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COVID-19 Temporary Wage Subsidy Scheme

The Temporary COVID-19 Wage Subsidy Scheme (TWSS) is operated by Revenue and Employers. It enables employees, whose employers are affected by the pandemic, to receive significant supports directly from their employer. The scheme remains for 12 weeks from 26th March 2020 and aims to keep employees registered with their employers, and maintain the relationship between employer and employee so that employees will be able to get back to work quickly after the pandemic and to ensure employees are paid during a time of a worldwide emergency.

Contents

COVID-19 Temporary Wage Subsidy Scheme. 1

COVID-19 TWSS Payment 2

Updates to the TWSS. 3

FAQs on TWSS. 5

How long does the TWSS last?. 5

Are there any age limits for the scheme?. 5

What are the qualification criteria for employees?. 5

How does an employee apply for the scheme?. 5

What if an employer does not apply for the Scheme?. 5

How does an employee know how much they are receiving by way of top up?. 5

How does an employee know how much Covid-19 Temporary Wage Subsidy they are receiving?. 6

What is the subsidy payable in the case of employees whose previous average net weekly pay does not exceed €412?. 6

What is the subsidy payable in the case of employees whose previous average net weekly pay is greater than €412 and less than or equal to €500?. 6

What is the subsidy payable in the case of employees whose previous average net weekly pay is greater than €500 and less than or equal to €586?. 6

What is the subsidy payable in the case of employees whose previous average net weekly pay is greater than €586 and less than or equal to €960?. 6

What is the subsidy payable in the case of employees whose pre-Covid salary was greater than €76,000, and their post-Covid salary has fallen below €76,000?. 7

Where can an employee get a rough idea of what the subsidy should be for them?  7

How can an employee calculate Average Revenue Net Weekly Pay for the purpose of determining the subsidy applicable to them?. 8

Is the TWSS subject to tax, USC or PRSI?. 9

Is the top-up payment subject to tax, USC or PRSI?. 10

How much will an employee earning €250 a week owe at the end of the year? 10

Will Employees on a Week 1 basis owe PAYE and USC at the end of the year?. 10

Is an employee who resides outside of Ireland, eligible?. 10

Will employees get insurable weeks?. 11

What happens if an employee has 2 jobs?. 11

Can employees get a tax/USC refund through payroll?. 11

What are employers required to contribute to the employee’s pay when the employee is receiving the wage subsidy?. 11

Will Local Property Tax or any other deductions be made from the TWSS payment?  11

Can the subsidy payment be made to employees who didn't receive pay in January or February due to maternity leave or illness?. 11

Can an employee on the subsidy payment transfer tax credits to their partner?. 12

Can a part time employee leave their employment and opt for the Pandemic Unemployment Payment? 12

What happens when an employee who has applied for the Covid-19 Pandemic Unemployment Payment is re-employed?. 12

When will an employee in receipt of TWSS payment have to repay the PAYE and USC due?  12

Can an employee determine how much PAYE and USC they will owe at the end of the year?  13

Can an employee avoid having to owe PAYE and USC at the end of the year?. 13

About the Author. 13

COVID-19 TWSS Payment

This scheme provides the payment of income supports to employers in respect of eligible employees where the employer’s business activities have experienced significant negative disruption due to the COVID-19 (Coronavirus) pandemic. The most reliable sources for details on this scheme are the Revenue Commissioners Government Publications and Citizens Information.

Revenue is as explicit as it can be as per the above for the operation of the payment and Revenue has been working extremely hard to keep employers and employees informed and updated. The scheme was put into place within a short period of time and has been updated continuously to address any legitimate shortcomings of the scheme. The many experienced payroll processing people who have been implementing the scheme on the ground have queried some of the practical problems that exist in some cases and have been liaising closely with Revenue in highlighting and resolving issues.

Updates to the TWSS

Statements from Revenue as extracted from their website Income tax and USC will not be applied to the subsidy payment through the payroll.

Employee PRSI will not apply to the subsidy or any top up payment by the employer.

Employer’s PRSI will not apply to the subsidy and will be reduced from 11.05% to 0.5% on the top up payment.

“However, the Subsidy will be liable to Income Tax and USC on review at the end of the year.

You can get more detailed guidance on the operation of the Temporary Wage Subsidy Scheme from Revenue’s Frequently Asked Questions. The FAQ’s are updated regularly with extra additional information and clarifications. Changes to Wage Subsidy Scheme from 4 May 2020 are also outlined on the Citizens Information website.

