COVID19 Wage Subsidy

A new Wage Subsidy scheme was announced in March which is aimed at allowing employers to pay their employees something during the current COVID pandemic.
Some changes are being made to this scheme from May 1st – The changes will mean an 85% subsidy instead of 70% for lower paid workers and will also mean some higher paid workers will now qualify for some subsidy.

Employers are expected to make” best efforts to maintain as close to 100% of normal income as possible for the subsidised period.

For the purposes of the Wage Subsidy Scheme – Net pay means Gross Pay Less Tax , USC + PRSI

How Will it Work ?

  • The subsidy scheme was originally set up to refund employers up to 70% of the weekly average Net pay for each employee up to a maximum of €410 .

New Rules From May 4th

(No backdating of the revised rates prior to 4 May will apply.)

Employees previously earning up to €586 net per week (€38000 gross annually)

  • An 85% subsidy shall be payable in the case of employees whose previous average net weekly pay does not exceed €412.
  • A flat rate subsidy of up to €350 shall be payable in the case of employees whose previous average net weekly pay is more than €412 but not more than €500.
  • A 70% subsidy shall be payable in the case of employees whose previous average net weekly pay is more than €500 but not more than €586, with the maximum cap of €410 applying.

Employees previously earning in excess of €586 net per week (€38000 annually gross)

  • For employees whose previous average net weekly pay is greater than €586 per week but not more than €960 per week (€76000 gross), the temporary wage subsidy shall not exceed €350 per week, and shall be calculated by reference to the amount of any additional payments made by the employer and its effect on the average net weekly pay as follows:
    • A subsidy of €350 shall be payable to employees with previous average net weekly pay greater than €586, where the employer pays sufficient gross salary which equates to an amount up to 60% of the employee’s previous net weekly earnings.
    • A subsidy of €205 shall be payable to employees with previous average net weekly pay greater than €586, where the employer pays sufficient gross salary which equates to an amount that is more than 60% but not more than 80% of the employee’s previous net weekly earnings.
    • No subsidy shall be payable to employees with previous average net weekly pay greater than €586, where the employer pays sufficient gross salary which equates to an amount that is more than 80% of the employee’s previous net weekly earnings.

Some examples of how we currently understand this will work (Do not rely on these figures )

Annual GrossWeekly GrossAv Weekly Net Taxable Pay
(Based on Single Person)
Refundable AmountWeekly Employer Top Up
Needed to Pay Normal
Take Home Pay
 
€12290€236€236200 (85%)36
€20483 #€394€363309 (85%)54
€25000€481€420350 (flat rate)70
€30000€577€489350 (flat rate)139
€35000€673€558391 (70%)167
€38000€731€586410176
Over €38000Over 586 see explanation above Varies

  • The subsidy scheme applies both to employers who top up employees’ wages and those that aren’t in a position to do so.
  • Income tax and USC will not be applied to the subsidy payment through the payroll but the Subsidy will be liable to Income Tax and USC on review at the end of the year.
  • Employee PRSI will not apply to the subsidy or any top up payment by the employer.
  • Employers PRSI will not apply to the subsidy and will be reduced from 10.5% to just 0.5% on any top up payment.

The scheme is expected to initially run for 12 weeks


Who Is Eligible ?

The scheme is available for employers who retain staff on payroll,
The scheme starts from 26th March, for payroll submissions relating to pay dates on or after the 26th March. The expectation is that this would cover payroll for the week commencing Monday 23. It cannot be backdated prior to that date.

The staff may be temporarily not working or can be on reduced hours and/or reduced pay.
Provided the employer meets the conditions set out below and subject to the levels of pay to the employees the employer may be eligible for the scheme for some or all of the employees.

Employers must not operate this scheme for any employee who is making a claim for duplicate support (e.g. Pandemic Unemployment Payment) from the DEASP.


To qualify for the scheme, employers must

  • be experiencing significant negative economic disruption due to Covid-19
  • be able to demonstrate, to the satisfaction of Revenue, a minimum of a 25% decline in turnover
    • The legislation says that the “employer needs to demonstrate to the satisfaction of the Revenue Commissioners that, by reason of Covid-19 and the disruption that is being caused thereby to commerce, there will occur in the period of 14 March 2020 to 30 June 2020 at least a 25 per cent reduction either in the turnover of the employer’s business or in customer orders being received by the employer .”
  • be unable to pay normal wages and normal outgoings fully
  • retain their employees on the payroll.

The Scheme is confined to employees who were on the payroll as at 29th February 2020, and who had at least one payroll submission made to Revenue between 1 February 2020 to 15 March 2020.


# €20483 is based on someone of €10.10 an hour minimum wage doing 39 hours a week.

The slightly confusing bit is that for the first few weeks (possibly up to 20th April) – while they get their computer systems sorted out – Revenue said they will refund employers 100% of the net pay (capped at €410) for all employees.

BUT – Revenue have said when the system is up and running fully they will recover any overpayments of refunds made in the first few weeks.

The names of all employers operating this scheme will be published on Revenue’s website in due course, after the scheme has expired.

Penalties will apply to any abuse of the Subsidy Scheme by self-declaring incorrectly, not providing funds to employees or non-adherence to Revenue, and any other relevant, guidelines.

Full Details at Revenue Site
Guidance

41 thoughts on “COVID19 Wage Subsidy

  1. Can you explain the reasoning behind giving a lesser payment from the government if your salary is over 38000? Say it’s 39000?

    • Well they had to set a cap at some level – and that is the level they chose. I think it’s around the average salary.

