UK employers and software developers take note – Northern Ireland’s judicial system, controlled by the Department of Justice, has implemented Collection Orders...
These were detailed in the Justice Act (Northern Ireland) 2016, were effective 01 June 2018 and will be administered by the new Fine Collection and Enforcement Service (FCS), part of the Department of Justice.
What is a Collection Order?
The Collection Orders in Northern Ireland will apply to ‘court imposed fines, compensation orders, offender levy, costs imposed by court, fixed penalties and penalty notices, fines transferred from other jurisdictions and juror fines’. The Department of Justice describes how Collection Officers at the FCS will administer and enforce the Orders once they have been made.
To all intents and purposes, the Collection Order is another Court Order to add to the array that we already have.
How will it be administered in the payroll?
Think Direct Earnings Attachment (DEA) – although not quite! The DEA only applies in Great Britain and the Collection Orders only apply in Northern Ireland, issued by courts in the devolved Northern Irish judicial system.
The Collection Order works in pretty much the same way – though not exactly. The Collection Order (referred to as an Attachment of Earnings Order) from the Northern Irish court will specify a reference number, a name, a payroll number and a National Insurance Number and instruct the employer of the outstanding amount of the debt. The repayment will be calculated from earnings after a protected earning proportion (60% of the debtor’s net earnings) in accordance with the tables below.
The earnings bands are exactly the same but the percentage deductions are only the same if the DEA specifies that the STANDARD rate of deduction is to be applied. To highlight this so you can see that they are not the same, I have specified the Collection Order net earnings and deduction percentages and compared these to the Great British HIGHER percentage rate of deduction:
Note also that there is no daily rate table for Northern Irish Collection Orders and no provision for the courts to specify fixed rate deductions.
So, in the payroll, the Collection Order will deduct correctly if it is entered into software as a DEA at the STANDARD rate. However, it will not be correct to display DEA as the payslip description and you should check your software’s functionality for changing the payslip description.
I would strongly advise looking at the Enforcement of Fines and Other Penalties Regulations (Northern Ireland) 2018, specifically Schedule 1 which contains all of the above information in more detail. Also, the Social Security (Fines) (Deductions from Benefits) Regulations (Northern Ireland) 2018 apply where a Collection Order is to deducted from Income Support, State Pension Credit, Jobseeker’s Allowance or Employment and Support Allowance.
The statutory guidance is a must-read if you think that you could be affected by these new Collection Orders. This guidance also tells employers what they have to do when they receive an Order, have made the deduction and want to remit the funds to the Northern Ireland Courts and Tribunals Service – and, of course, the penalties for doing it incorrectly.
Oh how the profession greatly misses the AEO Handbook that is now severely out of date but is being reviewed.
Forget EU Exit, devolution is now
Despite what may be said, these Collection Orders are not new and we have known about them since the Justice Act (Northern Ireland) 2016 received Royal Assent in May 2016. Neither is the guidance new, published in April 2018.
The reason that this may have taken people by surprise is the fact that it is extremely difficult to monitor everything that happens in every part of the United Kingdom. This is especially true where devolution is involved and commentators like me have to keep an eye on all of the UK for all parts of our payroll world that are affected by devolution. Maybe HMRC’s Employment and Payroll Group needs to consider this, given that one of its purposes is to ‘discuss issues or problems in administering payroll obligations’. I don’t see any reference to a specific Northern Ireland representative.
EU Exit (Brexit) is confusing, ever-changing and very little, if anything, is certain about it. Devolution is now!