COVID-19 update: Employers welcome Wage Subsidy Scheme

Alan Hickey

March 27 2020

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The government has moved to support businesses and employers by introducing a temporary Wage Subsidy Scheme.

The scheme aims to keep as many workers as possible in employment until the COVID-19 crisis is over.

Our experts explain the Temporary Wage Subsidy Scheme in more detail below.

Temporary Wage Subsidy Scheme

The Temporary Wage Subsidy Scheme aims to avoid large-scale redundancies across the sectors of the economy most affected by the COVID-19 crisis.

The government is encouraging businesses to keep as many employees as possible on their payrolls and will support any businesses wishing to do so through the Temporary Wage Subsidy Scheme.

The Temporary Wage Subsidy Scheme replaces the COVID-19 Pandemic Refund Scheme. If your business has already used this refund scheme, you will automatically be registered for the Temporary Wage Subsidy Scheme and Revenue will contact you.

Who can avail of the Temporary Wage Subsidy Scheme?

The scheme will be available to employers who can demonstrate that they have been attempting to retain and pay staff but are unable to do so because their turnover has been so badly affected by the crisis.

The Revenue will administer the scheme and have set out the following criteria. 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.
  • Be unable to pay normal wages and normal outgoings fully.
  • Retain their employees on the payroll.

Employees must also have been on your payroll for the last PAYE period in February to qualify.

The eligibility criteria remain subject to any subsequent Revenue guidelines and may change.

How much of staff salaries are paid?

Between now and the beginning of April, the state will co-fund 70% of salaries up to a maximum €410 per week.

From April 1st, the scheme looks set to be split into classes:

  • For employees earning up to €586 per week, the state subsidy is 70% or €410 per week.
  • For employees earning between €586 and €960 per week, the state subsidy is to be determined by the Minister for Finance.
  • For employees earning more than €960 per week, no subsidy will be payable.

Unemployment Payment increased in rate of pay and duration

The COVID-19 Pandemic Unemployment Payment has also increased to €350 per week. It's available to all employees and the self-employed who have lost their jobs due to the pandemic.

Any employees who have lost their jobs and have already applied for this benefit will automatically receive the increased rate of €350 per week.

The COVID-19 Pandemic Unemployment Payment will also now be in place for the duration of the crisis.

Payroll issues

As it stands, the state wage subsidy is not subject to income tax under the PAYE system and will be put through payroll as a non-taxable payment. 

In addition, there will be no PRSI payable on the state wage subsidy. 

The reduced rate of 0.5% Employer’s PRSI and 0% Employee’s PRSI (Class J) will be applied to any top-up payments given by employers.

Welcome change to redundancy laws

One major concern for employers during this crisis is the potential for a flood of redundancy claims. The government has now forbidden employees who have been laid off or put on short time during the crisis from making redundancy claims until May 31st, 2020 (or any extended period).

The risk of large-scale redundancies remains possibly the biggest concern for employers in the worst-hit sectors.

Peninsula’s Associate Director Alan Hickey, in his role as Chair of the Chambers Ireland Employment, Workplace and Skills Taskforce, raised this issue last week on behalf of Irish employers and it's encouraging to see that this matter is now being addressed.

Peninsula is actively engaging with Chambers Ireland in lobbying the relevant government departments on this issue to ensure the interests of employers are safeguarded throughout this crisis.


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