COVID-19 Wage Subsidy Scheme

Introduction

The new Temporary COVID-19 Wage Subsidy Scheme was announced on 24 March 2020.

It will allow employers to continue to pay their employees during the COVID-19 emergency. It aims to keep employees registered with their employers, so that they will be able to get back to work quickly after the pandemic.

The scheme will run until the end of August 2020.

If your employer implements the scheme, you will not need to apply for a social welfare payment. If you are an employee and you had already applied for the COVID-19 Pandemic Payment but your employer can now take you back onto the payroll (using the Wage Subsidy Scheme), you should close your application at MyWelfare.ie.

The Government is encouraging employers to top-up their employees' wages to maintain them at their current level of earnings. See ‘Rates’ below.

If you are self-employed and have lost all your employment, you should apply for the COVID-19 Pandemic Unemployment Payment (PUP).

The Temporary COVID-19 Wage Subsidy Scheme replaces the Revenue Employer COVID-19 Refund Scheme.

You can get more detailed guidance on the operation of the Temporary COVID-19 Wage Subsidy Scheme from Revenue’s Frequently Asked Questions. The FAQ’s are updated regularly with extra additional information and clarifications.

People getting social welfare and other payments

People aged over 66 who are getting a State pension are eligible for the Temporary COVID-19Wage Subsidy scheme and can keep their pension payment.

People getting a Working Family Payment are also eligible for the Temporary COVID-19 Wage Subsidy scheme, provided all other eligibility criteria are met – see ‘Rates’ below.

Apprentices

On 23 June 2020 the government announced changes allowing apprentices who were not on payroll due to block release training to access the TWSS.

Apprentices who were not on their payroll in January or February 2020 because they were on an education and training programme run by SOLAS are now eligible for TWSS. The changes will apply from 26 March 2020, the date of return to employment or the date the employer was registered for the scheme, whichever is the latest.

If you need to care for someone and can’t return to work

If you cannot return to work due to personal circumstances, for example if you need to care for someone, your employer can keep you on the TWSS, but is not obliged to. Your employer may allow you to take paid or unpaid leave. You can get more information in our document on your employment rights during COVID-19.

Who can apply for the Temporary COVID-19 Wage Subsidy Scheme?

The Scheme is available to employers from all sectors (except for the public service and non-commercial semi-state sector) who have lost a minimum of 25% of turnover because of the COVID-19 pandemic. Employers will have to make a declaration to Revenue confirming this.

The scheme is available for employers who keep staff on their payroll during the pandemic. Employees can be:

  • Temporarily not working (laid off) or
  • On reduced hours and/or reduced pay

How do I qualify?

As long as you meet the qualifying conditions, see ‘Rates’ below, you may be eligible for the scheme for some or all of your employees.

To qualify for the scheme, you must:

  • Self-declare to Revenue that you have experienced significant negative economic disruption due to COVID-19, with a minimum of 25% decline in turnover (between 14 March 2020 and 30 June 2020)
  • Be unable to pay normal wages and normal outgoings fully
  • Keep your employees on your payroll

Employees must have been on your payroll on 29 February 2020, and you must have made payroll submission on their behalf to Revenue in the period from 1 February 2020 to 31 March 2020.

Your declaration is not a declaration of insolvency. It is simply a declaration that the COVID-19 pandemic has caused disruption to your business.

Employers must not operate this scheme for employees who are making a claim for duplicate support from the DEASP (such as the COVID-19 Pandemic Unemployment Payment). However if your employee is already getting a payment from the DEASP such as a carers or disability payment, you can operate the scheme on their behalf.

If you re-hire employees who were previously laid off, the employee will qualify for the Subsidy scheme if their DEASP claim is ceased. Revenue will share data with DEASP. The employer does not have to cease the employment for an employee to be able to receive COVID-19 Pandemic Unemployment Payment. However, if an employee is receiving both COVID-19 Pandemic Unemployment Payment and the wage subsidy scheme, DEASP will cease their COVID-19 Pandemic Unemployment payment.

An employee who is receiving a TWSS payment and whose work is reduced to 3 days or less per week, can apply for Short Time Work Support which is a form of Jobseeker’s Benefit.

The Temporary COVID-19 Wage Subsidy Scheme applies both to employers that top up employees’ wages and those that are not in a position to do so.

