COVID-19

COVID-19: Wage Subsidy Scheme – FAQs for Employers

How is the scheme operated through payroll?

The employer runs the payroll as normal, entering the following details for each relevant employee under the Scheme:

  • PRSI Class set to J9
  • Enter a non-taxable amount up to 70% of the employee’s net weekly take home pay to:
    • a maximum of €410 per week where the average net weekly pay is less than or equal to €586, or
    • a maximum of €350 per week where the average net weekly pay is greater than €586 and less than or equal to €960.
  • 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
  • to avail of the wage subsidy, the wage subsidy plus any additional pay must not exceed the average net weekly pay
  • the payroll submission must include pay frequency and period number
  • Income tax and USC will not be applied to the subsidy payment through the payroll. However, the subsidy will be liable to income tax and USC on review at the year end.
  • Employee PRSI will not apply to the subsidy or any top up payment by the employer
  • Employer PRSI will not apply to the subsidy and will be reduced from 11.05% to 0.5% on the top up payment
  • Please note the subsidy does not apply where the AWN pay is greater than €960.

How do employers register for the scheme?

Employers who have not yet registered, 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. These may be different to your RDI bank account details so it is important to check this.

What if I am already registered employer COVID-19 refund scheme?

All employers who have already registered with Revenue for the purposes of the Employer COVID-19 Refund Scheme are not required to do anything further.

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 for Phase 1 of the subsidy scheme. This may change once Phase 2 has been enabled, which is expected to happen no later than the 20th April.

How does the subsidy scheme differ from the employer refund scheme?

This enhanced scheme:

  • Increases the maximum non-taxable refundable payment to €410 or 70% of the employee’s Average Net Weekly Pay, if less than €410, for employees earning less than or equal to €586 per week net.
  • Increases the maximum non-taxable refundable payment to €350 or 70% of the employee’s Average Net Weekly Pay, if less than €350, for those earning over €586 per week net and less than or equal to €960 per week net.
  • Allows the payment by employers of additional taxable payments.

How is the eligibility for the scheme determined?

Key indicators are that the employer’s turnover is likely to decrease by 25% for quarter 2, 2020; that the business is unable to meet normal wages or normal outputs and any other indicators set out in our guidelines.

In relation to the likely reduction in turnover of 25% or more, this is a reduction in expected turnover for Q2, 2020. The employer is best placed to determine that and may base this judgement on the decline in orders in March 2020, in comparison to February 2020, or the likely turnover for the quarter compared to Q1 or if appropriate Q2, 2019, or on any other basis that is reasonable.

Am I expected to provide proof of eligibility on application for the scheme?

Eligibility will initially be determined, largely on the basis of self-assessment and declaration by the employer concerned, combined with a risk focused follow up verification by Revenue involving an examination of relevant business records where that is considered necessary.

Revenue will not be looking for proof of qualification at this stage. They may in future, based on risk criteria review eligibility. In this context employers should retain their evidence/basis for entering the scheme.

What if my turnover has decreased by 25% or more but the company has strong cash reserves?

An employer that has been hit by a significant decline in business but has strong cash reserves, that are not required to fund debt, will still qualify for the Scheme but the Government would expect the employer to continue to pay a significant portion of the employee’s wages.

Can I still qualify if my employees have already been temporarily laid off?

The scheme is confined 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 to 15 March 2020.

Employees who were laid off after 29 February 2020 may be taken back onto the payroll for the purposes of this scheme.

If an employee’s average weekly pay is greater than €960 (due to additional tax credits claimed) but annual salary is less than €76k, is this employee eligible for the scheme?

it is the average weekly net pay rather than the gross pay equivalent that is taken into account for eligibility so although the gross pay may be less than €76K, the employee does not qualify based on his net pay.

When does the scheme apply from and how long will the scheme last for?

The scheme applies from Thursday 26th March 2020 and is available for an initial period of 12 weeks. 

What is the position if the company operates two trades, for example, retail and contracting, and only one trade is impacted by COVID-19 (i.E. The retail trade) and the overall company turnover does not fall by 25%?

We understand that if the company can demonstrate to the satisfaction of Revenue that one trade has been impacted and is able to produce relevant supporting documentation specific to that trade when requested to do so (e.g. separate management accounts) and is able to demonstrate compliance with other criteria, the company should be eligible to claim the subsidy for the impacted trade and directly impacted employees of this trade only.

Is it possible that a company, who could be deemed an essential business, could avail of a more relaxed revenue approach in relation to the wage subsidy scheme? The issue the company will face is not a reduction in turnover, but a slowdown in collecting debtors from their customers.

This is not covered by the wage subsidy scheme but if the company is experiencing cash flow problems, Revenue is encouraging companies to submit tax returns as and when due and engage early in relation to cash flow problems which give rise to difficulties in payment.

Must all my employees be affected to avail of the temporary wages subsidy scheme?

Eligible employers can participate in the scheme in respect of any eligible employees on their payroll, including those on reduced hours, rehired staff who were temporarily laid off or staff temporarily laid off but retained on the payroll.

Is the scheme open to directors?

If directors are paid through the payroll system and are included in the relevant payroll submissions for an eligible employer, then they are eligible to receive the wage subsidy.

Is an employee who resides in Northern Ireland eligible?

Employers can claim the subsidy in respect of cross border workers where the employee is exercising an Irish contract of employment in the Republic of Ireland, and where the employer satisfies the conditions of the scheme.