Examples of Involuntary Deduction Processing

Processing rules may vary by the legislation or the legal authority issuing the order for an involuntary deduction. Let's look at some examples that illustrate the processing of fees, protected pay amounts, and when employees have multiple assignments and payrolls.

Payroll processing first calculates disposable income using the disposable income rules. Then it looks at the exemption rules to calculate the amount exempt from withholding. Using these amounts, it can calculate the amount available to deduct.

Note:

The payroll process calculates disposable income once, based on the highest processing priority card component. The exception is regional tax levies, which have a separate disposable income calculation.

You can use these examples to understand how involuntary deductions are processed in different scenarios:

Involuntary deduction has initial fee and processing fee
Deduction amount exceeds protected pay amount
Employee has multiple assignments and payrolls
Multiple orders exist with different protected pay amounts

Involuntary Deduction Has Initial Fee and Processing Fee

Scenario: An employee in Country 1 is issued a court order for a monthly garnishment of 500. The order is subject to two fees. Both fees are paid to the agency responsible for administering the account. The agency then forwards the payments to the recipients:

A one time initial fee of 10
A monthly processing fee of 10

On the involuntary deduction calculation card:

Add a calculation component for a garnishment.
In the Calculation Component Details tab:
- Select the Order Amount Payee and the Processing Fee Payee. The processing fee payee is also the initial fee payee.
- Select Monthly in the Frequency field.

In the Enterable Calculation Values tab, enter the following values:

Field	Value
Order Amount	500
Processing Fee	10
Initial Fee	10

Payroll Run Results:

The amount of the employee's pay subject to deduction is 1000.
During the first monthly payroll after the court order is received, both the initial fee amount and the processing fee are deducted. The total deduction amount is 520.
In subsequent payroll runs, the order amount and the processing fee are deducted. The total deduction amount is 510.

Deduction Amount Exceeds Protected Pay Amount

Scenario: An employee in Country 2 is issued a court order for the amount of 100 per month. However, protected pay rules defined for the deduction require that the employee take home at least 700, after all deductions.

On the involuntary deduction calculation card:

Add a calculation component for a court order.
In the Calculation Component Details tab:
- Select the Order Amount Payee and the Processing Fee Payee.
- Select Monthly in the Frequency field.

In the Enterable Calculation Values tab, enter the following values:

Field	Value
Order Amount	100
Protected Pay	700

Payroll Run Results:

The amount of the employee's pay subject to the deduction is 750.
A deduction amount of 100 would leave only 650 for the final pay amount. Therefore, only 50 is deducted for the month.
The remaining balance of 50 isn't placed in arrears, based on processing rules defined for this deduction.

Employee Has Multiple Assignments and Payrolls

Scenario: An employee has one payroll relationship with two assignments. They receive paychecks from two different payrolls. One payroll is run on a weekly basis. The other is run on a monthly basis.

The employer receives a court order to deduct 200 per month from the employee's wages. The court order amount must be deducted from all available money, regardless of the payroll. If the total order amount can't be deducted from the first payroll run, then the following occurs. The remaining balance must be deducted from one or more subsequent runs during the month, until the full amount is paid.

On the involuntary deduction calculation card:

Add a calculation component for a court order.
In the Calculation Component Details tab:
- Select the Order Amount Payee.
- Select Monthly in the Frequency field.

In the Enterable Calculation Values tab, enter the following value:

Field	Value
Order Amount	200

Payroll Run Results:

During the first weekly payroll run, only the amount of 50 can be deducted, leaving an amount owed of 150 for the month.
When the next weekly payroll is run, the deduction can't be taken due to insufficient pay; the balance for the month remains 150.
The monthly payroll runs before the next weekly payroll is run. The remaining amount of 150 owed for the deduction is taken during the monthly payroll run.
No money is deducted during the subsequent weekly payroll runs for this month.

Note:

If a person has two assignments for different payroll relationships, they would typically be issued two different court orders, one for each employment. In this case, you would add each court order to a different calculation card.

Multiple Orders Exist with Different Protected Pay Amounts

Scenario: An employee in Country 2 has three court orders. Each court order has a different protected pay amount.

On the involuntary deduction calculation card add three calculation components for child support.
For each calculation component, select Monthly in the Frequency field.

Define the protected pay and order amount values for each deduction as shown in the following table:

Involuntary Deduction	Protected Pay Amount	Order Amount	Date Received
Child Support 1	500	1000	23 January 2012
Child Support 2	600	1100	2 February 2012
Child Support 3	1000	1200	2 February 2012

Payroll Run Results:

The net amount available for involuntary deductions in the payroll run is 2000 GBP. Based on the processing priority defined for child support payments, the payroll run processes the involuntary deductions in order by date received.

Here's the result:

Child Support 1 is paid in full, leaving 1000 available for other deductions.
Child Support 2 is paid an amount of 400 (1000 less protected pay of 600).
Child Support 3 isn't paid. The total amount is placed in arrears, based on processing rules defined for the deduction.