Following the Presidents signatory of the Emergency Measures in the Public Interest (Covid-19) Bill 2020 on Friday last, further clarifications are being provided by Revenue in relation to the Temporary Wage Subsidy Scheme. While we await the publication of the Act in the statutory books Adare Human Resource Management have prepared some updated FAQs in relation to the scheme for your consideration.
QUESTIONS & ANSWERS ON
WAGE SUBSIDY SCHEME
WHAT IS THE COVID-19 WAGE SUBSIDY SCHEME?
The Wage Subsidy Scheme is a form of income support. From March 26, 2020 an eligible Employer will be supported through the subsidy scheme and will refund Employers up to a maximum weekly of €410 for each qualifying Employee. The scheme will apply to Employers who top up Employees’ wages and those that aren’t in a position to do so, however, where a top up applies Employers should pay no more than the normal take home pay of the Employee. Please refer to Revenue for further details on the parameter of the scheme.
DOES THE COVID-19 WAGE SUBSIDY SCHEME APPLY TO ALL EMPLOYERS?
The Scheme is available to Employers from all sectors (excluding the public service and non-commercial semi-state sector) and who can demonstrate that their business activities are being adversely impacted by the COVID-19 pandemic through the eligibility criteria set out.
HOW DOES AN EMPLOYER KNOW IF THEY WILL BE CONSIDERED ELIGIBLE FOR INCOME SUPPORT UNDER THE WAGE SUBSIDY SCHEME?
Employers must self-declare to Revenue that they have experienced significant negative economic disruption due to Covid-19, with a minimum of 25% decline in turnover, retain Employees on payroll and have an inability to pay normal wages and other outgoings. All eligibility enquiries should be made to Revenue directly.
CAN AN EMPLOYER SEEK INCOME SUPPORT FOR ALL EMPLOYEES UNDER THE WAGE SUBSIDY SCHEME?
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 and/or reduced pay. Provided the Employer meets the conditions set out by Revenue 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. The Scheme is 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. 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. The subsidy scheme applies to Employers who top up Employees’ wages and those that aren’t in a position to do so. The names of all Employers operating this scheme will be published on Revenue’s website in due course, after the scheme has expires.
HOW LONG WILL SUPPORT BE PROVIDED UNDER THE WAGE SUBSIDY SCHEME?
The scheme will run for 12 weeks from 26 March 2020. The legislation governing the scheme, signed into law by the President on Friday March 27, 2020 is expected to be published in the Statutory books shortly.
HOW DOES THE SCHEME OPERATE FROM A PAYROLL PERSPECTIVE?
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. Please consult the Revenue website for exact details on payment and reimbursement procedures.
HOW DOES AN EMPLOYER REGISTER FOR THE SCHEME?
Employers should take the following steps:
Log on to ROS using ‘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. https://www.revenue.ie/en/online-services/support/ros-help/using-ros/how-to-set-up-a-refund-account/index.aspx
If you had already registered for the earlier Employer COVID-19 Refund Scheme you need not apply for this Wage Subsidy Scheme.
WHAT HAPPENS WHERE AN EMPLOYER SEEKS INCOME SUPPORT FOR AN EMPLOYEE WHO WAS NOT ON PAYROLL FROM FEBRUARY 29, 2020?
If an Employee, identified with their PPSN, was not included in a payroll submission reported to Revenue between 1 Feb 2020 and 15 March 2020 with a pay date from Feb 29, 2020, then the Employee is not eligible, and the Employer will not be refunded for this Employee.
CAN AN EMPLOYER APPLY FOR INCOME SUPPORT UNDER THE SCHEME FOR AN INDIVIDUAL WHO HAS BEEN OFFERED A JOB WITH THE COMPANY BUT WHOSE START DATE HAS BEEN DEFERRED?
