COVID19 Wage Subsidy

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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.

The wage subsidy scheme was expected to last a period of 12 weeks, starting from 26 March 2020. However, on 5 June 2020, the Minister for Finance and Public Expenditure and Reform announced that the Temporary Wage Subsidy Scheme is extended to 31 August 2020.

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 Amount Weekly 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


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