      • A cap would mean that noone gets from that 410 per week. Not that once your salary gets to 39000 you get less
        These are the people who pay the majority of the tax in this country who are then punished to give the money to those who pay little or no tax

  2. Hi. A little confused as an employer. This is to keep employees on despite business being very slow? So do we keep employees on doing very little and claim the 70 %?
    What happens if say we went on three day week?
    Thanks

  3. How can there be a payment of 350 euros for one illness,yet if I had a stroke or heart attack on the 1st of March they get 203 euros?
    I think there may be a legal issue as to how this is been rushed through without thinking.

  4. If 70% of your salary is less than €350 can the employer pay the employee €350 (same as the pandemic paymeny) and claim this full amount back from revenue. Example full salary is €400 per week. What can an employer claim back?

  5. Hi if I was currently on a salary of €400 per week, how much will the revenue refund my employer through this scheme and how much in April when it changes?

  6. How does this work for part time employees who also claim Jobseeker’s Allowance for the days they don’t work. As an employer can I still claim 70% of their wages without affecting their welfare claim.

    • Just wondering why a person on 39000 a year will get 350€ and a person on 37000€ a year will get 410€ per week. Also is overtime included when wage is being calculated . Seems like a person whose wages have been higher is being put on a lower payment. Why is this.

      • It’s hard to work out exactly what they are aiming to do.

        The cutoff of 38000 equates , they said , to the average salary.
        They might think the higher paid can look after themselves a bit more with savings ?
        It probably would have been better with a straight 70% refund with a cap of say €400 a week – and then less people would have been better off on Unemployment.
        In a short space of time it’s a good attempt. In the UK the equivalent refund system might take several more weeks to br up and running.

      • Oh i know its very unfair system. Assuming people will have alot of savings. Also does not allow anyone over €76k to get a subsidy so I would say directors etc wont be kept on payroll

    • I mean do I get the same benefits as my employees while im out of work like my staff as my company is closed for the forseable
      future

  7. I’m still confused. Last week for a particular employee I needed to apply Top up of €99.40 to the wage subsidy of €231.93 in order to bring their net pay last week to €344.65. These were the maximums I’m allowed for this employee. I cannot afford to continue these weekly top up payments. Wouldn’t this employee be better off claiming the €350 Covid Pandemic Unemployment payment?

    • Yes The employee will be better off – but the €350 Pandemic payment is temporary for 12 weeks .
      It’s hard to know what to do for the best.

      • Thanks for you previous answer. If a person has done substantial overtime in Jan and feb(qualifying months) that pushes him over the 586€ average net will that mean that the payment will be 350€ and not 410€ even when his annual wage would not be anywhere near that. Thanks for everything and sorry for troubling you.

  8. where a employee normally receives and average of €350,now they will receive 70% of their salary which is less than the pandemic payent of€350 staff are requesting to be temporrly liad off so they can get the €350 DESPA payment can we temporarly lay staff off where we have no work rather than putting on the Wage subsidy schemey

  9. Thanks for you previous answer. If a person has done substantial overtime in Jan and feb(qualifying months) that pushes him over the 586€ average net will that mean that the payment will be 350€ and not 410€ even when his annual wage would not be anywhere near that. Thanks for everything and sorry for troubling you.

  10. Hi can employees over 70 who are in receipt of a state contributory payment avail of the wage subsidy scheme for their wages?

  11. My son was working as a lounge Person for over a year now (until the pubs where told to close) He is under 18 and can’t get Social welfare Could he ask his employer for this ??

  12. Is it possible to switch schemes? For example, if you were currently in a position to keep on employees, claim the 70% and top up the rest of their wages but say two or three weeks down the line you find you have to close up your business, do you need to keep your employees on payroll for the 70% or can they then switch to the PUP?

  13. Hi, I have a really confusing issue surrounding an employee’s voluntary pension payments. We are about to initiate a company-wide reduction of our working hours to 2 and 1/2 days per week.
    I have an employee who (on full salary) currently takes home €887 per week. So he thinks he is eligible for the Covid-19 wage subsidy as his current net take home pay is below €960.
    However, he currently pays 8% of his gross wage into his pension. If I understand correctly, Pension payments are NOT taken into account when calculating NET wage for the Covid-19 scheme? So in that case the calculation of his estimated NET would be ‘Gross Wage -PAYE -PRSI -USC’. Which would result in a NET calculation of €990. Even though he only takes home €887 per week. Regardless, the €990 calculation makes him in-eligible.

    If he did not pay into a voluntary pension then his take home pay (and Covid-19 NET calculation) would actually be €933 (higher than his current take-home of €887) AND he would qualify for the Covid-19 scheme. But because he pays into a pension he won’t be eligible. Seems unfair. Maybe an unintended consequence? Are people near the thresholds being unfairly affected if they are part of a voluntary pension scheme as in this case?
    Another question – Can he stop paying into his pension now and become eligible for the scheme or it based solely on salary/wage calculations from a Jan/Feb time period?

  14. hi just wondering i claim disability allowance and work for 7hours aweek and was liad off work can i put in a cliam for covid 19

  15. Is the Covid Unemployment Payment taxable? (at a later stage – year end)

    • Jobseeker’s Benefit or Illness Benefit are taxable income, with the exception of the first €13 per week of Jobseeker’s Benefit income.
      No definite news on this new payment.

  16. Hi, started work in February. Employee counted these as training hours? Originally only paying me 8 hrs average weekly wage …yet I work 21 hrs ? Now have agreed to pay me 17hrs but re section 4.3 an I allowed not to participate in there scheme as not on books in January

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