01 04 2020 Insights Employment Law

Update: Employer COVID-19 Temporary Wage Subsidy

Tax Money People

This Insight provides an update to our previous Insight published on 25 March 2020 prior to enactment of the Bill.

By John Cuddigan
1 April 2020

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 week in relation to the operation of the Scheme and similar queries have come up. This Insight seeks to update our earlier Insight and clarify a number of the queries arising.

Scheme Criteria

Specified Employees

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.

Where an employer qualifies for the Scheme, then all employees who are specified employees will qualify for participation in the Scheme.

Employers to whom the Scheme Applies

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. In this regard, there was no guidance on what were best efforts and this has now been clarified to some extent by Revenue guidance;
  • 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; and
  • there are certain details to be provided through MyEnquiries by the employer including a declaration to be signed and provision of details of employer bank account. These are listed in the Revenue guidance linked above.

All employers participating in the Scheme will be listed on the Revenue website at the termination of the Scheme.

Wage Subsidy

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.

If an employer tops up the employee’s salary to a level where the net salary is greater than what the net salary would have been were it not for the emergency, any excess will be repayable to Revenue.

Queries that have Arisen:

The following queries have arisen in relation to the operation of the Scheme in the past week. On the basis of Revenue guidance and government clarification, we have attempted to answer these.

Can an employer participate where the employer has strong cash reserves?

The Act states that employers can participate only where they would otherwise not be in a position to discharge the wages of employees in full. Whilst this was initially taken to mean that companies who had cash reserves following prudent working capital practices or who had cash built up for investment could not participate, recent guidance has reduced these concerns.

The Minister for Finance has confirmed on 30 March that there is no requirement to use cash retained for investment for these purposes and companies holding cash for investment are not precluded from the Scheme. The Minister stated that he wishes to ensure that companies are in a strong financial position to proceed with intended investment following the emergency.

Additionally, on 1 April, the Chairman of the Revenue Commissioners stated that companies with ‘normal reserves’ of cash can participate in the Scheme (although the stronger the cash reserves, the greater the obligation of employers to top up the subsidy when paying wages to staff). What is normal will have to be assessed in this regard but it would appear prudent for employers to assess working capital requirements at this point based on the effects of the emergency continuing to impact business for the next 6 to 9 months at least. In this regard, the Scheme provides a subsidy for only 3 months of this period so ‘normal reserves’ may amount to a much higher figure than that which would be required on an historic working capital basis.

How does an Employer assess if turnover will drop by 25% and against what?

The Act does not provide details of the manner in which the drop by 25% is to be assessed or against what it is to be compared.

Guidance from Revenue has outlined that employers can base their assessment of any impact on turnover on projections for Quarter 2 (April to June). In this regard, it is overall turnover of the employer that should be projected and assessed.

Some commentary has indicated that it may be possible to agree with Revenue the application of the Scheme to a division of a company that has suffered significant reductions in turnover (but the entire company has not suffered in aggregate a sufficient 25% reduction in turnover) and where the Scheme will apply only to that division’s employees.

In assessing what the reduction in turnover for Quarter 2 is, Revenue has confirmed in recent guidance that it can be compared against the prior year’s turnover, the prior quarter’s turnover or any basis which is reasonable. This provides some flexibility particularly for employers with seasonal movements in turnover.

Can an Employer temporarily lay-off staff and top up their payments?

First off, where an employer chooses to temporarily lay off staff, the payments obtained by staff of €350 will be paid directly from the DEASP. The refund scheme no longer applies and the staff will have to apply to the DEASP.

Secondly, whilst an employer may wish to top up the payments received, there is no ability to do this.

It should also be noted that the Act provides that the normal 4-week limit on temporary lay-offs will not apply for the period up to 31 May, meaning that the usual 4-week period will effectively terminate on 28 June next.

For more information on the content of this insight please contact:
John Cuddigan, Partner | E. john.cuddigan@rdj.ie | T. +353 21 4802701

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