On 15 April 2020, changes to the Wage Subsidy Scheme were announced. These changes will take effect from 4 May.

•The subsidy will increase from 70% to 85% for employees with a previous average take-home pay below €412 per week

•The subsidy will be €350 per week for employees with a previous average take-home pay between €412 and €500 per week

•The subsidy remains the same for employees with a previous average take-home pay of between €500 and €586 per week

•A tiered system has been introduced for employees with a previous average take-home pay of over €586 per week

•Employees who were taking home more than €960 per week will be able to avail of the scheme (this change applies from 16April)

The new rates apply from 4th May and will not be backdated.

The update from Government and Revenue as at 16th April 16, 2020 to addresses questions for employers and employees.

Revenue has considered representations from and on behalf of employers who have not met the reporting conditions and were therefore unable to access the Scheme. On 24th April Revenue announced that it will allow certain employers who hadn’t fulfilled their PAYE reporting obligations for February 2020 by 15 March 2020, to access the Temporary Wage Subsidy Scheme (TWSS).
Because of the short time frame within which a complex scheme such as this had to be drawn up by Revenue and implemented by Employers, Boyle Practical Project Management is strongly advising employees to use the Gross Pay to Net Pay Calculator and the COVID-19 Temporary Wage Subsidy Scheme calculator to independently verify the amount of the TWSS they are receiving and the amount of PAYE and USC that would be due on this payment. Please allow a few seconds for these interactive calculators to load on their respective pages.

The continuous improvement to the TWSS is another example of how those experienced in the field of all things payroll in the private and public sectors have come together in making a critical contribution to maintaining stability within the economy and supporting those impacted financially by the Corona Virus Covid-19.

Misinformation can arise when those that are non-qualified in payroll related matters start interpreting information or and sharing incorrect information. For the most part generalisations cannot be made about the operation of the Temporary COVID-19 Wage Subsidy Scheme. The application of Payroll processes leads to differing results for different people based on their personal circumstances. Because there is no one size that fits all. The guidance on TWSS issued by revenue is the go to location for up to date information. The spread of misinformation distracts and frustrates those that are working over and above their normal work commitment to deliver as fair and as equitable a scheme as is possible within the short timeframes available and in the knowledge that there will be circumstances where anomalies will continue to exist within the scheme.

FAQs on TWSS

Here is a sample of frequently asked questions by employees around the Temporary COVID-19 Wage Subsidy Scheme and it’s processing through Payroll:

How long does the TWSS last?

The scheme is expected to last 12 weeks from 26 March 2020.

Are there any age limits for the scheme?

There is no age restriction for employees to be eligible and it includes those employees on fulltime, part-time, temporary and short-time work arrangements

What are the qualification criteria for employees?

The Scheme is confined to employees who were on the employer’s payroll as at 29 February 2020, and for whom a payroll submission has already been made to Revenue in the period from 1 February 2020 to 15 March 2020.The 15th March deadline has been extended to 1st April because some companies had not made submission within the required timeframe, and were ineligible for the scheme before the deadline was extended.

How does an employee apply for the scheme?

An eligible employee does not have to do anything. It is a matter for the employer to register for the Subsidy scheme with Revenue

What if an employer does not apply for the Scheme?

An employer may decide to close their business for this period. This is called a temporary lay-off. If an employer cannot pay employees for this period, employees can apply for a special COVID-Pandemic Unemployment Payment. This emergency payment has been introduced for anyone whose employer is unable to continue to pay them and the payment is available to all employees who have lost employment due to the pandemic.

How does an employee know how much they are receiving by way of top up?

This is shown as gross pay on their pay-slip.

How does an employee know how much Covid-19 Temporary Wage Subsidy they are receiving?

In relation to an employee covered by the TWSS, the employer is obliged to show the amount of the subsidy on the employee’s pay-slip as "GovC19 WageSub" or any other identifiable name.

What is the subsidy payable in the case of employees whose previous average net weekly pay does not exceed €412?

For payroll submitted to Revenue on or after 4th May 2020, with a pay date on or after that date an 85% subsidy shall be payable in the case of employees whose previous average net weekly pay does not exceed €412. Look up ready reckoner for more precise details.

What is the subsidy payable in the case of employees whose previous average net weekly pay is greater than €412 and less than or equal to €500?

