Irish Payrolls – Temporary Covid-19 Wage Subsidy Scheme

With the impact of the global Coronavirus pandemic hitting many UK and Irish businesses hard, the Governments have been arranging generous packages to see the see these businesses and their employees through these difficult times until the virus has subsided.

In particular the Irish Revenue have announced the Temporary COVID-19 Wage Subsidy Scheme which allows employers to retain employees on their payroll that would have otherwise been at risk of being laid off due to the impact of this pandemic.

The Temporary COVID-19 Wage Subsidy Scheme

This scheme, from the 26th of March, will refund employers a maximum of €410 per qualifying employee.

Through this scheme employers should not pay more than the normal weekly net pay, and from April the subsidy payment should be based on 70% of the normal net weekly pay to a maximum of €410 per employee per week.

Deductions

Employees paid under the subsidy scheme will not be subject to tax or Universal Social Charge (USC) on the payment, and this will instead be assessed at the end of the tax year. Any additional top up over and above the subsidy payment however will be liable to tax and USC.

With regard to Pay Related Social Insurance (PRSI), no employee deduction will be made from the subsidy payment or any additional top ups made by the employer. For the employer, the employer’s PRSI payment will not be made for the 70% subsidy payment but will be applied at a rate of 0.5% on any additional top up payments.

How will it work?

The Temporary Wage Subsidy Scheme will work by employers notifying the Irish Revenue through payroll of any payments made to employees, the Revenue will then transfer the funds directly back into the employers’ bank accounts.

It is estimated that if all goes as planned transfers will be made within 2 working days.

Eligibility

The scheme will operate for all employees for whom a payroll submission was made by the employer in the period from the 1st of February to the 15th of March. If employees have been laid off and the employment ceased the employee should apply directly to the Department of Employment Affairs and Social Protection (DEASP) for payment.

The scheme will apply to:

• Employers who have temporarily laid off staff as a result of the COVID-19 outbreak
• Employers who have kept staff on payroll and not ceased employment with Revenue
• Employees who a payroll submission was made for between the period of the 1st of February 2020 and the 15th of March 2020

How will employers qualify?

To qualify for this scheme, employers must:

• Be experiencing significant negative economic disruption due to the Coronavirus outbreak
• Be able to demonstrate, to the satisfaction of the Irish 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

How to apply for the scheme

The process to apply for the scheme is quite simple. Simply follow the following steps:

1. Log onto ROS myEnquiries, select the category ‘COVID-19: Temporary Wage Subsidy.’
2. Read the declaration and click ‘Submit.’
3. Log onto ROS and in ‘Manage my bank accounts’, ‘Manage EFT’, ensure that the bank account details are correct

For more information on what the Government has put into place in the UK, please see our recent post regarding the ‘Coronavirus Job Retention Scheme.’