In order to avail of the income support the Employer must satisfy all eligibility criteria in the first instance and the Employee eligibility criteria is satisfied in the second place, meaning that the Employee must be on payroll; may be temporarily not working or may be on reduced hours and/or reduced pay. The scheme is confined to Employees who were on the payroll since February 29, 2020 in the payroll that was reported to Revenue between 1 Feb 2020 and 15 March 2020 so where a start date has been deferred the Employee would not satisfy these conditions.
CAN AN EMPLOYER APPLY FOR INCOME SUPPORT UNDER THE SCHEME FOR AN EMPLOYEE WHO HAS RESIGNED AND GIVEN THEIR NOTICE TO LEAVE?
In order to avail of the income support the Employer must satisfy all eligibility criteria in the first instance and the Employee eligibility criteria is satisfied in the second place, meaning that the Employee who has resigned and is working their notice must be on the payroll, or is temporarily not working, or on reduced hours and/ or reduced pay and finally that the Employee was on the payroll since February 29, 2020 which was reported to Revenue between 1 Feb 2020 and 15 March 2020. If the Employee who has tendered their resignation meets those criteria that may be eligible under the scheme for the period of time up to the conclusion of their notice.
IS THE SCHEME OPEN TO DIRECTORS?
If Directors are paid through the payroll system and are included in the relevant payroll submissions for an eligible Employer, then they are eligible to receive the wage subsidy.
WHAT IF AN EMPLOYEE IS ALREADY IN RECEIPT OF A DEASP COVID SUPPORT PAYMENT?
Employers must not operate this scheme for any employee who is making a claim for duplicate support (e.g. Pandemic Unemployment Payment) from the DEASP. Where an Employee previously laid off has been re-hired, the Employee will qualify for the Subsidy scheme if their DEASP claim is ceased. Revenue will share data with DEASP. If an Employee is receiving both the Pandemic Unemployment Payment (PUP) and also the wage subsidy, DEASP will cease their PUP payments.
CAN STAFF WHO ARE ON SICK LEAVE AND/OR ISOLATING QUALIFY FOR THE SCHEME?
If the eligible Employer retains them on the payroll then they can continue to operate the wage subsidy scheme insofar as the Employee is not in receipt of any other benefit, see question directly above.
IF AN EMPLOYEE HAS BEEN LAID OFF AND CLAIMED A JOBSEEKER’S PAYMENT FROM DEASP, CAN AN EMPLOYER CLAIM A SUBSIDY?
Employers should not claim a subsidy in respect of an Employee who is receiving a jobseeker’s payment from DEASP unless they rehire the Employee and the Employee notifies DEASP that they are “signing off” and re-joining their Employer.
WHAT HAPPENS WHERE AN EMPLOYER PREVIOUSLY APPLIED FOR A REFUND FOR PAYMENTS MADE TO EMPLOYEES LAST WEEK THROUGH THE EMPLOYER REFUND SCHEME, DO THEY HAVE TO REAPPLY TO THE WAGE SUBSIDY SCHEME?
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 €410 will be refunded in respect of each eligible Employee per week.
WHAT ARE THE TWO PHASES TO THE TEMPORARY COVID-19 WAGE SUBSIDY SCHEME?
Phase one is Phase 1 is a short, transitional phase that builds on the previous emergency Employer COVID Refund Scheme that was operational from 15 March to 25th March 2020, under which the Employer received a refund of €203 per week for each Employee that it keeps on its books. The Temporary Wage Subsidy Scheme provides a maximum of €410 in respect of eligible Employees for Employers who operate the Subsidy Scheme regardless of whether the Employer makes an additional payment to the Employee’s earnings or not.
In Phase 2, by no later than 20 April 2020, the operation of the scheme will ensure that the Subsidy paid to Employers will be based on each individual Employee’s Average Net Weekly Pay, subject to the maximum weekly tax-free amounts. Further information on how these arrangements will work will issue shortly.
IS AN EMPLOYER REQUIRED TO MAKE AN ADDITIONAL PAYMENT TO THE EMPLOYEE?