For payroll submitted to Revenue on or after 4th May 2020, with a pay date on or after that date a flat rate subsidy of  €350 shall be payable in the case of employees whose previous average net weekly pay is more than €412 but not more than €500.

What is the subsidy payable in the case of employees whose previous average net weekly pay is greater than €500 and less than or equal to €586?

For payroll submitted to Revenue on or after 4th May 2020, with a pay date on or after that date a 70% subsidy shall be payable in the case of employees whose previous average net weekly pay is more than €500 but not more than €586. Look up ready reckoner for more precise details.

What is the subsidy payable in the case of employees whose previous average net weekly pay is greater than €586 and less than or equal to €960?

For payroll submitted to Revenue on or after 4th May 2020, with a pay date on or after that date a subsidy shall be payable in the case of employees whose previous average net weekly pay is more than €586 but not more than €960 as follows the temporary wage subsidy shall not exceed €350 per week, and shall be calculated by reference to the amount of any additional payments made by the employer and its effect on the average net weekly pay as follows:

 

 ◦A subsidy of €350 shall be payable to employees with previous average net weekly pay greater than €586, where the employer pays sufficient gross salary which equates to an amount up to 60% of the employee’s previous net weekly earnings.

◦A subsidy of €205 shall be payable to employees with previous average net weekly pay greater than €586, where the employer pays sufficient gross salary which equates to an amount that is more than 60% but not more than 80% of the employee’s previous net weekly earnings.

◦No subsidy shall be payable to employees with previous average net weekly pay greater than €586, where the employer pays sufficient gross salary which equates to an amount that is more than 80% of the employee’s previous net weekly earnings.

What is the subsidy payable in the case of employees whose pre-Covid salary was greater than €76,000, and their post-Covid salary has fallen below €76,000?

From 16 April 2020, the wage subsidy is available to support employees where their pre-Covid salary was greater than €76,000, and their post-Covid salary has fallen below €76,000, subject to the tiered arrangements and tapering to ensure that the net pay does not exceed €960 per week. Tapering of the subsidy shall apply to all cases where the gross pay paid by the employer plus the subsidy amount exceeds the previous average net weekly pay. This is calculated by subtracting the gross pay paid by the employer from the previous average net weekly pay and ensures that no employee would be better off under the Scheme. The single exception to tapering is where an employer wishes to pay an employer contribution which when added to the wage subsidy for the employee does not exceed €350 per week. In such cases, tapering of the temporary wage subsidy shall not be applied.

Where can an employee get a rough idea of what the subsidy should be for them?

Boyle Practical Project Management BPPM has prepared this ready reckoner for this purpose.

Ready reckoner of subsidy based on average weekly wage

 

How can an employee calculate Average Revenue Net Weekly Pay for the purpose of determining the subsidy applicable to them?

An employee can calculate the “Average Revenue Net Weekly Pay”, using the values in the payroll submission for each pay date in January and February 2020 and BPPM’s Covid-19 Temporary Wage Scheme Calculator:

Follow the instructions here:

1.          log into your Revenue Online Service (ROS)

2.          Sign in to “My Account”

3.          Enter your PPS No.

4.          Enter          Date of Birth

5.          Enter          Password

6.          Sign in       If you get a message about saving your passwaord I always say not for this site

7.          Manage Your Tax 2020

8.          View active employments

9.          Take your “Pay for Income Tax” and from it subtract the “Income Tax Paid”, the “USC Paid” and the “Employee PRSI paid. The result is your pay net of statutory deductions or referred to here as net pay

10.     Take a note of the pay date and net pay you get for each period as you will need this figure for entering into the Covid-19 Temporary Wage Subsidy Scheme calculator

11.     Monthly paid has only two periods and two pay-dates. Weekly paid could have 9 periods if an employee was paid each week in January and February. Pay Periods will either be Weekly. Fortnightly, Bi-Monthly, Four-weekly or Monthly.

12.     To find the number of Insurable weeks you received for each payment and your pay cycle frequency go into view and “No of insurable weeks” and “Pay Frequency”

13.     Take a note of the No of insurable weeks you get for each period as you will need this figure for entering into the Covid-19 Temporary Wage Subsidy calculator

14.     Go to the Covid-19 Temporary Wage Subsidy calculator

15.     Enter your Pay cycle frequency from the drop down menu COVID-19 Temporary Wage Subsidy Scheme calculator.

16.     Enter the pay date and net pay for each pay period into the Calculator in the cells provided for each pay-date

17.     Enter no of insurable weeks in field to the right of the net pay figure

18.     The interactive application will do the rest. It will total the figures for each pay date in January and February 2020 and divide this by the total number of insurable weeks reported. If the total number of insurable weeks reported exceeds 9 then it will use 9 as the divisor, as notified by Revenue. If, for example, due to an exclusion order or an employee being PRSI exempt, there were no insurable weeks reported then the application will use 9 as the divisor in line with Revenue notification.

