Temporary Wage Subsidy- Memo Updated as at 27th March  

The new scheme replaces the previous Covid-19 refund scheme- It is operated directly through the Company Payroll.

If employees have applied to the DEASP for the emergency Covid 19 payment they can now be ‘re-employed’ and this scheme can be used by the employer to pay them. Employees cannot claim from the state and avail of this scheme.

  • Phase 1 – Transitional phase (Phase two is expected mid -April but no details yet)

A maximum subsidy of 70% of average net pay up to a maximum subsidy of €410 for those whose average net pay is less than €586.

A Maximum subsidy of €350 for those whose average net pay is between €586 to €960 per week. Over €960 average net pay per week- no subsidy

The employer can chose to top up the net wages to a maximum of the 100% of net wages including the subsidy. If the employer tops up to over the 100% of net wages including the subsidy this will lead to a reduction in the subsidy repaid.

Under PAYE modernisation employees on cumulative bases may be entitled to a tax refund in real time on top of the refund, which will therefore increase the net payable to the employee. Under the scheme the PAYE refunds given to employees will be issued along with the subsidy to the employer. This is more likely when the employer is not topping up the scheme.

Under the transitional phase which is expected to be from 26th March to 20th April the revenue will issue the full refund of €410 per employee even though 70% of the net pay may be less than the €410. Revenue will then reconcile the payments made against the returns filed by the Employers and the difference will be due back to revenue immediately. Please keep a full record of subsidy repayments received DO NOT spend the difference as Revenue will want it returned. If you fail to repay the difference it will be ducted from future subsidy payments.

  • Average net pay will be based the net pay for January and February or weeks 1-9 if weekly and as submitted to Revenue no later than 15th March.
  • The scheme applies to employees on the payroll on 29th February and who were included in a payroll submission between 1st February and 15th March
  • Employees who were ceased between 1st March and 25th March can be rehired and put on the scheme providing they sign back off from the emergency Covid 19 payment.
  • The subsidy element is not taxable but Revenue will tax employees at year end by review. (Employees beware –you may get a bill).
  • Any subsidy to be claimed will be reimbursed to the employer within two working days. (Make sure you input the bank details into the refund section for PAYE in ROS)

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 that you have suffered a minimum of a 25% decline in turnover. See guidance re this. 
  • be unable to pay normal wages and normal outgoings fully. Revenue have stated in their guidance document that this doesn’t preclude a company with cash reserves but that the government would expect the employer to pay a significant portion of the employees wages.
  • retain their employees on the payroll.

Further guidance – https://www.revenue.ie/en/corporate/communications/covid19/temporary-covid-19-wage-subsidy-scheme.aspx

See Covid 19 – FAQs + Covid 19 Employer eligibility guidance document