COVID-19 Wage Subsidy Scheme

Introduction

The new Temporary COVID-19 Wage Subsidy Scheme was announced on 24 March 2020.

It will allow employers to continue to pay their employees during the COVID-19 emergency. It aims to keep employees registered with their employers, so that they will be able to get back to work quickly after the pandemic.

The scheme will run for 12 weeks from 26 March 2020.

If your employer implements the scheme, you will not need to apply for a social welfare payment. If you are an employee and you had already applied for the COVID-19 Pandemic Payment but your employer can now take you back onto the payroll (using the Wage Subsidy Scheme), you should close your application at MyWelfare.ie.

The Government is encouraging employers to top-up their employees' wages to maintain them at their current level of earnings. See ‘Rates’ below.

If you are self-employed and have lost all your employment, you should apply for the COVID-19 Pandemic Unemployment Payment of €350 a week.

The Temporary COVID-19 Wage Subsidy Scheme replaces the Revenue Employer COVID-19 Refund Scheme.

You can get more detailed guidance on the operation of the Temporary COVID-19 Wage Subsidy Scheme from Revenue’s Frequently Asked Questions. The FAQ’s are updated regularly with extra additional information and clarifications.

People getting social welfare and other payments

People aged over 66 who are getting a State pension are eligible for the Temporary COVID-19Wage Subsidy scheme and can keep their pension payment.

People getting a Working Family Payment are also eligible for the Temporary COVID-19 Wage Subsidy scheme, provided all other eligibility criteria are met – see ‘Rates’ below.

If you are working as an apprentice, you may be eligible for the Temporary COVID-19 Wage Subsidy scheme if your employer keeps you on the payroll and provided all other eligibility criteria are met.

Who can apply for the Temporary COVID-19 Wage Subsidy Scheme?

The Scheme is available to employers from all sectors (except for the public service and non-commercial semi-state sector) who have lost a minimum of 25% of turnover because of the COVID-19 pandemic. Employers will have to make a declaration to Revenue confirming this.

The scheme is available for employers who keep staff on their payroll during the pandemic. Employees can be:

  • Temporarily not working (laid off) or
  • On reduced hours and/or reduced pay

How do I qualify?

As long as you meet the qualifying conditions, see ‘Rates’ below, you may be eligible for the scheme for some or all of your employees.

To qualify for the scheme, you must:

  • Self-declare to Revenue that you have experienced significant negative economic disruption due to COVID-19, with a minimum of 25% decline in turnover (between 14 March 2020 and 30 June 2020)
  • Be unable to pay normal wages and normal outgoings fully
  • Keep your employees on your payroll

Employees must have been on your payroll on 29 February 2020, and you must have made payroll submission on their behalf to Revenue in the period from 1 February 2020 to 15 March 2020. These criteria were revised by Revenue on 24 April 2020. You can now access the scheme if you made your February 2020 payroll submission to Revenue before 1 April 2020 and all previous months’ payroll submissions were submitted to Revenue before 15 March (once all other qualifying criteria are met).

Your declaration is not a declaration of insolvency. It is simply a declaration that the COVID-19 pandemic has caused disruption to your business.

Employers must not operate this scheme for employees who are making a claim for duplicate support from the DEASP (such as the COVID-19 Pandemic Unemployment Payment). However if your employee is already getting a payment from the DEASP such as a carers or disability payment, you can operate the scheme on their behalf.

If you re-hire employees who were previously laid off, the employee will qualify for the Subsidy scheme if their DEASP claim is ceased. Revenue will share data with DEASP. The employer does not have to cease the employment for an employee to be able to receive COVID-19 Pandemic Unemployment Payment. However, if an employee is receiving both COVID-19 Pandemic Unemployment Payment and the wage subsidy scheme, DEASP will cease their COVID-19 Pandemic Unemployment payment.

The Temporary COVID-19 Wage Subsidy Scheme applies both to employers that top up employees’ wages and those that are not in a position to do so.

Proofs required

Applications are based on self-assessment principles. You can read detailed information on the key indicators and supporting proofs from Revenue (pdf). Employers should keep proof of their eligibility for the scheme (evidence of reduction in turnover and other evidence). However, you shouldn’t need professional advice or assistance when applying for the scheme.

Penalties will apply to self-declaring incorrectly, not providing funds to employees or not following Revenue (or other) guidelines.

Rates

The subsidy scheme currently refunds employers up to a maximum of €410 for each qualifying employee. From 4 May it will change to a system based on the previous average take home pay of employees. See below for details.

The subsidy is based on an employee's pay after tax, USC and PRSI, not their gross pay.

Levels of subsidy since 4 May 2020

Since 4 May 2020, the subsidy payment has moved to a system based on the previous weekly average take home pay for each employee. The previous weekly average take home pay is based on an employee’s pay in January and February 2020.

