Temporary COVID-19 Wage Subsidy Scheme

Posted in Employment, Good Advice, Responsibilities

General Information

The Irish Government announced on March 24 new measures to provide financial support to Irish workers affected by the Covid-19 crisis.

As part of these measures, Revenue will operate a Temporary Wage Subsidy Scheme to enable employees, whose employers are affected by the pandemic, to receive significant supports directly from their employer.

The Scheme will run for 12 weeks from 26 March 2020.

The operation of the Temporary Wage Subsidy Scheme will be available to employers who keep employees on the payroll throughout the COVID-19 pandemic, meaning employers can retain links with employees for when business picks up after the crisis. Additionally, the operation of the Scheme will reduce the burden on the Department of Employment Affairs and Social Protection (DEASP) which is dealing with the other Covid-19 related payments.

Employers are encouraged to facilitate employees by operating the Scheme, by retaining employees on their books and by making best efforts to maintain a significant, or 100% income, for the period of the Scheme.

Key Features of the Scheme

  • Replaces the previous COVID-19 Refund Scheme.
  • Initially, and from 26 March 2020 the Scheme will refund employers up to a maximum of €410 per each qualifying employee.
  • However, employers should pay no more than the normal take home pay of the employee.
  • The Scheme applies to employers who top up employees’ wages and those that aren’t in a position to do so.
  • Employers 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 will, in general, be made within two working days after receipt of the payroll submission.
  • In April, the Scheme will move to a subsidy payment based on 70% of the weekly average take home pay for each employee up to a maximum of €410*.
  • Income tax and USC will not be applied to the subsidy payment through the payroll.
  • 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 0.5% on the top up payment.

* (details on this are available on Revenue website).

Who Does the Scheme Apply To?

The Scheme is available to employers from all sectors (excluding the public service and non-commercial semi-state sector) whose business activities are being adversely impacted by the COVID-19 pandemic.

The Scheme is available for employers who retain staff on payroll; 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.

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
  • 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 employer’s payroll as at 29 February 2020, and for whom a payroll submission has already been made to Revenue in the period from 1 February 2020 to 15 March 2020.

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

Registering for the Temporary Wage Subsidy Scheme

Any employer, already registered with Revenue for the purposes of the Employer COVID-19 Refund Scheme, is not required to take any further action. The employer may make payroll submissions from 26 March 2020 under the subsidy Scheme arrangements on the same basis as they were doing for the Employer Refund Scheme, and €410 will be refunded in respect of each eligible employee per week.

If you are an employers, or their agents, that requires help registering for and operating the scheme please feel free to contact us for further assistance.

Income tax, USC, LPT, if applicable, and PRSI are not deducted from the Temporary Wage Subsidy.

In many cases the payment of the Temporary Wage Subsidy and any additional income paid by the employer will result in the refund of Income Tax or USC already paid by the employee.  Any Income Tax and USC refunds that arise as a result of the application of tax credits and rate bands can be repaid by the employer and Revenue will also refund this amount to the employer.

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.

Revenue will credit employers with the temporary wage subsidy paid to each employee based on the information provided in payroll submissions and adherence to the maximum limits as described above.

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.

Guidance/Information

For general issues relating to the Scheme, employers should contact Revenue’s National Employer Helpdesk via the myEnquiries system, providing details of the query and a direct dial contact number.

Employers should make sure to select ‘Employer’s PAYE’ and then ‘Employer’s PAYE General Enquiry’ when submitting the query through myEnquiries.

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