Advice for Employers, Employees & the Self Employed as the COVID-19 Pandemic Unfolds (Updated 25/03/20)

*Updated 25th March 2020*

Temporary COVID-19 Wage Subsidy Scheme explained by Donna Farrell, Director of Marsh Mackey Recruitment.

Here are the essential links for full details:

See below some Q&A details – please note these are subject to change and some clarification from revenue:

How will the Temporary Wage Subsidy Scheme be operated?

The Temporary Wage Subsidy Scheme will be implemented and operated by Revenue under the PAYE collection system in real time, therefore ensuring employees will be in receipt of the subsidy payment along with their weekly employer contribution of wages. 

Is the scheme open to self-employed as well as employees?

Self-employed individuals will be paid directly by DEASP under the COVID-19 Pandemic Unemployment Payment scheme rather than through the Revenue operated subsidy scheme.

What are the key elements of the Temporary COVID-19 Wage Subsidy Scheme?

The Subsidy Scheme provides the payment of income supports to employers in respect of eligible employees where the employer’s business activities have been adversely impacted by the COVID-19 (Coronavirus) pandemic.
The employer will include the subsidy as part of the employees’ wages in addition to the amount that the employer would otherwise be able to pay.  The employer will separately identify this on the payslip as a payment described as “non-taxable pay”. 
What is an eligible employee?

An eligible employee is someone who the employer cannot afford to pay fully because of the COVID-19 crisis who is being kept on the books of the employer.  The employee must be on the payroll as at 29 February 2020 and the employer has made payroll submissions to Revenue, in respect of the individual, between 1 February 2020 and 15 March 2020.

What are the two phases to the Temporary COVID-19 Wage Subsidy Scheme?

Phase 1 is a short, transitional phase that builds on the current emergency Employer Refund Scheme that has been operational since 15 March 2020, under which the Employer gets a refund of €203 per week for each employee that it keeps on its books.  The Subsidy Scheme will increase the €203 refund to a maximum of €410 (or €350 for employees who gross annual pay is between €38,000 and €76,000) to Employers who operate the Subsidy Scheme regardless of whether the employer tops-up the employee’s earnings or not.

Phase 2 will see a personal subsidy payment being refunded to an employer by Revenue based on 70% of the net weekly average earnings for each employee, to a maximum of €410 per employee, or €350 per week for employees who gross annual pay is between €38,000 and €76,000.  The personalised subsidy payment mechanism will be operational from 20 April 2020, at the latest.


Will the employer be required to make a payment themselves to the employee?

The scheme is predicated on the employer wanting to keep the employees on the payroll and to retain them for when business picks up. There is no minimum amount that the employer must pay in order to be eligible for the scheme but the employer will need to enter at least €0.01 to run payroll.

What if an employer tops up the wage subsidy?

The Employer should pay no more than normal wages and the maximum Subsidy is €410 per week per employee, or €350 for employees who suffer losses and whose gross annual pay is between €38,000 and €76,000. If the subsidy refunded to an employer in respect of an employee exceeds 70% of an employee’s net income, the excess will have to be refunded to Revenue or will be clawed back when making further Subsidy payments to employers.

If the employer tops up the payment to an employee and the employee’s weekly net pay figure exceeds 70% of their net weekly income, the subsidy will be reduced in line with any payment above the 70% ceiling.


How does the Subsidy Scheme differ from the current Refund Scheme?

During this short transition period this enhanced scheme:

Increases the non-taxable refundable payment to €410
Allows the payment by employers of additional taxable top up payments, subject to review.


When does the Subsidy Scheme become operational?

From Thursday 26 March, the transitional scheme, which extends the scope of the current arrangements, will be implemented.

The full Subsidy scheme will be operational by 20 April at the latest

 

Will employers be entitled to the full Subsidy amount under the transitional arrangements?

If an employer receives a subsidy payment which is more than they are entitled to, say because the employee’s “normal” net weekly earnings are less than the Subsidy payment, they will be obliged to refund the monies to Revenue, or Revenue will reduce subsequent Subsidy payments the employer is due to receive.

 

How do Employers register for the Subsidy Scheme?

Employers, or their agents, apply to Revenue to operate the scheme by carrying out the following steps:

Logging on to ROS myEnquiries and selecting the category ‘Employer COVID -19 Refund Scheme’.
Accepting the declaration set out and submitting to Revenue.
In ROS, ensuring that the bank account details provided are correct.
To avoid delays, employers are urged to check and confirm their bank details as recorded with Revenue. 


Can those Employers who are signed up for the current Scheme apply for the Subsidy Scheme

Employers who have signed up to the scheme announced on Sunday 15 March and who may have received refunds under the current Scheme are eligible for the Subsidy Scheme.  They will not be required to apply for the Subsidy scheme.  Instead, Revenue will invite them to confirm that they meet the conditions of the Subsidy scheme.

Are there any conditions associated with the Subsidy Scheme

The Subsidy Scheme is open to employers who self-declare to Revenue that they have experienced significant negative economic disruption due to Covid-19.  They should be able to show, to the satisfaction of Revenue, that the negative disruption has led to a minimum of 25% decline in actual or predicted turnover, an inability to pay normal wages and outgoings and, to other circumstances as set out in published Revenue Guidelines.

