What are net earnings?
This is what is left after the deduction of:
- income tax
- class 1 national insurance contributions
- regular contributions paid into a company pension scheme
We do not class the following as earnings and they cannot be used for deduction from earnings orders:
- amounts paid by a public department of the Government of Northern Ireland or any country outside the UK
- any social security pension, allowance or benefit
- tax credits
- any pension or allowance paid for disability
- guaranteed minimum pension within the Social Security Pensions Act 1975
- statutory maternity pay
- statutory paternity pay
- statutory adoption pay
- statutory redundancy pay
If the only earnings your employee receives fall into these categories, they cannot pay by deduction from earnings order.
For example, if your employee is only receiving statutory maternity, paternity or adoption pay, they cannot pay child maintenance by a deduction from earnings order.
However, once they return to work - or if they are receiving any contractual maternity, paternity or adoption pay - they may choose to, or be required to, pay by deduction from earnings order.
A deduction from earnings can only be made from the following types of earnings:
- wages, fees, bonus, commission, overtime pay or any payments on top of wages
- private or occupational pensions, and compensation payments
- Statutory Sick Pay
- contractual sick pay
- contractual maternity pay (not Statutory Maternity Pay)
- contractual paternity pay (not Statutory Paternity Pay)
- contractual adoption pay (not Statutory Adoption Pay)
- contractual redundancy pay (not Statutory Redundancy Pay).
Satutory pay is money that employees are entitled to by law. Contractual pay is pay that employers agreewith their employees over and above statutory pay.
Page topRelated information
For child maintenance worked out on or after 3 March 2003
For child maintenance worked out before 3 March 2003
- Read our leaflet
"Advice to employers" [PDF 261Kb]
