COVID-19: Temporary COVID-19 Wage Subsidy Scheme
The Temporary COVID-19 Wage Subsidy Scheme (TWSS), which is run by the Revenue Commissioners replaced the short lived COVID-19 Employer Refund Scheme. The scheme is expected to run for 12 weeks from the 26th March.
The Scheme aims to provide a subsidy to facilitate employers to continue to pay their employees during the current pandemic. Employers will be refunded up to a maximum of 70% of an employee's wages (and up to a maximum of 85% from the 4th May). The Government expects the employer to try to maintain an employee’s income as close to 100% as possible for the subsidised period, though the combined employer pay and the subsidy should not exceed 100%.
The subsidy scheme applies both to employers who make additional payments to their employees and those that are not in a position to do so.
The amount of the weekly subsidy is linked to the employee's average weekly net pay (the amount an employee receives after tax, PRSI and other deductions are taken from the gross pay). From the 26th March to the 3rd May:
- If an employee’s average weekly net pay (pre-COVID-19 emergency) is up to €586, the subsidy is 70% of net pay up to a limit of €410;
- If average weekly net pay is between €586 and €960, the level of the subsidy is up to €350;
From March 26th to April 15th if the average net weekly pay is above €960 no subsidy is paid.
From 16th April the subsidy is now payable if an employee’s average weekly net pay exceeds €960 in certain circumstances.
The level of subsidy if an employee’s average weekly net pay is over €586 is linked to the level of how much the employer has been able to pay to the employee and the level of reduction in the employee’s pay.
- If an employee’s average net weekly pay exceeds €586 and the employer pays up to 60%, the subsidy will be up to €350 per week.
- If an employee’s average net weekly pay exceeds €586 and the employer pays between 60% and 80%, the subsidy will be up to €205 per week.
- If an employee’s average net weekly pay exceeds €586 and the employer pays over 80%, no subsidy is payable.
It is important to note that the combined Employer payment and Subsidy payment should not exceed €960, regardless of the employee’s weekly net pay prior to the Covid-19 emergency.
A number of changes were announced on the 16th April. These will come into effect from the 4th May and will not be backdated.
- If an employee’s average weekly net pay is up to €412 per week the subsidy will be 85% of their previous net weekly pay.
- If average weekly net pay is between €412 and €500 per week, the subsidy will be up to €350 per week.
- If an employee’s average weekly net pay is between €500 and €586, the subsidy is 70% of net pay up to a limit of €410.
- If an employee’s average weekly net pay is over €586, the subsidy will be available, on a tapered basis, up to €350 per week.
The Revenue Commissioners advise that employers make the subsidy payment to their employees through their normal payroll process. Employers will then be reimbursed for amounts paid to eligible employees and notified to Revenue via the payroll process. Reimbursement will, normally, be made within two working days after receipt of the payroll submission. Employers PRSI will also not apply to the subsidy and will be reduced to 0.5% on the top-up payment.
Income tax and the Universal Social Charge (USC) will not be applied to the subsidy payment through the payroll. Employee Pay Related Social Insurance (PRSI) will not apply to the subsidy or any top-up payment by the employer. However, the payments are liable to income tax, and 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.
To qualify for the scheme, applying employers must satisfy the Revenue Commissioners 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 registering for 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.
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).
Further information on the Temporary COVID-19 Wage Subsidy Scheme is available at https://www.revenue.ie/en/corporate/communications/covid19/temporary-covid-19-wage-subsidy-scheme.aspx