What does an employee have to do to avail of the scheme?

Once an employee of an eligible employer was employed on 29 February 2020 and the employer has included them in their payroll submissions to Revenue in the period 1 February to 15 March 2020, they are eligible for the scheme. The employee does not have to do anything else. It is a matter for the employer to register for the Subsidy scheme with Revenue.

I’ve laid off employees this week can I rehire them and avail of this scheme?

Yes, if an eligible employer has laid off employees as a result of COVID-19, they can be taken back onto the payroll and will qualify for the subsidy if they meet the criteria  and were on payroll at the end of February and were returned through PAYE by 15 March. 

How will Employers operate the Subsidy Scheme?

  • For ease of administration and to reduce the burden on employers as well as employees this scheme is operated through the normal payroll process.
  • Employer runs the payroll as normal, setting each effected employee to PRSI class J9, pays a non-taxable amount of 70% of the employee’s average net weekly pay to a maximum of €410 (or €350 for employees who gross annual pay is between €38,000 and €76,000).  Where there is a Top Up payment by the employer the full value of the Top Up is reported in gross pay, pay for income tax etc.  Where no Top Up is being provided by the employer then €0.01 is reported as Gross Pay.  Additional information must include pay frequency.
  • Income tax, USC and PRSI will not be deducted from the refundable non-taxable payment of €410/€350.    Where a Top Up is provided this will be liable to income tax, USC and LPT, where applicable.  PRSI class J9 attracts a Nil payment for employees and a reduced 0.5% rate for employers.  This more favourable rate will be applied to the Top Up component.
  • Employer submits the payroll to Revenue on or before each pay date.
  • Revenue will check payroll submissions to ensure that employers have completed the required declaration and that the employees receiving the payment were included in Employer’s last February payroll submission.
  • Based on the payroll submissions received Revenue will credit €410/€350 per employee per week to the employer’s bank account, as recorded in Revenue’s system

How quickly will Employers get their refund under the Subsidy Scheme and how is it paid?

The amounts paid to employees and notified to Revenue will be transferred into the employer’s bank account by Revenue. This reimbursement will, in general, be made within two working days after receipt of the payroll submission.

Have any Employers received any refunds to date under the current Scheme?

3,800 employers have already registered their intention to operate the current Refund scheme.  Since Thursday 19 March, nearly 1,000 employers have received refunds of over €860,000 in respect of over 4,200 employees.

What if my employee is due a refund of tax in the payroll?

Where an employee is due a refund of tax or USC based on the payroll being processed, Revenue will refund this to the employer along with the associated wage subsidy.

Are there any checks and balances in place to ensure that only Employers adversely affected benefit from the Subsidy Scheme?

Revenue and the Department of Employment Affairs and Social Protection will be checking the eligibility of employer and employees for this scheme.  Checks include:

  • That the employer has applied to operate the scheme,
  • That all employees are included on a payroll submission made by the employer in the period from 1 February 2020 to 15 March 2020.
  • That the employee was on the payroll as of 29 February and has not been ceased on the payroll
  • That the employer has paid the full subsidy amount to the employee and
  • That employees are not receiving the wage subsidy from multiple employers.
  • Other checks will be built into the system and applied in real time.

Where employees have already been laid off and their employer has ceased their employment, they can apply directly to DEASP for the payment.

How long will payments under the enhanced Scheme last?

The full scheme is in place for 12 weeks and will be subject to review.

Can employers top up the wage subsidy?

Under the Scheme, employers will pay their employees a portion of their wages depending on their ability to pay, Revenue will then pay the employee a further amount in respect of each employee. The subsidy payable for each employee will be determined with reference to their normal weekly wage.

Is the wage subsidy taxable on the employee?

The payments to redundancy are liable to income tax; however, the subsidy is not taxable in real-time through the PAYE system during the period for the Covid-19 pandemic. Instead it will be taxable by review at the end of the year. 

What if an employer has already applied for the previous scheme and got €203 refunded. Are they now due more?

The Subsidy scheme is operational only from March 26, 2020 so they will not be due a further refund for amounts received up to that date.  Revenue will transfer those employers who have registered for the initial €203 Covid-19 Refund scheme across to this new scheme.

Employer has already ceased their employees can they operate this scheme?

Employees who have already been laid off by their employer can be placed back on the payroll and the employer will be entitled to the temporary wage subsidy payment for him or her.

Does this impact employees’ rights payment?

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.

Will my employees get insurable weeks?

Yes, the employers PRSI is reduced from 10.5% to 0.5% and no employee PRSI applies.  Entitlements will not be broken, and employees will get insurable weeks or credited contributions.  This matter will be fully examined by DEASP and agreed.

If I pay a top up is the employer PRSI calculated at J9 0.5%?

Yes, the employers PRSI is reduced from 10.5% to 0.5% and no employee PRSI applies.  Qualifying employees are coded as J9 class of PRSI for the purposes only of its reporting obligations.  Entitlements will not be broken, and employees will get insurable weeks or credited contributions.  This matter will be fully examined by DEASP and agreed.