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As part of The Emergency Measures in the Public Interest (Covid-19) Act, the Government introduced the Temporary Covid-19 Wage Subsidiary Scheme (the “Scheme”).
While initially appearing attractive for employers, a full investigation of the Scheme and its practicalities should be considered before employers avail of it. We have highlighted the core provisions of the Scheme below. It should be noted that the above is based on draft legislation which has not yet come into law. We will update you on any developments as they occur.
The Scheme was designed to enable employers to retain links with employees so businesses will be able to trade through the crisis. It is expected to operate for 12 weeks from the 26th March 2020.
If they choose to avail of the Scheme, employers will continue to make wage payments through their normal payroll service and then, within two days of payroll submission, will be reimbursed up to the thresholds as set out in the next paragraph. Employers are expected to use their best efforts to top up the supplement and ensure their employees are paid 100% of their wages, or as close as possible to it.
Revenue will not apply Income tax, USC or employees’ PRSI to the subsidy. Employer’s PRSI will be reduced from 11.05% to 0.5% on any top up payment the employer makes.
Where employees earn less than €38,000 gross per annum, employers will receive a subsidy of up to 70% of the employees take home pay, up to a weekly tax free amount of €410.
Employees earning more than €76,000 gross per annum, are not covered by the Scheme.
The scheme is available to employers in all sectors of the economy (excluding the public service and non-commercial semi-state sector) once the following criteria is met:
The Scheme may not be availed of if the employee is claiming support by another method, for example if an employee is claiming the Covid-19 Pandemic Unemployment Payment from the Department of Employment Affairs and Social Protection.
Click here and follow the instructions as set out on Revenue’s website.
Given the legislation drafted to date is complex, and that the Revenue guidance which has issued is just that, guidance, it is recommended that legal advice be sought before entering into the Scheme. Care should be taken before declaring a business as eligible to receive the subsidy due to the potential repercussions and penalties which may be imposed at a later date.
About the author: Emer Murphy, Solicitor on The Employment Team
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