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Temporary COVID-19 Wage Subsidy Scheme - Updated

Apr 06, 2020

EMPLOYER UPDATE


Temporary COVID-19 Wage Subsidy Scheme

 

The Emergency Measures In The Public Interest (COVID 19) Act 2020 came into operation on the 26th March 2020. These measures provide financial support to Irish Companies and their workers affected by the Covid-19 crisis who, otherwise, may be unable to pay employees their wages due to the lack of funds arising from the COVID 19 crisis and allows employers to continue to pay employees and to re-employ employees who may have been laid off. The scheme runs for 12 weeks from 26 March 2020.


Employers must keep employees on the payroll throughout the COVID-19 pandemic so that employers retain their links with employees for when business picks up after the crisis.


Employers are encouraged to maintain a significant, or 100%, net income, for the period of the scheme. A summary of the operation of the scheme is as follows: -

Scheme Details

  • Employers will not apply the €350 payment under the COVID-19 Unemployment Payment Refund Scheme anymore.
  • The subsidy will refund employers up to a maximum of:- o €410 per qualifying employee, where the employees normal net pay is €586 p.w. or less
  • €350 per employee where the normal net pay is between €587p.w. and €960 p.w
  • The scheme will not apply if net pay is in excess of €960 p.w.
  • The reimbursement will, in general, be made within two working days after receipt of the payroll submission.
  • Employers are requested to top up, if possible, to no more than the normal take home (net) pay, but must pay a top up of at least € .01.
  • From no later than the 20th April, the subsidy payment will be based on 70% of the weekly average take home pay for each employee up to the relevant maximum.
  • Income tax, PRSI, LPT and USC will not be applied to the subsidy at the time of payment. This will be balanced at year end.
  • Employee PRSI will not apply to the subsidy or top up payments.
  • Employers PRSI will not apply to the subsidy and will be reduced from 11.5% to 0.5% on the top up payment. (Class J9)

 

Who does the scheme apply to?

The Scheme is open to businesses, excluding the public service and non-commercial semi-state sector, who are being adversely impacted by the pandemic and they:-


  • retain staff on payroll or re-employ laid off staff, whether they are 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.


Scheme Qualification

Employers must:

  • be experiencing a significant negative economic disruption due to Covid-19
  • Applications will be self-assessed – employers must presume this will be checked at some date with potential serious consequences for any unsustainable claim
  • be able to demonstrate, to the satisfaction of Revenue, an expected minimum of a 25% decline in turnover in Q2
  • be unable to meet normal wages and normal outputs fully.

Employees must:

  • have been 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.
  • be employees who were laid off after 29th February and are taken back onto the payroll.
  • If an employee has more than one job the employer applies 70% of what they are paying the employee.

Publication: 

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

Employer Registration: 

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.


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 26th March 2020

Transitional Phase - 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 70% of the employee’s net take home pay subject to the €410/ €350 maximum.
  • 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 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 additional payment, which cannot be re-grossed, are liable to income tax and USC
  • Net pay must not exceed previous normal net pay
  • The payroll submission must include pay frequency and period number.


Normal Weekly Net Pay

This is the Average Net weekly pay for January and February 2020 based on revenue returns by 15th March 2020.

  • Take the employee’s “Gross pay” and from it subtract the “Income Tax Paid”, the “USC Paid” and the “Employee PRSI Paid”.
  • Total this figure for each pay date in Jan and Feb 2020 and divide this by the number of insurable weeks (capped at 9) for the period.
  • This gives the employee’s average pay that is to be used for the subsidy amount
  • Pension and other voluntary deductions can only be made from the “top-up” payment provided funds are sufficient.


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.


Where an employee is not covered by this scheme they may still be able to avail of the Covid 19 Pandemic Unemployment Payment or Short-time Work Support/Job Seekers benefit.


Please note 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.

 

This update is for guidance only and 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: info@mssirl.ie Website: www.mssirl.ie

 

Useful links for more information:-

 

https://revenue.ie/en/employing-people/documents/pmod-topics/guidance-on-operation-of-temporary-covid-wage-subsidy-scheme.pdf

 

https://revenue.ie/en/corporate/communications/documents/guidance-on-employer-eligibility-and-supporting-proofs.pdf


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