5.2.3 Collection from Salary or Wages
As far as is practicable, the Registrar is required to collect registered maintenance liabilities by deduction from the salary or wages of a payer (known as employer withholding or EW).
The CSRC Act sets out an employer's obligation to withhold money from salary and wages and to send it to the Registrar.
Employer withholding can apply when the payer is an employee who receives salary or wages. This has a broad meaning under the CSRC Act and includes:
- payments to employees,
- payments to company directors,
- payments to office holders,
- return to work payments,
- payments under labour hire arrangements,
- payments of pensions and annuities,
- payments for termination of employment,
- payments for unused leave,
- benefit payments,
- compensation payments,
- alienated personal services payments,
- payments to independent contractors,
- parental leave payments, and
- periodic payments received from a superannuation fund (including payments made under the Commonwealth Superannuation Scheme, the Defence Forces Retirement Benefit Scheme and the Defence Forces Retirement and Death Benefit Scheme).
Starting employer withholding
The Registrar will send a written notice to the payer's employer when a decision is made to collect a registered maintenance liability through employer withholding (section 45(1)). The notice will:
- specify the name of the payer,
- include sufficient particulars to enable the employer to identify the payer,
- instruct the employer to:
- make periodic deductions from salary and wages paid to the payer, from a specified day in accordance with the specified weekly deduction rate, and
- pay to the Registrar the amounts deducted each month by the 7th day of the following month and to give the Registrar notice of the amounts deducted (section 47(1)).
The Registrar must also give a copy of the notice to the payer (section 45(3)).
Collecting arrears through employer withholding
If the Registrar is already collecting an ongoing liability from a payer's salary and wages, it can also arrange to collect arrears in the same way (this is known as employer withholding of arrears, or EWA).
The Registrar can vary a notice served on an employer for the collection of ongoing child support to include an additional amount to cover amounts overdue (section 45(2A)). Amounts overdue include debts owed to the Commonwealth that arise under or in relation to an enforceable maintenance liability. This may include arrears of child support, late payment penalties and estimate penalties. A copy of the notice to increase the deduction must be served on the employer. The Registrar will also send a copy of the notice to the payer.
As in all payment arrangements, DHS will provide a payer with the opportunity to respond before additional deductions commence. An opportunity to negotiate allows the payer to present DHS with any relevant facts for consideration. The protected earnings amount (5.2.4) still applies in these cases.
An arrangement to collect arrears by employer withholding will not prevent the Registrar from taking other administrative action or legal action to recover the debt. DHS will make this clear to a payer when negotiating any recovery arrangement.
Example: The Registrar is collecting Blair's arrears of child support by additional salary deductions. The Registrar becomes aware that Blair is about to sell a property in which they have significant equity. The Registrar would seek to satisfy the debt in full by reaching an agreement with Blair to pay their arrears at the time of settlement, or by issuing a section 72A notice. It is important to make clear to Blair that the Registrar will seek to satisfy the debt in the most efficient and timely way possible. If an additional amount becomes available, the Registrar will seek to apply it to the debt.