19.     The calculation will result in an Average Revenue Net Weekly Pay for the employee. However, there will be a small number of cases where calculation may not be fully representative of the employee’s usual weekly wage. For example if they were 5 fortnightly payments, the total insurable weeks are 10 but the divisor is 9 and can be no more than 9. The calculated Average Revenue Net Weekly Pay must be used in in these cases as this is how Revenue will calculate it, without exception.

20.     The Calculator will also calculate the pay cycle TWSS payment

21.     Check the figure on your pay-slip against what is calculated by the calculator for the pay cycle. If you find there is a significant difference, consult with your employer.

This calculator serves as an independent verification that the TWSS payment you are receiving from your employer is in line with instructions on how the TWSS payment is to be calculated. A significant difference in the figures here will have consequences for you at the end of the year when Revenue review your Tax and USC liability. The TWSS payments will be subject to PAYE and USC at the end of the year based on what Revenue determine your TWSS payment should have been.

Is the TWSS subject to tax, USC or PRSI?

Income tax, USC and PRSI are not deducted from the Temporary Wage Subsidy through payroll at time of payment?  Employees are processed on PRSI class J9, which attracts an employer PRSI charge of 0.5%., and nil contribution from the employee. The Subsidy will be liable to tax and USC on review at the end of the year at which time, Revenue will decide on how this tax liability will be collected from the employee. Calculate amount due of PAYE and USC due on TWSS.

Is the top-up payment subject to tax, USC or PRSI?

Any top-up payment is subject to income tax, USC and no PRSI is due to be paid by employees PRSI (class J9).

How much will an employee earning €250 a week owe at the end of the year?

Employees earning €250 a week  or less  are not liable to pay any income tax because the personal  tax credits of €63.46 are more than the amount of tax these employees would be due to pay. These employees are not liable to pay USC as Universal Social Charge is only due on income over €250 per week.

Will Employees on a Week 1 basis owe PAYE and USC at the end of the Year?

Employees may receive a Tax Credit Certificate on the week 1 basis in which case their employer will deduct PAYE and USC from their pay on a week-to-week basis. Employees’ tax credits and cut off point are not backdated to the beginning of the year and do not accumulate for each pay period. In this context these employees will not receive any refunds of PAYE or USC that may be due until a ‘cumulative’ TCC is issued. If employees are still on the week 1 basis at the end of the year, they must submit an Income Tax Return.

Unless employees on a WK 1 basis have earnings that  are outside the Tax and USC net then there is no way an employee can avoid underpaying tax on any pay-date on which the Covid-19 TWSS payment was made. The amount of PAYE and USC underpaid at the end of the year may be different based on each individuals circumstances post Covid-19 TWSS. Circumstances influencing the amount owing are outlined at:

Is an employee who resides outside of Ireland, eligible?

Employers can claim the subsidy in respect employees where the employee is exercising an Irish contract of employment in the State, and where the employer satisfies the conditions of the scheme.

Will employees get insurable weeks?

Once employees are processed under PRSI class J9, the employees will receive insurable weeks. Entitlements for benefits will not be broken, and employees will get insurable weeks or credited contributions.

What happens if an employee has 2 jobs?

Both employers can process pay based the employee's Average Weekly Wage.

Can employees get a tax/USC refund through payroll?

Yes and this is processed and paid through payroll in the normal way. In many cases the payment of the Temporary 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.

What are employers required to contribute to the employee’s pay when the employee is receiving the wage subsidy?

All efforts should be made by employers to support their employees. Employers may or may not be financially able to contribute to the employee due to the business closure or downturn available. There is no minimum amount that the employer must pay in order to be eligible for the scheme but the employer will need to enter at least €0.01 to run payroll.

Will Local Property Tax or any other deductions be made from the TWSS payment?

Where employees are receiving only the Temporary Wage Subsidy, no other deductions should be processed through payroll. Where employers are paying a top-up payment, usual deductions can be processed where the top-up value is the same or greater than the total value of the deductions.