Returning to work following maternity, adoptive leave or Parental leave or in receipt of certain DEASP benefit payments

You can now qualify for TWSS if you were not on your employer's payroll on 29 February 2020 because you were on either:

Payment will be backdated to 26 March 2020 or to the date you recommenced employment, whichever is the latest date.

A manual process to introduce this facility for eligible employees is now available. Employers who want to access this scheme on behalf of employees covered by these changes can complete a short online form available on Revenue’s online service ROS. Employers should log on to ROS myEnquiries, click add 'A New Enquiry' and select the category 'Covid-19: Temporary Wage Subsidy', Subcategory: 'TWSS - Maternity and other Benefits'.

Employers can get information on the process they should follow under section 3.15 of Revenue’s Frequently Asked Questions.

Revenue will begin to process these payments, some payments may take a number of weeks.

Proofs required

Applications are based on self-assessment principles. You can read detailed information on the key indicators and supporting proofs from Revenue (pdf). Employers should keep proof of their eligibility for the scheme (evidence of reduction in turnover and other evidence). However, you shouldn’t need professional advice or assistance when applying for the scheme.

Penalties will apply to self-declaring incorrectly, not providing funds to employees or not following Revenue (or other) guidelines.

Eligibility review

Employers should review their eligibility for the scheme at the end of quarter 2. Where, following a review, an employer is satisfied the eligibility criteria were met, they can continue to avail of the scheme for the extension period to 31 August 2020.

If an employer finds the eligibility criteria were not met but had reasonable grounds for assuming they would (based on the best estimate about eligibility when they joined the scheme), the employer should now cease claiming the subsidy for the extended scheme. Revenue will not seek claw-back of subsidy paid in these cases.

Compliance checks

Revenue will be contacting employers to check that:

  • Employers still meet the eligibility criteria
  • Employees are receiving the correct subsidy amount
  • The correct subsidy amount is on an employee’s payslip

More information on these compliance checks is available from Revenue.

Rates

The subsidy scheme currently refunds employers up to a maximum of €410 for each qualifying employee. From 4 May it will change to a system based on the previous average take home pay of employees. See below for details.

The subsidy is based on an employee's pay after tax, USC and PRSI, not their gross pay.

Levels of subsidy since 4 May 2020

Since 4 May 2020, the subsidy payment has moved to a system based on the previous weekly average take home pay for each employee. The previous weekly average take home pay is based on an employee’s pay in January and February 2020.

On 4 May 2020 Revenue informed all eligible employers of the maximum personal subsidy amount in respect of each individual employee on its payroll based on the employee’s Average Revenue Net Weekly Pay.

Income thresholds Level of subsidy payment
Previous average take home pay below €412 per week 85% of the weekly average take home pay
Previous average take home pay between €412 and €500 per week Flat rate subsidy of €350 per week
Previous average take home pay between €500 and €586 per week 70% of the weekly average take home pay, up to a maximum of €410
Previous average take home pay between €586 and €960 per week Subsidy is subject to ‘tapering’. That means the level of subsidy is calculated by reference to the amount of any additional (‘top up’) payments made by the employer and its effect on the weekly average take home pay.

Subsidy levels are as follows:

  • Flat rate subsidy of €350 per week, where the employer pays a top up payment up to 60% of the employee’s previous weekly take home pay
  • Flat rate subsidy of €205 per week, where the employer pays a top up payment between 60% and 80% of the employee’s previous weekly take home pay
  • No subsidy is payable, where the employer pays a top up payment above 80% of the employee’s previous weekly take home pay

Tapering is calculated by subtracting the gross 'top up' paid by the employer from the employee’s previous average take home pay.

Previous average take home pay above €960 per week

Employee’s whose average take home pay has fallen below €960 can now avail of the scheme, subject to the tapering rules (see above).

No subsidy applies for employee’s whose current pay is more than €960. This is the case regardless of the level of any reduction in pay.

As normal business resumes and the employer’s contribution to the employee’s pay increases, TWSS payments will reduce through tapering – see table above. When an employer pays normal pre-COVID wages, no subsidy is due.

Are payments liable to income tax and PRSI?

