Temporary Wage Subsidy Scheme


Temporary Wage Subsidy Scheme

Part 7 of the Emergency Measures in the Public Interest (Covid-19) Act 2020 describes the Temporary COVID-19 Wage Subsidy Scheme (TWSS). TWSS replaced the short lived COVID-19 Employer Refund Scheme, which was run by the Department of Employment Affairs and Social Protection. Under Section 28 (2) of the Act it says that “This section shall apply where—

(a)  the business of an employer has been adversely affected by Covid-19 to a significant extent with the result that the employer is unable to pay to a specified employee the emoluments the employer would otherwise have normally paid to him or her,

(b)  notwithstanding the existence of the circumstances referred to in paragraph (a), the employer has the firm intention of continuing to employ the specified employee (and to pay to him or her emoluments accordingly) and is making best efforts to pay to the employee some of the emoluments referred to in paragraph (a) during the applicable period, and

(c)  the employer has satisfied the conditions specified in subsection (4).

For most employees the word ‘emoluments’ should be read as ‘wages’.

How to qualify?

The Revenue Commissioners (Revenue) are responsible for the running of the TWSS and to qualify for the scheme, applying employers must satisfy Revenue that they are:

-         Experiencing significant negative economic disruption due to COVID-19;

-         Able to demonstrate a minimum of a 25% decline in turnover;

-         Unable to pay normal wages and normal outgoings fully; and

-         Retaining their employees on the payroll, who must have been on the payroll on February 29th, 2020, and for whom a payroll submission was made to the Revenue Commissioners in the period from February 1st, 2020 to March 15th, 2020.

Employers already registered with the Revenue Commissioners for the first scheme, the DEASP’s Employer COVID-19 Refund Scheme, are not required to take any further action. Employers registering for the current scheme, the Temporary COVID-19 Wage Subsidy Scheme, should apply to Revenue by:

-         Logging on to ROS myEnquiries, clicking Add A New Enquiry and selecting the category ‘COVID-19: Temporary Wage Subsidy’;

-         Reading the “COVID-19: Temporary Wage Subsidy Self-Declaration” and pressing the ‘Submit’ button;

-         Ensuring refund bank account details are registered on your Revenue record. 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.

-         Revenue will issue a confirmation via myEnquiries and the employer can immediately operate the scheme.


In their publication Frequently Asked Questions (FAQ V6.0), the Revenue Commissioners note that the TWSS is in a transitional period and that “In Phase 2, from 4 May 2020, the operation of the scheme will ensure that the Subsidy paid to employers will be based on each individual employee’s Average Net Weekly Pay, subject to the maximum weekly tax-free amounts. Further information on how these arrangements will work will issue shortly.” (FAQ 1.2)

Later on in FAQ 4.1 Revenue say that “During the Transitional period, the subsidy scheme will initially refund employers €410 per each qualifying employee.” Revenue advise employers how to set up their arrangements to allow for future changes including entering:

-        “a non-taxable amount equal to 70% of the employee’s Average Net Weekly 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.”

In Section 28 (6) (f) of the Act it states that “A temporary wage subsidy shall not be paid to an employer in relation to a specified employee where the amount of the net weekly emoluments of that employee is in excess of €960 per week.” However, on April 15th Minister for Finance, Pascal Donohoe announced further changes to the Temporary Wage Subsidy Scheme, which will come into effect from May 4th. As a result, “if an employee was earning over €76,000 gross and has now been reduced to below €960 net pay a week, and their reduction is more than 20% then a subsidy of up to €205 would be payable and if the reduction was more than 40% a subsidy of up to €350 would be payable.”

Amongst the other changes Minister Donohoe announced were:

For employees with net pay less than €586 per week:

-        for those employees with previous average net pay less than €412 per week the subsidy will be increased from 70% to 85% of their previous net weekly pay;

-        for those employees with previous average net pay between €412 and €500 per week the subsidy will be up to €350 per week;

For employees with net pay in excess of €586 per week a tiered approach will apply as follows: 

-        Gross Amount paid by Employer                                                                             Subsidy

-        Up to 60% of employee’s previous average net weekly pay                             Up to €350 pw

-        Between 60% and 80% of employee’s previous average net weekly pay      Up to €205 pw

-        Over 80% of employee’s previous average net weekly pay                              No subsidy payable


The Revenue Commissioner’s note that employers must not operate this scheme for any employee who has or is making a claim to the Department of Employment Affairs and Social Protection (DEASP) for the COVID-19 Pandemic Unemployment Payment (PUP).

They also note that there “can be cases where an employee was in employment but who did not receive normal pay in January or February 2020, such as reduced pay, maternity leave, illness benefit or off-pay leave. In such cases the employer can either:

-        operate the scheme based on Average Net Weekly Pay,

-        pay the employee the appropriate wages without receiving a subsidy refund, or

-        the employee may decide not to participate in the Temporary Wage Subsidy Scheme and instead apply directly to the Department of Employment Affairs and Social Protection for the Pandemic Unemployment Payment.” (FAQ 4.6)


The Revenue Commissioners say that income tax and USC will not be applied to the subsidy payment through the payroll; and that employee PRSI will not apply to the subsidy or any top up payment by the employer. In FAQ 3.10 they say that “Although the employer’s PRSI is reduced from 11.05% to 0.5% and no employee PRSI applies, it is intended that employees in respect of whom a temporary wage subsidy is being properly paid will be allocated social insurance contributions appropriate to their normal employment status for the duration of the temporary wage subsidy.”

However, Revenue go on to say that “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 liable for tax on the subsidy amount paid to them by their employer by way of review at the end of the year.” (FAQ 3.11)

Under FAQ 4.1 Revenue states that “In many cases the payment of the Temporary Wage Subsidy and any additional income paid by the employer will result in the refund of Income Tax or USC already paid by the employee. Any Income Tax and USC refunds that arise as a result of the application of tax credits and rate bands can be repaid by the employer and Revenue will also refund this amount to the employer.”

The most recent version of the Revenue Commissioners publication Frequently Asked Questions is available at https://www.revenue.ie/en/employing-people/documents/pmod-topics/guidance-on-operation-of-temporary-covid-wage-subsidy-scheme.pdf