General information on the Temporary COVID-19 Wage Subsidy Scheme

The government announced new measures to provide financial support to Irish workers affected by the COVID-19 crisis.

As part of these measures, Revenue will operate a Temporary Wage Subsidy Scheme.

The scheme was expected to last a period of 12 weeks, starting from 26 March 2020. However, on 5 June 2020, the Minister for Finance and Public Expenditure and Reform announced that the operation of the Temporary Wage Subsidy Scheme has been extended to 31 August 2020.

The operation of the Temporary Wage Subsidy Scheme will be available to employers who keep employees on the payroll throughout the COVID-19 pandemic, meaning employers can retain links with employees for when business picks up after the crisis. Additionally, the operation of the scheme will reduce the burden on the Department of Employment Affairs and Social Protection (DEASP) which is dealing with the other COVID-19 related payments.

Employers are encouraged to facilitate employees by operating the scheme, by retaining employees on their books and by making best efforts to maintain a significant, or 100% income, for the period of the scheme.

• replaces the previous COVID-19 Refund Scheme
• initially, from 26 March 2020 until 04 May 2020, the subsidy scheme refunded employers up to a maximum of €410 per each qualifying employee
• an employer can choose to make an additional gross payment to the employee to fully or partially make up the difference between the amount provided by the subsidy scheme and the employee’s Average Revenue Net Weekly Pay. Such additional payments, which cannot be re-grossed, are regarded as gross pay and liable to Income Tax and USC
• if the employer makes excessive additional gross payments, then either the subsidy value applicable for the employee and refundable to the employer will be reduced, or the employee may not be eligible for the subsidy scheme
• the subsidy scheme applies to employers who make additional gross payments to employees’ wages and those that aren’t in a position to do so
• employers make this special support payment to their employees through their normal payroll process
• employers will then be reimbursed for amounts paid to employees and notified to Revenue via the payroll process
• the reimbursement will, in general, be made within two working days after receipt of the payroll submission
• from 4 May 2020, the subsidy payment has moved to a system based on the previous Average Net Weekly Pay (ARNWP), calculated by Revenue, for each employee
• income tax and USC will not be applied to the subsidy payment through the real time payroll environment. However, subsidy payments will be liable to income tax and USC by way of an end of year review for the employee
• employee PRSI will not apply to the subsidy or any top up payment by the employer
• employers PRSI will not apply to the subsidy and will be reduced from 11.5% to 0.5% on the additional gross payment

The scheme is available to employers from all sectors (excluding the public service and non-commercial semi-state sector) whose business activities are being adversely impacted by the COVID-19 pandemic.

The scheme is available for employers who retain staff on payroll; some of the staff may be temporarily not working or some may be on reduced hours or reduced pay. Provided the employer meets the conditions set out below and subject to the levels of pay to the employees the employer may be eligible for the scheme for some or all of the employees.

To qualify for the scheme, 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

The scheme was initially confined to employees who were on the employer’s payroll as at 29 February 2020, and for whom a payroll submission has already been made to Revenue in the period from 1 February 2020 to 15 March 2020.

However, Revenue has since implemented changes to the scheme to include certain employees who were not on payroll on February 29,2020. Such scenarios include employees returning to work;

• following a period of maternity, adoptive leave or related unpaid leave, or a period of paternity, parental leave or related unpaid leave, or
• having been in receipt of Health and Safety or Parent's Benefit paid by the DEASP for February 2020, or
• having been in receipt of Illness Benefit paid by the DEASP for February 2020
• or Apprentices who were on an education and training programme run by SOLAS in February 2020 and, as a result, were not eligible for a Temporary Wage Supplements Scheme payment

The names of all employers operating this scheme will be published on Revenue’s website in due course, after the scheme has expired.

Registration for the scheme can be done through ROS/ MyEnquiries. Any employer, already registered with Revenue for the purposes of the Employer COVID-19 Refund Scheme, is not required to take any further action. The employer may make payroll submissions from 26 March 2020 under the subsidy scheme arrangements on the same basis as they were doing for the Employer Refund Scheme, and the qualifying subsidy amount will be refunded in respect of each eligible employee per week.