On 4 May 2020 Revenue informed all eligible employers of the maximum personal subsidy amount in respect of each individual employee on its payroll based on the employee’s Average Revenue Net Weekly Pay.

Income thresholds Level of subsidy payment
Previous average take home pay below €412 per week 85% of the weekly average take home pay
Previous average take home pay between €412 and €500 per week Flat rate subsidy of €350 per week
Previous average take home pay between €500 and €586 per week 70% of the weekly average take home pay, up to a maximum of €410
Previous average take home pay between €586 and €960 per week Subsidy is subject to ‘tapering’. That means the level of subsidy is calculated by reference to the amount of any additional (‘top up’) payments made by the employer and its effect on the weekly average take home pay.

Subsidy levels are as follows:

  • Flat rate subsidy of €350 per week, where the employer pays a top up payment up to 60% of the employee’s previous weekly take home pay
  • Flat rate subsidy of €205 per week, where the employer pays a top up payment between 60% and 80% of the employee’s previous weekly take home pay
  • No subsidy is payable, where the employer pays a top up payment above 80% of the employee’s previous weekly take home pay

Tapering is calculated by subtracting the gross 'top up' paid by the employer from the employee’s previous average take home pay.

Previous average take home pay above €960 per week

Employee’s whose average take home pay has fallen below €960 can now avail of the scheme, subject to the tapering rules (see above).

No subsidy applies for employee’s whose current pay is more than €960. This is the case regardless of the level of any reduction in pay.

Are payments liable to income tax and PRSI?

Please note also the following:

  • Income tax and USC will not be applied to the subsidy through the payroll (any tax liability that may arise will be reviewed at the end of the year)
  • Employee PRSI does not apply to the subsidy or to top-up payments by the employer (employees are set to PRSI class J9).
  • Employers PRSI does not apply to the subsidy and will be reduced from 10.5% to 0.5% on the top-up payment within the thresholds set out by Revenue (see ‘Level of subsidy and income thresholds’ above). However, if the wage subsidy plus any top-up payments exceed the thresholds, the employee will no longer be eligible for any subsidy and the employee returns to PRSI class A1.

Section 4.4.3 of Revenue’s FAQ (pdf) shows a detailed illustration of the impact that top-up payments can have on the subsidy and PRSI class.

Employees continue to be covered by social insurance while their employer is getting a subsidy. Their PRSI entitlements will not be broken and they continue to get insurable weeks or credited social insurance contributions.

How to apply

You do not need to re-apply if you have already applied for the Employer COVID-19 Refund Scheme.

You can make payroll submissions from 26 March 2020 under the Temporary COVID-19 Wage Subsidy Scheme arrangements on the same basis as for the Employer COVID-19 Refund Scheme, and €410 will be refunded for each eligible employee per week.

You will then be reimbursed for amounts paid to employees and notified to Revenue through the payroll process. In general, this will be made within 2 working days after receipt of the payroll submission. Note that to receive payments under the Wage Subsidy Scheme, you must set up a nominated refund bank account. This is the case even if you have an existing payment bank account set up under ROS.

If you need to register for the scheme, you can apply to Revenue by following these steps:

  1. Log on to ROS myEnquiries and select the category ‘Covid-19: Temporary Wage Subsidy’.
  2. Read the “Covid-19: Temporary Wage Subsidy Self-Declaration” and press the ‘Submit’ button.
  3. Ensure bank account details on Revenue record are correct for your nominated refund bank account. 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.

How quickly will the refund be paid?

Revenue will transfer the amounts paid to employees and notified to Revenue into your nominated refund bank account. In general, the refund will be made within 2 working days after receipt of the payroll submission.

You can read detailed guidelines on the operation of the scheme (pdf).

What details should I enter in my payroll?

Operating the scheme until 4 May 2020

You should run the payroll as normal, entering the following details for each relevant employee under the Scheme:

  • PRSI Class set to J9.
  • Enter a non-taxable amount up to 70% of the employee’s average net weekly pay to:
    • a maximum of €410 per week where the average net weekly pay is less than or equal to €585, or
    • a maximum of €350 per week where the average net weekly pay is greater than €586 and less than or equal to €960.
  • From 16 April 2020, the wage subsidy is available to support employees whose Average Revenue Net Weekly Pay was greater than €960, and their current gross pay is below €960 per week, subject to the tiered arrangements and tapering. Where the current gross pay, as reported in the payroll submission, represents a reduction from the Average Revenue Net Weekly Pay by:
    • less than 20%, no subsidy is payable
    • between 20% and 39%, a subsidy of up to €205 is payable
    • 40% or more, a subsidy of up to €350 is payable. The maximum additional payment an employer can make, to receive the full subsidy, is the difference between the employees Average Revenue Net Weekly Pay and their maximum weekly wage subsidy (see section 4.8 of Revenue’s FAQ’s (pdf) -– ‘What are the applicable payroll frequency multipliers?’).
  • If an employer is not making any payment to the employee, they should include a pay amount of €0.01 in Gross Pay.
  • If an employer is making additional wage payments to employees, they should include this amount in the Gross Pay.
  • It is important that employers do not include the Temporary COVID-19 Wage Subsidy payment in Gross Pay.
  • The wage subsidy plus any additional pay must not be more than the average net weekly pay.
  • It is important that employers do not include the Temporary COVID-19 Wage Subsidy payment in Gross Pay.
  • The payroll submission must include pay frequency and period number.The Department of Children and Youth Affairs (DCYA) has a Temporary COVID-19 Wage Subsidy Childcare Scheme in place since 6 April 2020. You can find out more in our document on Childcare and COVID-19.

