Updated Covid-19 Temporary Employer Wage Subsidy Scheme changes from 4 May

As you are aware, the Temporary Wage Subsidy Scheme (TWSS) has had many changes and updates following its initial announcement in March 2020. Updated Covid-19 Temporary Employer Wage Subsidy Scheme changes from 4 May. Anyone processing payroll from 4^th May 2020 can now apply these updates and changes where applicable.

Eligibility for the Temporary Wage Subsidy Scheme Revision:

The criteria for eligibility remains the same and so the scheme continues to be open to employers who self-declare to Revenue that they have experienced significant negative economic disruption due to Covid-19.

It should be noted that previously one of the conditions of the scheme was that all payroll submissions for February 2020 should have been made to Revenue on or before 15^th March 2020. Where the payroll submission had not been filed by this date, the employer was not eligible for the TWSS.

Changes to this were announced on 24^th April 2020 to permit an employer who made the payroll submission after 15^th March 2020 and before 1^st April 2020 in relation to pay dates in February 2020 (all previous months submissions were to be submitted before 15^th March 2020) will be eligible for the scheme for payroll submissions and pay dates after 24^th April 2020. So, if you were not previously eligible as a result of late filing of the February 2020 payroll submission, then you should consider the revised condition now.

All other eligibility criteria remains the same as previous.

Key Changes to the Scheme effective from 4^th May 2020:

With effect from 4^th May 2020, the changes are as follows:

Employees with a net pay of €412 or less

An 85% subsidy for employees up to a maximum payment of €350 per week. The employer can pay a top up exceeded 15% to bring the total net payment of €350 per week (i.e. subsidy plus gross ‘top up’ pay) to €350 net.

Employees with a net pay between €412 and €500

A flat rate subsidy of up to €350 will be payable to employees.

Employees with a net pay between €501 and €586

Employees can get up to 70% of their previous average net pay., up to a maximum of €410 per week.

Employees with a net pay between €586 per week and less than €960 per week

A tiered approach will apply if an employer has reduced the salary of the employee post Covid-19 as follows:

Where the employer pays 60% of net salary, a subsidy of €350 is payable.

Where the employer pay between 60% and 80% of the net salary, a subsidy of €205 is payable.

Where the employer pays between 80% and 100% of the net salary, no subsidy is payable.

Employees with a pre-Covid salary greater than €960 and post-Covid less than €960

It should be noted that this change became effective from 16^th April 2020 and remains effective under the new changes from 4^th May 2020.

The wage subsidy is available to support employees where their pre-Covid salary was greater than

€960 net per week, and their post-Covid salary has fallen below €960 per week. Tiered arrangements apply as follows:

Where an employees salary has been reduced less than 20%, no subsidy is payable.
Where the employee salary is reduced between 20% and 40%, a subsidy of €205 is payable.
Where the employee salary is reduced more than 40%, a subsidy of up to €350 would be payable.

The total of the net pay of the employee cannot exceed €960 per week after applying the subsidy plus the top up from the employer.

Taxation of the subsidy payment

As was previously outlined, the wage subsidy is not taxable by the employer through the payroll system, but rather it is a taxable payment for the employee. The individual’s taxes will be reviewed by Revenue at the end of the year and any liability will be collected. We would advise that if you are operating the Employer Wages Subsidy Scheme, then you should ensure that you inform your employees of this. Revenue have confirmed that individual employees may contact Revenue through “My Account” and request that their tax credits be changed to a Week1/Month 1 basis. This will help to reduce and minimise their any potential tax liability at the end of the year.

There have been so many changes to this scheme since it was first introduced, it is important to ensure that you continue to review salaries, qualifying criteria and amendments and effective dates of each of the changes introduced. We will continue to review and monitor the scheme for any updates, clarifications and further changes. However, in the meantime, if you have any queries or requires assistance, we are happy to help.

Stay safe