On 24 March 2020 the Government announced an extension of measures targeting businesses hit by the Covid-19 pandemic. The Wage Subsidy Scheme is intended to encourage businesses to keep their employees on the books by providing a tax-free subsidy of up to 70% of average net wages. This subsidy will be payable through standard payroll, which means the employees will not have to take any further steps.
Who can apply for this scheme?
This scheme is directed to businesses that are significantly affected by the Covid-19 pandemic that would otherwise have to consider laying off staff. In order to be eligible, the employer will have to show a minimum 25% reduction in actual or predicted turnover resulting in inability to pay normal wages and outgoings.
The scheme is expected to last for a period of 12 weeks.
Revenue in conjunction with the Department of Employment Affairs and Social Protection (DEASP) will be conducting checks to verify the company's eligibility for the scheme. The checks will seek to ensure that:
- The employer applied for the scheme
- Employee’s net pay has been calculated correctly
- The full subsidy amount has been paid to the employee
- The employee is currently on payroll or has been recently laid off as a result of Covid-19 disruption (was on payroll in the period from 1 February 2020 to 15 March 2020)
- The employee is not receiving Covid-19 subsidies from other schemes.
Employer Refund Scheme vs Wage Subsidy Scheme
The Wage Subsidy Scheme extends and replaces the Employer Refund Scheme introduced earlier in March. The Employer Refund Scheme provided 70% of the employee’s weekly net pay up to €203. The Wage Subsidy Scheme maintains the 70% subsidy and introduces two net weekly pay bands:
- a maximum of €410 per week where the average net weekly pay is less than or equal to €586; or
- a maximum of €350 per week where the average net weekly pay is greater than €586 and less than or equal to €960.
Phases of the Wage Subsidy Scheme
Phase 1 - Transitional Phase
In the short transitional period the scheme will refund employers up to a maximum of €410 per each qualifying employee regardless of their income. However, to assist future reconciliation, the employer should record the correct values when running the payroll as per Revenue guidance.
In Phase 2 the scheme will ensure that the amount of subsidy is related to the individual’s Average Net Pay. The details are to be published no later than 20 April 2020.
How to apply?
For more information about the scheme and for information on how to apply, please visit the revenue website.