tool available to CSA staff is a deduction from earnings order
(DEO). A DEO instructs the NRP's employer to deduct the maintenance
from earnings and pay them to the CSA. Evidently, DEOs can only
be used if the NRP is employed, rather than self-employed where
other options are available (see chapter 8). The NRP must provide
the employer's details within seven days and the employer must
comply with the DEO within seven days of receiving it. A failure
to do so is punishable by a fine of up to £500. Around 16%
of Agency cases using the CSA collection service are paid through
a DEO.[161] During
the Committee's visit to Dudley, we were told that DEOs have a
compliance rate of around 87% and are therefore a potentially
effective way for the Agency to secure compliance.[162]
154. Application of a DEO is an administrative process
that CSA staff can initiate without a liability order being sought
through the courts. In that respect, DEOs should be a compliance
tool that Agency staff can swiftly apply where necessary. In practice,
the Agency is reluctant to use DEOs and views them as a last resort
before further enforcement action is taken through the courts.[163]
PWCs complain that the CSA is slow to make DEOs[164]
- this is also evidenced in the correspondence that the Committee
receives from CSA clients.
155. A further problem with DEOs is that payments
may not be maintained in the event of the NRP changing jobs. Indeed,
it is claimed that some NRPs purposely move their place of employment
to avoid paying their maintenance through a DEO. A suggestion
raised in a letter to one of the Committee Members from a constituent
suggests that
one way of keeping track
of NRPs who should be paying maintenance through a DEO could be
to put a marker on P45s so that employers are informed that the
individual should be making payments to the CSA. The
Committee recommends that the Department investigates the feasibility
of marking all DEOs in payment on P45 Forms provided to new employers;
and to make existing DEOs automatically transferable to new employers.
156. NRPs themselves can request a DEO at the beginning
of a claim process, although the CSA prefers payments to be made
through direct debits.[165]
It was pointed out by Professor Nick Wikeley that child support
legislation in the UK assumes that DEOs are principally an enforcement
mechanism rather than a collection tool. Yet in Australia and
the USA, deducting child support payments through the payroll
is a standard collection method that is frequently used.[166]
The Committee heard that in Australia, of the 48% of CSA cases
that use the CSA collection service rather than being 'private
collect', two in five voluntarily use the payment method of 'employer
withholding.'[167]
Professor Wikeley also informed the Committee that income withholding
in the USA has helped to increase compliance, with collection
rates doubling since 1996.[168]
The downside of DEOs is the administrative burden caused to employers
and privacy concerns for NRPs, particularly those working in small
companies.
157. The Committee
recommends that Deduction of Earnings Orders should in future
be a standard method of payment for all CSA liabilities due from
employed non-resident parents who default on more than 2 payments
in any rolling 12 month period.
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