15 04 2020 Insights Tax

Employer COVID-19 Temporary Wage Subsidy – An Update

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Tax Money People

The Emergency Measures in the Public Interest (Covid-19) Act 2020 (the “Act”), which has passed all legislative stages and is being signed into law, sets out details of a wage subsidy support payment scheme introduced as part of the response by the Government to COVID-19 (the “Scheme”). The Scheme is administered through the Revenue Commissioners and aims to provide a special subsidy to employers to incentivise retention of employees and avoid additional redundancies due to the ongoing pandemic. The Scheme has replaced the Covid-19 Employer Refund Scheme which was set up at the initial stages of the pandemic.

The Scheme essentially operates by permitting employers who satisfy certain conditions to obtain subsidies of up to 70% of a specified employee’s net remuneration. Where the employer has satisfied the criteria and applied the payment correctly, they will be reimbursed by Revenue.

The Scheme is administered under guidelines issued by Revenue and Revenue has helpfully placed detailed guidance on its website at this point which clarifies many of the questions that existed when the Scheme was first announced.

These details can be found at:


We have advised clients over the past few weeks in relation to the operation of the Scheme and similar queries have been raised. This Insight seeks to update our earlier Insight and clarify a number of the queries arising, with the assistance of some clarifications provided by Gearoid Murphy, Principal Officer, Revenue on a webinar hosted by EY this morning.

Scheme Criteria

Specified Employees - Clarification

The Act provides that specified employees in relation to an employer means an individual who was on the payroll of the employer as at 29 February 2020, and both of the following conditions are met:

  • the employer has submitted to the Revenue Commissioners a notification or notifications of the payment of emoluments to the employee in February 2020 in accordance with Regulation 10 of the Regulations; and
  • the employer has submitted the monthly return with details of tax deducted for the month of February 2020 on or before 15 March 2020. The payment of the tax does not have to have been made.

Mr Murphy confirmed this morning that there can be no relaxation of the requirement that employees were on payroll for February to participate in the Scheme.

Employers to whom the Scheme Applies - Clarifications

There are a number of other conditions that must be met by employers mentioned in the Act, these being:

  • the business of the employer must be adversely affected with the result that the employer is unable to pay to a specified employee the emoluments the employer would otherwise have paid to him or her;
  • the employer must show there is an intention of making best efforts to pay the employee some of the emoluments that would otherwise have been paid; and
  • the question of the adverse effect will need to be demonstrated to the satisfaction of Revenue in accordance with their guidelines – 25% reduction in turnover for the period 14 March to 30 June is required to be shown in this regard.

Mr Murphy clarified a few points this morning, these being:

  • the impact on turnover can be based on best estimates for the quarter made by the employer, as the employer is in the best place to judge that;
  • employers can assess the impact on turnover on a divisional basis where the overall turnover of the employer is not impacted to the required level. This is a significant departure and may assist employers who are impacted in areas by the current emergency;
  • employers with cash reserves that were held for investment, expansion or repayment of debt can participate in the Scheme. Employers with cash reserves not earmarked for such purposes can still participate in the Scheme but would be expected to top-up employee wages to the average weekly net pay level;
  • Revenue will engage with employers whose turnover may not drop by 25% in Quarter 2 but who have suffered drops in orders due to the emergency and where turnover might be impacted in subsequent quarters;
  • in a group context, overall group turnover impacts can be used where this entitles an employer to participate in the Scheme. Engagement with Revenue on this would be required to ensure compliance; and
  • in the context of start-up companies, Revenue is prepared to be flexible in relation to assessing the impact on turnover.

Mr Murphy also confirmed this morning that Revenue is operating the scheme flexibly and is seeking not to be prescriptive but agile in dealing with the different circumstances of employers.

Wage Subsidy - Clarifications

The wage subsidy potentially payable is as follows:

  • where the net pay (were it not for the Covid-19 emergency) payable was not more than €586 per week, an amount not exceeding 70% of the net weekly emoluments. This is not the same thing as €410 as if the net pay per week was €500, then the subsidy will be €350 (i.e. it cannot exceed 70% of the net pay that would have been payable);
  • where the net pay (were it not for the Covid-19 emergency) payable was more than €586 per week but not more than €960 per week, an amount to be determined by the Minister for Finance (this is €350 per week); and
  • where the net pay is in excess of €960 per week, no subsidy arises.

What has emerged in certain cases is that employers will find that the wage subsidy ends up being less beneficial for an employee than the pandemic unemployment payment (“PUP”) of €350, particularly for lower paid employees. This is exacerbated by the fact that the wage subsidy is taxable in the hands of the employee (but by way of year end adjustment). On this, Mr Murphy outlined that whilst the tax status of the PUP is under discussion, it is currently not listed as a tax exempt social protection benefit.

Mr Murphy clarified this morning that an announcement is due from the Minister for Finance at midday to amend the above bands to address unhappiness with the limits above. This may make significant amendments to the Scheme participation limits.

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