Attachment of earnings order is a court order that demands the employer deduct a portion of an employee’s paycheck to be used to repay a debt owed by the employee.
An AEO is a legally binding document often related to unpaid taxes, court-ordered payments, or child support payments.
Companies with global workforces may especially struggle with these orders. They can find themselves getting lost in local laws and compliance hoops.
Some countries that use AEOs include:
Other countries may have similar concepts to AEOs. In France, for example, there is “wage garnishment” while is Spain there is “wage embargo”.
What are the different types of AEOs?
Ordinary AEO – as the name suggests, this is the most common type of AEO, used to cover debt a person owes their creditor.
Priorities AEO – this is when the employee owes money to more than one creditor and the AEO specifies the order in which the debt should be paid.
Consolidated AEO – here too, the person has multiple debts, but rather than paying each separately, the court can order that the debts be paid in one consolidated payment.
Variable AEO – in this case a person’s salary or income may differ week to week or month to month. The AEO may then dictate the deduction of monthly or weekly amounts from the salary that are based on percentage.
Protected Earnings AEO – this AEO sets a minimum amount that must remain in the employee’s salary so that they have enough to live by.
Handling AEOs with a global workforce
Each country has its own regulatory process and compliance requirements surrounding AEOs. Organizations with global workforces need to navigate things like local laws, employee relations, and administration.
With all the complications that can come from failing to adhere to an AEO, many organizations are turning to payment execution platforms to smooth out the process. This includes:
- Providing expert support
- Automating bulky processes
- Simplifying administration
- Offering transparent communication for employees