The Department of Children and Youth Affairs (DCYA) has a Temporary COVID-19 Wage Subsidy Childcare Scheme in place since 6 April 2020. You can find out more in our document on Childcare and COVID-19.

Income tax, USC, LPT, if applicable, and PRSI are not deducted from the Temporary Wage Subsidy.

Operating the scheme after 4 May 2020

From 4 May 2020, the maximum weekly wage subsidy for each individual employee is based on the employee’s Average Revenue Net Weekly Pay as calculated by Revenue.

All eligible employers have been provided with the new maximum weekly wage subsidy amount for each individual employee on their payroll. Employers can download this information from a CSV file on Revenue’s Online Service (ROS).

These new wage subsidy rates will apply to payroll submitted from 4 May with a pay date on or after that date until the end of the scheme. There will be no backdating of the revised rates to before 4 May 2020.

Employers can view their Temporary Wage Subsidy Scheme payroll submissions and refunds through the View Payroll link on ROS. Employers can see if the refund was paid or not paid and a reason for non-payment.

You can get further details in section A4 and in Appendix 2 of the Frequently Asked Questions Guidance on the Operational phase of the COVID-19: Temporary Wage Subsidy Scheme or there is a video available on the Revenue site outlining the step by step procedure for downloading the information.

Taxation of Temporary COVID-19 Wage Subsidy Scheme

In many cases, the payment of the Temporary COVID-19 Wage Subsidy and any additional income paid by the employer will result in the refund of income tax or USC already paid by the employee. Any income tax and USC refunds that arise as a result of the application of tax credits and rate bands can be repaid by the employer and Revenue will also refund this amount to the employer.

Based on the information provided in payroll submissions and the maximum limits, described above, Revenue will credit employers with the temporary wage subsidy paid to each employee.

The names of all employers operating this scheme will be published on Revenue’s website after the scheme has expired.

What if I want to stop operating the Temporary COVID-19 Wage Subsidy Scheme?

Employers will need to notify Revenue and the Department of Employment Affairs and Social Protection (DEASP) if their circumstances have changed and they want to stop payment of the Temporary COVID-19 Wage Subsidy Scheme.

Notifying Revenue

If you want to stop operating the TWSS, you can stop making a payroll submission and Revenue will stop making refunds.

You will need to:

  • Cease making a payroll submission to revenue for the Temporary COVID-19 Wage Subsidy Scheme and
  • Ensure the PRSI class for your employee is returned to the correct PRSI class
  • Keep records of all the payments to your employees. Revenue will provide guidance on reconciling payments if needed.
  • Cease employment for the individual employee with Revenue. Give the date you ended the wage subsidy scheme to the employee, so that they can apply for the COVID-19 Pandemic Unemployment Payment if they need too.

Notifying the Department of Employment Affairs and Social Protection

You will need to:

  • Email StopAlertTWSS@welfare.ie if you stop paying your staff using the Temporary Covid-19 Wage Subsidy Scheme
  • Include the PPSN details of the staff members you have stopped paying

This notification is important and is in the interests of your staff, as it will assist DEASP in processing their COVID-19 Pandemic Unemployment Payment.

The COVID-19 Pandemic Unemployment Payment is a new social welfare payment of €350 a week for employees and self-employed people who have lost all their employment due to the COVID-19 public health emergency.

An employee can apply online at MyWelfare.ie. You can get more information in our document on the COVID-19 Pandemic Unemployment Payment.

Further information

Employers should contact Revenue’s National Employer Helpdesk through the myEnquiries system, providing details of the query and a direct telephone number.

Employers should make sure to select ‘Employer’s PAYE’ and then ‘Employer’s PAYE General Enquiry’ when submitting the query through myEnquiries.

You can read more about COVID-19 Temporary Wage Subsidy and a list of frequently asked questions on the Revenue website.

If you have a question about your situation during the COVID-19 emergency period, you can request a call back from the Citizens Information Service.

You can read more in our documents:

Page edited: 19 May 2020