If an employee has both a DEO (Child Maintenance) and a DEA, the DEO will take priority over the DEA. The system will check the employee's net wage and ensure that it is equal to or greater than 60% before calculating the DEA. If the net wage falls below this threshold, the DEA will not be calculated. This means that the DEO will be deducted first, followed by the DEA.
📌Note: If the DEO deduction results in the employee receiving less than 60% of their net pay, then no DEA should be deducted.
During each pay period, People XD will evaluate the employee's net wage to determine whether the DEA deduction should be applied in full, partially, or not at all. The system has been designed in accordance with HMRC guidelines.
For further information regarding protected earnings associated with DEAs, we recommend visiting the HMRC website on Direct Earnings. This resource will help you understand what to expect in People XD concerning a DEA with protected earnings.
According to the HMRC website, here is some important information regarding protected earnings:
When operating a DEA, you must consider the Protected Earnings amount, which is equal to 60% of an employee’s net earnings. For each pay period when a DEA calculation is applicable, you must ensure that after adding the DEA amount to any other orders in place, the employee is left with at least 60% of their net wage."