In a previous article dated 30th March 2020 (available here), we discussed the workings of the Government’s Temporary Wage Subsidy Scheme which is aimed at helping employers to keep employees on the payroll for the duration of the Covid-19 crisis (whether or not those employees are still working) so that businesses can resume normal operations more easily after the crisis.
In line with a formal determination made by the Minister for Finance and Public Expenditure Reform on 15th April improvements have been made to the subsidy payments available in certain circumstances. The main categories of employees to benefit from these improvements are those whose average net weekly pay in January and February 2020 was less than €500 as well as those who had a pre-Covid salary in excess of €76,000 but have since had their pay cut by significant amounts (discussed below).
Most of these improvements will be effective for payroll submitted to Revenue on or after 4th May, 2020. The improvements are outlined below.
Improvements in Subsidy Rates applicable as and from 4th May, 2020:
| Average Revenue Net Weekly Pay during January and February 2020 (“ARNWP”) | New subsidy rate as and from 4th May |
| €412 or less | 85% |
| €412 to €500 | €350 flat rate |
| €500 to €586 | 70% capped at €410 |
| €586 to €960 where the employer pays gross salary equal to 60% of the employee’s net weekly earnings. | €350 |
| €586 to €960 where the employer pays gross salary of over 60% but less than 80 % of the employee’s net weekly earnings | €205 |
| €586 to €960 where the employer pays gross salary of over 80% of the employee’s net weekly earnings | No subsidy payable |
Availability of a subsidy payment to those with a pre–Covid salary in excess of €76,000
Under the new rules from 16th April, the subsidy is now also available to support employees where their pre-Covid salary was greater than €76,000 and their post-Covid salary has fallen below €76,000 subject to the tiered arrangements outlined in the table below and subject to tapering to ensure that the net pay does not exceed €960 per week.
Tiered Arrangements for people with a pre-Covid salary of greater than €76,000
| Level of Reduction | Subsidy rate |
| Less than 20% reduction | No subsidy payable |
| Between 20% and 39% reduction | Up to €205 |
| Reduction of 40% or more | Up to €350 |
Tapering:
Tapering of the subsidy shall apply wherever the gross pay paid by the employer plus the subsidy amount exceeds the ARNWP.
In any case where Revenue have overpaid the subsidy this will be reclaimed from the employer.
The only exception to this is where an employer wishes to pay more than 15% of pre-Covid crisis pay such that the employer contribution by way of normal wages plus the temporary wage subsidy brings the new salary of the employee to €350 per week. In those cases, any tapering of the temporary wage subsidy that would otherwise have applied shall not be applied.
The subsidy will also have to be tapered to ensure that the net weekly pay (including the employer’s contribution and the wage subsidy) of the employee does not exceed €960 net per week.
Employer eligibility to avail of the scheme;
Previously employers were only eligible to avail of the scheme in respect of employees if their February 2020 payroll submission had been submitted to Revenue by 15th March, 2020. That 15th March deadline has now been extended so that employers will be eligible for the scheme provided they have submitted the February 2020 payroll submission to Revenue before 1st April, 2020 and payroll submissions for all previous months were submitted to Revenue before 15th March, 2020. However any employee in respect of whom a subsidy is claimed still has to have been on the employer’s payroll on 29th February, 2020.
Since the date of our last article on this scheme Revenue has published further Guidance on Employer Eligibility and Supporting Proofs for the Scheme. This guidance is available here.
Ongoing Updates:
Employers may find it helpful to keep an eye on the ever changing Revenue Guidelines on the scheme available at this link.
This article is designed to provide a high level summary of recent updates to the scheme and does not constitute tax advice. Employers are advised to obtain appropriate accountancy/tax advice on the day to day implementation of the scheme.
29th April 2020
Anne O’Connell Solicitors
Fitzwilliam Hall
Fitzwilliam Place
Dublin 2.
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