Ahsan Mustafa

An Earnings Arrestment Schedule is an effective method of diligence which puts the onus on a debtor’s employer to repay the debt through deducting the employee’s wages. Breach of an Earnings Arrestment Schedule can result in decree against the employer for the entire debt. However, the effectiveness of this debt recovery tool must be balanced out with protection of the lowest earners.

The Diligence against Earnings (Variation) (Scotland) Regulations 2024 came into force yesterday. This regulations amend the figures which are contained in Part 3 of the Debtors (Scotland) Act 1987 (i.e. sections 53(2)(b), 63(4)(b) and Schedule 2. The 2024 Regulations also replace the Diligence against Earnings (Variation) (Scotland) Regulations 2023 (S.S.I. 2023/27), but retain the 2023 Regulations for transitional purposes.

The 2024 Regulations change the amounts deducted from a debtor’s earnings before an arrestment order is applied. This is a protective mechanism for debtors as the 2024 Regulations raise the amount earned before earnings are deducted by the arrestment. Consequently, debtors who earn less will have a lower amount deducted whilst those debtors who earn more will have a higher amount deducted.

The 2024 Regulations also adjust the table bandings which determine the earnings deductions if a debtor earns above the protected minimum amount. These changes will apply to all existing Earnings Arrestment Orders. The tables in Schedule 2 are usually uprated every three years in order to keep the correct balance between the creditor’s rights to effectively enforce and protection for the debtor. The tables in Schedule 2 were previously updated in 2023 which was sooner than the normal three yearly update. This was due to the high consumer price inflation rates for the period between October 2020 and October 2022 and the cost of living crisis at that time. Inflation rates had rise higher than the average earnings and the adjustment to the tables was a protective measure for debtors.

Table A of Schedule 2 sets out weekly earnings deductions, Table B sets out monthly earning deductions and Table C sets out daily earnings deductions. The Regulations stipulate that when applying a percentage, the calculation should be done to two decimal places of a penny and the result rounded to the nearest whole penny, with an exact half penny being rounded down.

The monthly protected amount is now £750, up from £655.83. A consumer price inflation based increase would have changed this to £729.88, but this figure was rounded up based on average weekly earnings. The weekly protected amount has increased from £150.94 to £172.61, and the daily protected amount has increased from £21.56 to £24.66. The daily protected amount is the same figure which is used to determine the sum deducted from earnings which are subject to a conjoined arrestment order or a current maintenance arrestment, where the debts are all current maintenance.

There were calls to increase the monthly protected amount to £1,000 during scrutiny of the Bankruptcy and Diligence (Scotland) Act 2024, but this was not done due to concerns about unintended impacts. The 2024 Regulations were a proportionate response and the Schedule 2 tables were updated accordingly to protect the lowest earners.

Ahsan Mustafa is an associate at Aberdein Considine