Deduct an attachment of earnings order (AEO) from an employee's pay
Deduct debt payments directly from an employee’s wages by setting up an attachment of earnings order (AEO), a legally binding court order to collect debt, in the employee's pay template.
Add an earnings order pay item
- In the Settings menu, select General Settings.
- Under Features, click Payroll Settings.
Click the Pay Items tab.
- Click Earnings Order and then click Add Earnings Order Type.
- Name the attachment of earnings order, select the relevant account, and complete any other details as needed. The AEO defines the debt amount, the protected earnings rate (PER), and how often you should collect the debt.
- Click Save.
Add an earnings order to an employee's pay template
To deduct payments from their pay each pay period:
- In the Payroll menu, select Employees.
- Click the name of an employee to add an attachment of earnings order.
- Click the Pay Template tab.
- Under Earnings Orders, click Add New Earnings Order.
- Select the attachment of earnings order type.
(Optional) Enter the protected earnings amount.If an employee does not earn enough money to pay the AEO after the protected earnings amount is received, Xero will not deduct the AEO or calculate the remaining AEO amount. You’ll need to keep track of it yourself. You can see if Xero deducted the AEO from the earnings orders line on the employee’s payslip.
- Enter the AEO amount deducted each pay period.
- Click Save.