Can the subsidy payment be made to employees who didn't receive pay in January or February due to maternity leave or illness?

These employees must apply for a support payment from the DEASP, as they were not included on a payroll submission up to 29 February. Revenue will reject the application for the Subsidy reimbursement for any such employee.

Can an employee on the subsidy payment transfer tax credits to their partner?

Yes but it is not advisable. You might be on the subsidy payment and jointly assessed, where your spouse or civil partner pays tax under Pay As You Earn (PAYE). If this is the case, you may be able to transfer your unused tax credits to your spouse or civil partner. This will increase their tax credits and reduce the tax they pay. This will however reduce your tax credits increase your tax liability

Can a part time employee leave their employment and opt for the Pandemic Unemployment Payment?

Employees who leave employment voluntarily are not entitled to the Covid-19 Pandemic Unemployment Payment. The Department of Employment Affairs and Social Protection will review all claims of employees who leave their employment and claim the Covid-19 Pandemic Unemployment Payment. It will engage with Revenue to identify those workers not eligible to avail of the Covid-19 Pandemic Unemployment Payment and will take steps to recover any incorrect payment. Any person who knowingly claims the payment in circumstances where they are not entitled to the payment will be prosecuted.

What happens when an employee who has applied for the Covid-19 Pandemic Unemployment Payment is re-employed?

If an employee applied for the Covid-19 Pandemic Unemployment Payment and their employer re-employs them under the new COVID-19 Wage Subsidy Scheme, the employee must close their claim for Covid-19 Pandemic Unemployment Payment. Employees can close claims using MyWelfare.ie.

When will an employee in receipt of TWSS payment have to repay the PAYE and USC due?

When an end of the year review takes place, it may be the case that an employee’s unused or additional tax credits will cover the COVID-19 temporary wage subsidy payment liability that may arise. Additional tax credits may be claimed for health expenses or non-routine dental treatment that reduces any tax owing. Where this is not the case, it is normal Revenue practice to collect any tax owing in manageable amounts by reducing an individual’s tax credits for the following year in order to minimise any hardship.

Can an employee determine how much PAYE and USC they will owe at the end of the year?

Yes. By using the BPPM Gross Pay to Net Pay Calculator and following the instructions employees can accurately calculate the underpayment in real time and at the end of the year. The calculator is free to use and no data is stored nor is any personal information required to complete this interactive application.

Can an employee avoid having to owe PAYE and USC at the end of the year?

Unless an employee’s earning are outside the Tax and USC net then there is no way an employee can avoid underpaying tax on any pay-date on which the Covid-19 TWSS payment is made. The amount of PAYE and USC underpaid at the end of the year may be different based on each individuals circumstances post Covid-19 TWSS. Circumstances influencing the amount owing are outlined at:

About the Author

Padraig Boyle at Boyle Practical Project Management wrote this article and also developed the interactive gross pay to net pay calculator that would calculate net pay for a person in a given pay period for a given taxable pay for that pay period. Padraig has many years extensive experience in all aspects of Irish payroll.
Padraig Boyle at Boyle Practical Project Management wrote this article and also developed the interactive gross pay to net pay calculator that would calculate net pay for a person in a given pay period for a given taxable pay for that pay period. Padraig has many years extensive experience in all aspects of Irish payroll.
The Practical in Boyle Practical Project Management (BPPM) is always to the fore in all its product and service offerings. The reasoning for this approach is to do with satisfying customer requirements. Although the Gross Pay to Net Pay, was not developed specifically for use with COVID-19 Temporary Wage Subsidy Payment, it ideal for calculating the underpayment of PAYE and USC on the COVID-19 Temporary Wage Subsidy Payment in 2020.
With the introduction of PAYE Modernisation on the 1st of January 2019 many businesses chose to outsource their payroll to a payroll provider. The primary customer and stakeholder of any payroll system are the employees of the company using the system. The ability of the payroll system and those operating it to deal with the Temporary COVID-19 Wage Subsidy Payments to the satisfaction of employees is the key to determine if the system is fit for purpose.
Has your payroll system or your payroll provider satisfied the service and information required by you as an employee to enable you to carry on with your work in the knowledge that the payroll system and those operating it are up to date with the details of the Temporary COVID-19 Wage Subsidy Payment? Feel free to share the Basics of Payroll Management with your employers payroll/HR section if you have concerns about how your payroll requirements are been met.

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