Employers, or their agents, wishing to register for the scheme can apply to Revenue by carrying out the following steps:

• log on to ROS myEnquiries and select the category ‘COVID-19: Temporary Wage Subsidy’
• read the “COVID-19: Temporary Wage Subsidy Self-Declaration” and press the ‘Submit’ button
• ensure bank account details on Revenue record are correct. 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

The employer runs the payroll as normal, entering the following details for each relevant employee under the Scheme:

• PRSI Class set to J9
• a non-taxable amount equal to the employee’s net take home pay or €410 whichever is the lesser
• if an employer is not making any payment to the employee, they should include a pay amount of €0.01 in Gross Pay
• if an employer is making additional wage payments to affected employees, they should include this amount in the Gross Pay
• it is important that employers do not include the Temporary Wage Subsidy payment in Gross Pay
• the payroll submission must include pay frequency and period number

Income tax, USC, LPT, if applicable, and PRSI are not deducted from the Temporary Wage Subsidy.

The Temporary Wage Supplements Scheme payments (and the Pandemic Unemployment Payment (PUP)) made to employees are liable to income tax and Universal Social Charge (USC). However, the subsidy is not taxed in real-time through the PAYE system and instead will be calculated as part of the employee End of Year review.

To mitigate the possible impact on the employee End of Year review, Revenue placed all employees that received payments under either the TWSS (Temporary Wage Subsidy Scheme) or the PUP (Pandemic Unemployment Payment) on a ‘Week 1 basis. The week 1 basis is also known as 'non-cumulative basis'; Each pay day is taxed on its own, separate from previous weeks. Pay and tax credits are not accumulated from the previous 1 January.

Employers must not operate this scheme for any employee who is making a claim for duplicate support (e.g. the Pandemic Unemployment Payment) from DEASP.

Based on the information provided in payroll submissions and adherence to the maximum limits, described above, Revenue will credit employers with the temporary wage subsidy paid to each employee.

Penalties will apply to any abuse of the Subsidy Scheme by self-declaring incorrectly, not providing funds to employees or non-adherence to Revenue, and any other relevant, guidelines.

For general issues relating to the scheme, employers should contact Revenue's National Employer Helpline via the myEnquiries system, providing details of the query and a direct dial contact number.

Employers should make sure to select ‘Employer’s PAYE’ and then ‘Employer’s PAYE General Enquiry’ when submitting the query through myEnquiries.

Revenue have outlined that Revenue is unable to make some payments under the Temporary Wage Subsidy Scheme because a small number of employers have not set up a nominated Refund Bank Account on the Revenue On-Line System (ROS).

Revenue has confirmed that it is unable to pay more than €1.3 million to over 600 employers for payments made by them under the scheme.

Many employers will have an existing Payment Bank Account set up in ROS, however, to receive payments from Revenue, including under the Temporary Wage Subsidy Scheme, employers also need to set up a nominated Refund Bank Account.’

Revenue is asking any employer who is currently awaiting payment from Revenue to check that they have set up a nominated Refund Bank Account in ROS.

A Refund Bank Account, which must be SEPA (Single EURO Payments Area) reachable, can be set up as follows:

• Log on to ROS
• Select ‘Manage Bank Accounts’ option
• Select the ‘Manage EFT’ option
• Select ‘PAYE-EMP’ option
• Enter ‘IBAN number’ (Can be found on bank statement)
• Enter ‘BIC number’ (Can be found on bank statement)
• Enter ‘Account Name’ (minimum requirement is first 18 characters)
• Complete ‘Confirmation Screen’
• Complete the ‘Sign and Submit’ requirement (ROS login password required).

Further information regarding Refund Bank Account requirements is available in the Frequently Asked Questions (FAQ) section of the Revenue website here

For more see here.