Net Deduction Component

AEOs have to be calculated on attachable earnings less certain deductions.  This is known as the individual’s ‘attachable net pay’ for attachment of earnings purposes and should not be confused with the ‘true net pay’ that is paid to the employee. Therefore, the 'Calculated On' being set to 'Net' cannot be used as this uses True Net.  The Net Deduction Component configuration allows users to define the pay codes that should be included and the deductions that should then be deducted to reach a value on which a deduction should be based on.

Attachable earnings are those earnings on which AEO deductions should be based.  The attachable earnings include:

• Wages

• Overtime

• SSP

• Holiday pay

• Most other types of pay

The following earnings are not be used as earnings on which the AEO deductions should be based on:

• SMP

• SAP

• SPP

• ShPP

• Reimbursements

• Benefit in Kind/Salary Sacrifice

Once the attachable earnings are established, the following deductions should be deducted from the attachable earnings to form the net attachable earnings for the AEO percentages to be based on:

•  Tax

• National Insurance

• Pension

Note, that depending on the AEO, it will determine if an AEO with a higher priority should also be considered as part of the attachable deductions.  Usually, if the payee has another priority order, this is not part of the net attachable pay and should only usually be considered for the protected earnings.

To allow for the varied way pay codes and deductions can be configured, the net attachable pay that the AEO should be determined on, is configured by using the Net Deduction Component feature.  The net deduction component is then applied to the AEO Deduction Header.