25th March 2020
EMPLOYER UPDATE: Temporary COVID-19 Wage Subsidy Scheme
The Government announced on the 24th March that it intended to bring in additional measures to provide financial support to Irish Companies and workers affected by the Covid-19 crisis. One of these measures is the Temporary Wage Subsidy Scheme.
The scheme will support employers who are affected by the pandemic by providing financial support to allow employees to continue to be paid as employees. The scheme will run for 12 weeks from 26 March 2020.
Employers must 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.
Employers are encouraged to facilitate employees by operating the scheme and making their best efforts to maintain a significant, or 100% income, for the period of the scheme. Information on the operation of the scheme is currently limited but the details we have so far are as follows: -
- Replaces the previous COVID-19 Refund Scheme.
- The subsidy will refund employers up to a maximum of €410 per each qualifying employee.
- Employers are requested to top up, if possible, to no more than the normal take home pay.
- Scheme is also applicable to employers that are not in a position to top up.
- Employers make this special support payment through their normal payroll process.
- Employers will be reimbursed following notification 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 subsidy payment will be 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.
- 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.
Who does the scheme apply to?
The Scheme is available to employers, excluding the public service and non- commercial semi-state sector, whose business activities are being adversely impacted by the pandemic and they:-
- retain staff on payroll, whether they are temporarily not working or on reduced hours and/or reduced pay.
- The employer meets the conditions set out below and subject to the levels of pay given to the employees, the employer may be eligible for the scheme for some or all the employees.
Employer qualification 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
- the employees 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.
Any employer, already registered with Revenue for 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.
Employers, or their agents, wishing to register for the scheme can apply to Revenue by carrying out the following steps:
- Log on to ROS myEnquiries and select the category ‘Covid-19: Temporary Wage Subsidy’.
- Read the “Covid-19: Temporary Wage Subsidy Self- Declaration” and press the ‘Submit’ button.
- Ensure bank account details on Revenue record are correct. These can be checked in ROS and in ‘Manage bank accounts’, ‘Manage EFT’. Enter the refund bank account that the refund is to be made to.
Operating the scheme from Thursday 26 March 2020
The employer runs the payroll as normal, entering the following details for each relevant employee under the Scheme:
- PRSI Class set to J9.
- A non-taxable amount equal to the employee’s net take home pay or €410 whichever is the lesser.
- 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.
- Income tax, USC, LPT, if applicable, and PRSI are not deducted from the Temporary Wage Subsidy.
- The payment of the Temporary Wage Subsidy and any additional income paid by the employer may 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.
Based on the information provided in payroll submissions and adherence to the maximum limits Revenue will credit employers the temporary wage subsidy paid to each employee.
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.
We will endeavour to provide you with any additional, updated information, as it becomes available.
This update is provided by the MSS HR Support Service
Further details on the update or about our services may be obtained from:
John Barry/Tara Daly/ Hugh Hegarty at Tel: 01 8870690
Email: firstname.lastname@example.org Website: www.mssirl.ie