The scheme is predicated on the Employer wanting to keep the Employees on the payroll and to retain them for when business picks up. The Employer is expected to make best efforts to maintain as close to 100% of normal income as possible for the duration of the Subsidy period. There is no minimum amount that the Employer must pay in order to be eligible for the scheme, but the Employer will need to enter at least €0.01 to run payroll.
WHAT IS AN ADDITIONAL TAXABLE PAYMENT IN THE TEMPORARY WAGE SUBSIDY SCHEME?
Sometimes referred to as top-up payments, in the transition phase of the Subsidy Scheme an Employer can choose to make an additional payment to the Employee to fully or partially make up the difference between the amount provided by the subsidy scheme and the Employee’s normal Average Net Weekly Pay. Such additional payments are liable to Income Tax and USC. If the Employer makes an additional payment greater than the difference allowed by the scheme (i.e. the Employee receives more than the Average Net Weekly Pay) then the subsidy value refundable to the Employer will be reduced by this excess amount when the refund reconciliation is performed by Revenue in due course.
DOES AN EMPLOYER HAVE TO SHOW PROOF OF ELIGIBILITY IN THEIR APPLICATION FOR THIS SCHEME?
Revenue will not be looking for proof of qualification at this stage. There may arise in the future a need to review eligibility based on risk criteria. In this context Employers should retain their evidence/basis for entering the scheme. According to Revenue it will be very clear to them from their normal relationships and interactions with businesses that there was no doubt about qualification and that the businesses were so impacted.
Employers base their application on self-assessment principles e.g. the Employers turnover is likely to decrease by 25% for the second quarter of 2020; that the business is unable to meet normal wages/normal outputs. Following this the Employer makes a declaration that as a result of the Covid-19 Pandemic, there will be a disruption to the business and a decline in revenue or customers.
An Employer that has been impacted by a significant decline in business, but which has strong cash reserves that are not required to fund debt, still qualifies for the scheme. However, the expectation is that the Employer will continue to pay a significant proportion of the Employee’s wages.
WHAT ELIGIBILITY SUPPORTING PROOFS MAY BE REQUESTED BY REVENUE IN THE FUTURE?
In any check, Revenue will focus on the types of business records, having regard to the nature and scale of the business, that should normally be readily available for such a business. The critical requirement is to be able to show significant negative economic disruption due to COVID-19. The proofs mentioned below are intended to be illustrative rather than exhaustive and Revenue is open to considering other relevant evidence as a reasonable demonstration of eligibility for the COVID-19 Temporary Wage Subsidy Scheme.
If for some reason the decline in turnover was less than 25% the business should retain documentation supporting its rationale for believing that it would suffer such a decline.
Copies of documentation submitted to a financial institution as part of the negotiation of forbearance measures with the financial institution.
Copies of notifications or communications to Employees or Trade Unions or staff representative bodies of salary/wage cuts implemented as a direct result of the COVID-19 pandemic.
Copies of documentation that show that any cash reserves in the business that are required to fund debt that is equal or greater than the reserve amount.
Evidence of reliance on the Government Credit Guarantee Scheme or overdraft facilities or other borrowings for capital purposes.
In the case of start-up businesses, for example, evidence of a decline in investment by at least 25% arising from the COVID-19 crisis.
Should Revenue seek to validate Employer eligibility for the scheme, it will adopt a reasonable, fair and pragmatic approach in considering whether the criteria have been met.
Disclaimer - The information in this section is provided to assist Employers on the implementation of the Government Schemes and must be read in the context of the scheme details from the Revenue website, Department of Employment Affairs and Social Protection www.gov.ie website and should not be interpreted as a legal definition of any of the information provided. The information is changing constantly, and any information provided is correct of March 30, 2020 and is per information on the Revenue website as of that date.
FOR FURTHER INFORMATION OR ADVICE, PLEASE CONTACT YOUR DESIGNATED EXPERIENCED HR CLIENT MANAGER IN ADARE HUMAN RESOURCE MANAGEMENT OR INFO@ADAREHRM.IE .