The Government has announced a scheme for employers and employees who are facing difficulties as a result of the COVID-19 outbreak. This new scheme - known as 'Temporary Covid-19 Wage Subsidy Scheme' - takes effect from Thursday 26th March 2020 and replaces the previous Employer Covid-19 Refund Scheme.
We have summarised the key points of the scheme below:
The Purpose of the scheme
The primary objective of the scheme is to enable Revenue to continue to work with employers towards agreeing a mutually acceptable solution that will see organisations return to viability as soon as possible.
In any such engagement, Revenue expects businesses to be able to produce relevant supporting documentation on request and to engage with them on any follow up discussions or checks.
Qualifying for the Scheme
Which Employers qualify for the scheme?
The COVID-19 Temporary Wage Subsidy Scheme is available to employers across all sectors excluding the Public Service and Non-Commercial Semi-State Sector. To qualify for the scheme a business must be experiencing a significant negative economic disruption due to the Covid-19 pandemic. Revenue expects recipients to have a decline of at least 25% in the future turnover of, or customer orders for, the business for the duration of the pandemic and that as a result the employer cannot pay normal wages and outgoings fully but still wants to retain its employees on the payroll.
To qualify, 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 or customer orders
- be unable to pay normal wages and normal outgoings fully
- retain their employees on the payroll
Eligibility for the scheme will initially be determined on the basis of self-assessment and declaration by the employer concerned, combined with a follow up verification by Revenue involving an examination of relevant business records where that is considered necessary.
Which Employees qualify for the scheme?
To be eligible an employee is someone who an employer cannot afford to pay because of the COVID-19 crisis and who is being kept on the books of the employer. There are no age restrictions on this scheme. Also, note that the employee does not have to register for the scheme, it is a matter for the employer to register for the subsidy with Revenue.
The scheme is restricted to employees who were on the employer’s payroll 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.
Employees who were laid off after 29 February 2020 may be taken back on to the payroll for the purposes of this scheme provided they meet the remaining criteria and they were on payroll at the end of February and details were returned through to Revenue by 15 February.
Please note that Revenue will not be looking for proof of qualification at this stage but may look for more proof in future.
When will organisations be reimbursed?
Employers will be reimbursed 2 days after PSR submission to revenue.
How does it impact redundancy and insurable weeks?
Measures are being brought forward by DEASP to suspend the provisions of Section 12 of the Redundancy Payments Act 1967 where an employee has been temporarily laid off or put on short-term work arising from the Covid-19 emergency measures.
Entitlements will not be broken and employees will get insurable weeks or credited contributions. Additionally, the employers PRSI is reduced from 11.05% to 0.5% and no employee PRSI applies.
Employers are encouraged to be mindful of contractual agreements as in some cases a clause may need to be contained in (or added to) employment contracts that permit exceptional measures to be taken.
Also, it is important to note that where an employee has multiple employments, each employer can operate the scheme based on 70% of employee’s net earnings.
Is the wage subsidy taxable on the employee?
Crucially, the payments are liable to income tax; however, the subsidy is not taxable in real-time through the PAYE system during the period of the subsidy scheme. Instead the employee will be taxable on the subsidy amount paid to them by their employer by review at the end of the year.
How to apply for the Scheme
Any of our clients looking to avail of the scheme can do so by filling out the registration form available here.
For employers who have already registered for Employer Covid-19 Refund scheme, revenue will automatically transfer them across to this new initiative. Please be aware that where an employer has already applied for the previous scheme and been refunded €203, they are not now due more. The subsidy scheme is operational only from March 26, 2020 and so they will not be due a further refund for amounts received up to that date.
To keep up to date on the latest COVID-19 developments including available grants visit our COVID-19 Information and Resources page:
For further information on the Temporary Covid-19 Wage Subsidy Scheme visit https://www.revenue.ie/en/news/articles/guidance-on-the-temporary-covid-19-wage-subsidy-scheme.aspx