Temporary Covid-19 Wage Subsidy Scheme

Phase 1 - March – 20th April 2020     

What is the Scheme?  

• The scheme will operate to refund employers up to 70% of the net wage paid to employee subject to the thresholds detailed below.
• Refunds under this Scheme will be issued to employers with 2 working days.
• It replaces the previous €203 refund scheme and any employer who opted to operate this scheme will be contacted by Revenue to transfer to this new scheme.
• Employers are encouraged, but not obliged, to top-up the subsidy to bring the net wages of employees as close to 100% as possible.
• The Scheme can be applied even if an employees working hours have been reduced.
• The Scheme will operate in 2 phases:

Phase 1 – March to 20th April 2020 (this document only deals with Phase 1) Phase 2 – 20th April 2020 onwards (awaiting further guidance from Revenue)   

Who Qualifies for the Scheme?  

The Scheme is available to employers who are: 

• Experiencing significant negative economic disruption due to Covid-19 able to demonstrate a minimum of a 25% decline in turnover unable to pay normal wages and normal outgoings fully, and retain their employees on the payroll. 
• Employees who were on the employer’s payroll as at 29th February 2020 and for whom a payroll submission has already been made to Revenue in the period from 1st February to 15th March 2020. The employer is not to pay in excess of an employee’s usual net wages.
• Employers who avail of the Scheme will be published on Revenue’s website.   

How will the Scheme Operate?   

Phase 1 - For March and up to 20th April 2020 (Transitional Period)  

During this period the Scheme will refund employers a maximum of €410 regardless of the employee’s income. However for administration purposes the employer is being asked to return the following information on the payroll:

• Set PRSI Class J9 Enter a non-taxable amount equal to 70% of the employee’s Average Net Weekly Pay to: maximum of €410 per week where the average net weekly pay is less than or equal to €586, or maximum of €350 per week where the average net weekly pay is greater than €586 and less than or equal to €960.
• The Scheme does not currently allow for any refund where the employees average net weekly pay is greater than €960 per week.
• No IT, USC or PRSI is to be levied on the subsidy payment through payroll. The subsidy will be liable to IT and USC on review at the end of the year. Revenue have yet to announce how this will operate.
• Employer’s PRSI at a rate of 0.5% (down from 11.5%) applies to any top-up amounts.
• IT and USC should be applied on any top-up amounts.
• It is likely that the Scheme will trigger tax refunds for employees and employers can pay over the tax refunds to employees. Revenue will reimburse the tax refunds to employers.

Phase 1 Examples                                                                                               

(a) Average Net Weekly Wages €210. Anna’s average net weekly wages is €210. In Phase 1 the refund will operates as follows:   On the payroll submission the Covid-19 refund amount will be declared as €147 (i.e. €210 @ 70%). Revenue will refund the employer €410 regardless.   The over-refunded amount €263 (i.e. €410 - €147) will be due back to Revenue. Though we are awaiting guidance on how that will operate in practice.   

(b) Average Net Weekly Wages €550. Tom’s average weekly wages is €550. In Phase 1 the refund for Tom’s employer will operate as follows:   On the payroll submission the Covid-19 refund amount will be declared as €385 (i.e. €550 @ 70%). Revenue will refund the employer €410 regardless.   The over-refunded amount €25 (i.e. €410 - €385) will be due back to Revenue.       

(c) Average Net Weekly Wages €586. Jack’s net weekly wages is €586. The refund scheme will operate as follows:   On the payroll submission the Covid-19 refund amount will be declared as €410 (i.e. €586 @ 70%) and Revenue will refund the employer €410 regardless.   There will be no ‘over-refunded’ element in this case.   

(d) Average Net Weekly Wages €675. Jane’s average net weekly wages is €675 (as this is above the €586 threshold above, Jane’s maximum subsidy under the Scheme will be capped at €350). The refund will operate as follows:   On the payroll submission the Covid-19 refund amount will be declared as €350 (i.e. the maximum threshold for this wage amount). Revenue will refund the employer €410 regardless.   The over-refunded amount €60 (i.e. €410 - €350) will be due back to Revenue.   

(e) Average Net Weekly Wages €1,110. Mark’s net weekly wages is €1,100. He breaches the €960 net weekly wage maximum and therefore is not entitled to avail of the scheme.   

Phase 2 – 20th April 2020 Onwards   

We are awaiting further guidance from Revenue in respect of this phase.