Announced 24th March (updated 26th March 11am)
A new Wage Subsidy scheme has been announced which is aimed at allowing employers to pay their employees something during the current COVID pandemic.
Employers are expected to make” best efforts to maintain as close to 100% of normal income as possible for the subsidised period. ”
The refund scheme will mean that employers can retain links with employees for when business picks up again . Also it will reduce the burden on the Department of Employment Affairs and Social Protection (DEASP).
How Will it Work ?
- The subsidy scheme will refund employers up to 70% of the weekly average take-home pay for each employee up to a maximum of €410 ( **see below)
- Higher paid employees will get lower percentage.**
- The subsidy scheme applies both to employers who top up employees’ wages and those that aren’t in a position to do so.
- Employers will need to make this special support payment to their employees through their normal payroll process. Employers will then be reimbursed for amounts paid to employees and notified to Revenue via the payroll process.
- The reimbursement to employers will, in general, be made on the same day within two working days after receipt of the payroll submission.
- 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.
Some of the staff may be temporarily not working or some may 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.
Some examples of how we currently understand this will work (Do not rely on these figures )
|Annual Gross||Weekly Gross||Av Weekly Net Taxable Pay|
(Based on Single Person)
|Refundable Amount||Weekly Employer Top Up|
Needed to Pay Normal
Take Home Pay
The figures above highlight how close the take home full time minimum wage is (€363) compared to the COVID Unemployment Benefit of €350. That was probably intentional by the government – but it does mean that some employees might be thinking they will be better off not working .
Top ups are optional.
Operating the scheme from Thursday 26 March 2020
Revenue Instructions are given below.
Revenue Payroll Instructions
The employer runs the payroll as normal, entering the following details for each relevant employee under the Scheme:
- PRSI Class set to J9.
- Enter a non-taxable amount equal to 70% of the employee’s net weekly pay to:
- a maximum of €410 per week where the average net weekly pay is less than or equal to €586
- a maximum of €350 per week where the average net weekly pay is greater than €586 and less than or equal to €960.
- If an employer is not making any payment to the employee, they should include a pay amount of €0.01 in Gross Pay.
- If an employer is making additional wage payments to affected employees, they should include this amount in the Gross Pay.
- It is important that employers do not include the Temporary Wage Subsidy payment in Gross Pay.
- The payroll submission must include pay frequency and period number.
# €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. We are not clear how they will do this if the figure entered on the payroll is the 70% figure .
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.
Applications will eventually need to be made to Revenue
Employers who hade already signed up for the Employer Refund Scheme announced on 15th March, and who may have received refunds under the current scheme do not need to reapply.