Creditors Duty to Provide Information
During the passage of the Bill, sharing of information was identified by the Scottish Executive as a useful tool in the smooth running of earnings arrestments. Duties were also imposed on creditors to provide information to employers. The following information has to be sent to employers by 6 April each year.
- The sum outstanding
- The amounts and dates of any payments.
This should certainly assist in ensuring that employers are working with the correct balances.
Where Alex M Adamson are acting in a collection capacity we will provide these intimations to employers on behalf of clients at no additional cost.
Debtors Duty to Supply Information
When a debtor leaves one place of employment not only must his previous employer notify the creditor of the name and address of the new employer, exactly the same obligation is imposed on the debtor. This is a welcome addition to the rights of creditors.
Some dubiety existed among employers as to how holiday pay should be calculated. This particularly impacted on the weekly paid. The dilemna arose where say 3 weeks pay was paid in one payment. Some employers took the view that because it was paid as one payment the calculation should be made by making the deduction applicable to the total amount paid in the table for weekly pay. This resulted in a much higher level of deduction than the alternative method of calculation. That alternative was to divide the total pay by the number of weeks (say 3 in the example), calculate the deduction from the weekly table and multiply by 3. The Scottish Executive took the view that the latter approach was preferred and the 2007 Act now makes it clear that is how deductions should be made from holiday pay.
Simultaneous Operation of Earnings Arrestments and Current Maintenance Arrestments
Under the original 1987 Act where an earnings arrestment and current maintenance arrestment were operating simultaneously, the earnings arrestment was applied first and the current maintenance applied to the balance. If there was insufficient balance to pay the full amount of the current maintenance arrestment as it would leave the debtor with the minimum level of earnings stated in the Act then only the amount in excess of that minimum balance was paid to the current maintenance arrester. This was considered unfair to the maintenance arrester as this meant that higher arrears of maintenance were accruing that had to be dealt with by earnings arrestment. Accordingly the 2007 Act provides that where there is insufficient free income to meet both arrestments the amount to be paid to each is calculated proportionally. The formula is contained in the new section 58(2)of the Debtors (Scotland) Act 1987. This will of course mean that arrears will still accrue in current maintenance arrestments but the amounts will be smaller.