From 4th May the COVID-19 Temporary Wage Subsidy Scheme administered by the Revenue Commissioners has moved into the operational phase.
The main changes to be aware of are as follows:
Reconciliation of employer refunds
At some future date after 4th May Revenue will undertake a calculation of the actual wage subsidy due to each employer during the transitional period i.e. March 26th – May 4th
Where the amounts repaid by Revenue are greater than the actual subsidy that was due Revenue will notify the employer of any overpayment. Revenue will then look to recoup this overpayment by either reducing the amount of future subsidy payments or requesting that the overpayment be repaid directly to Revenue.
Employer CSV file download
During the transitional phase it was up to the employer to manually calculate the subsidy that was due in respect of each eligible employee. From 4th May each employer, or their accountant on their behalf, will be able to download a CSV file from ROS. This will have the necessary information for each employee to accurately calculate the appropriate wage subsidy due.
Each employer can import this CSV file into their payroll software and the software will utilise this information when each subsequent payroll run is being completed.
New Wage Subsidy rates take effect
On Wednesday 15th April revenue announced new subsidy rates which became effective for any payroll runs completed on or after 4th May 2020. To recap these new rates are as follows:
Staff on average net weekly wages of up to €412 per week
Employees earning an average net weekly wage of €412 (roughly equivalent to €24,400 gross per annum) will see the subsidy paid by the State rise from 70% to 85% of their average net weekly pay.
Another change for employees in this bracket is that the employer can top up the wages to €350 per week (including the subsidy) without experiencing any reduction in the subsidy payable even if the top up plus subsidy exceeds their average net weekly pay.
For example, if you have an employee on €300 average net weekly pay. The subsidy amount will now be €255 (€300 x 85%)
The employer can now decide to provide a maximum top up of €95. This will mean the employee will receive €350 net pay but the subsidy amount to be repaid in respect of that employee will not be reduced, it stands at €255.
This relaxation of the top up rules only applies to employees in this wage bracket.
For all other employees any top up amount included in gross pay plus the subsidy amount cannot exceed the average net weekly wage for that employee.
Staff on average net weekly wages of between €412 and €500
For employees with an average net weekly wage between €412 and €500 (roughly equivalent to €31,000 gross per annum), the subsidy amount will be fixed at €350 per week.
Staff on average net weekly wages of between €500 and €586
For employees with an average net weekly wage of between €500 and €586 (roughly equivalent to €38,000 gross per annum) the subsidy will continue to be 70% of the average net weekly wage subject to a maximum subsidy of €410 per week.
Staff on average net weekly wages of between €586 and €960
Employees with average net weekly wages of between €586 and €960 (roughly €76k per annum gross), the rate of the subsidy will vary between anything from €0 to €350 using a tiered approach, which is linked to the extent to which the employer is paying additional gross salary as a top-up payment.
- When running payroll, if the amount entered by the employer in the gross pay box is up to 60% of the employee’s previous average net weekly wage then the amount of the subsidy will be a maximum of €350 per week
- If the amount entered in gross pay is more than 60% but not more than 80% of the employee’s previous average net weekly wage then the amount of the subsidy will be a maximum of €205 per week
- If the amount entered in gross pay is more than 80% of the employee’s previous average net weekly wage then no subsidy will be payable
Staff previously on average net weekly wages of greater than €960 who have taken a pay cut
It is very important to note that the changes that affect employees who were earning over €76k before the COVID-19 pandemic, took effect on 16th April 2020.
Employees who had average net weekly wages of over €960 (roughly €76k per annum gross) before the COVID-19 crisis now qualify for a subsidy under the wage subsidy scheme but only if they have taken a significant pay cut and also that pay cut has resulted in their weekly wages (i.e. Gross pay amount plus the subsidy amount) being reduced below €960 per week.
The rate of the subsidy will vary between anything from €0 to €350 using the same tiered approach as outlined for employees with average net weekly wages of between €586 and €960.