Please note also the following:

  • Income tax and USC is not be applied to the subsidy through the payroll (any tax liability that may arise will be reviewed at the end of the year). To reduce the amount tax that may arise at the end of the year, Revenue is placing all employees that receive payments under the TWSS or PUP on a Week 1 basis. Revenue issued Week 1 Revenue Payroll Notifications (RPNs) to employers (available through ROS since 21 June 2020). Employers must use the most recent RPN so employees are switched to the Week 1 basis as quickly as possible.
  • When an end of the year review takes place, an employee’s unused tax credits may be enough to cover any tax liability. Where this is not the case, and they have underpaid tax, Revenue will normally collect the underpayment by reducing the employee’s tax credits for a future year(s) in order to minimise any hardship. If the employee has any additional tax credits to claim, for example health expenses, this will also reduce any tax due.
  • Employee PRSI does not apply to the subsidy or to top-up payments by the employer (employees are set to PRSI class J9).
  • Employers PRSI does not apply to the subsidy and will be reduced from 10.5% to 0.5% on the top-up payment within the thresholds set out by Revenue (see ‘Level of subsidy and income thresholds’ above). However, if the wage subsidy plus any top-up payments exceed the thresholds, the employee will no longer be eligible for any subsidy and the employee returns to PRSI class A1.

Section 4.4.3 of Revenue’s FAQ (pdf) shows a detailed illustration of the impact that top-up payments can have on the subsidy and PRSI class.

Employees continue to be covered by social insurance while their employer is getting a subsidy. Their PRSI entitlements will not be broken and they continue to get insurable weeks or credited social insurance contributions.

How to apply

You do not need to re-apply if you have already applied for the Employer COVID-19 Refund Scheme.

You can make payroll submissions from 26 March 2020 under the Temporary COVID-19 Wage Subsidy Scheme arrangements on the same basis as for the Employer COVID-19 Refund Scheme, and €410 will be refunded for each eligible employee per week.

You will then be reimbursed for amounts paid to employees and notified to Revenue through the payroll process. In general, this will be made within 2 working days after receipt of the payroll submission. Note that to receive payments under the Wage Subsidy Scheme, you must set up a nominated refund bank account. This is the case even if you have an existing payment bank account set up under ROS.

If you need to register for the scheme, you can apply to Revenue by following these steps:

  1. Log on to ROS myEnquiries and select the category ‘Covid-19: Temporary Wage Subsidy’.
  2. Read the “Covid-19: Temporary Wage Subsidy Self-Declaration” and press the ‘Submit’ button.
  3. Ensure bank account details on Revenue record are correct for your nominated refund bank account. These can be checked in ROS and in ‘Manage bank accounts’, ‘Manage EFT’, enter the refund bank account that the refund is to be made to.

How quickly will the refund be paid?

Revenue will transfer the amounts paid to employees and notified to Revenue into your nominated refund bank account. In general, the refund will be made within 2 working days after receipt of the payroll submission.

You can read detailed guidelines on the operation of the scheme (pdf).

What details should I enter in my payroll?

Operating the scheme until 4 May 2020

You should run the payroll as normal, entering the following details for each relevant employee under the Scheme:

  • PRSI Class set to J9.
  • Enter a non-taxable amount up to 70% of the employee’s average net weekly pay to:
    • a maximum of €410 per week where the average net weekly pay is less than or equal to €585, or
    • a maximum of €350 per week where the average net weekly pay is greater than €586 and less than or equal to €960.
  • From 16 April 2020, the wage subsidy is available to support employees whose Average Revenue Net Weekly Pay was greater than €960, and their current gross pay is below €960 per week, subject to the tiered arrangements and tapering. Where the current gross pay, as reported in the payroll submission, represents a reduction from the Average Revenue Net Weekly Pay by:
    • less than 20%, no subsidy is payable
    • between 20% and 39%, a subsidy of up to €205 is payable
    • 40% or more, a subsidy of up to €350 is payable. The maximum additional payment an employer can make, to receive the full subsidy, is the difference between the employees Average Revenue Net Weekly Pay and their maximum weekly wage subsidy (see section 4.8 of Revenue’s FAQ’s (pdf) -– ‘What are the applicable payroll frequency multipliers?’).
  • If an employer is not making any payment to the employee, they should include a pay amount of €0.01 in Gross Pay.
  • If an employer is making additional wage payments to employees, they should include this amount in the Gross Pay.
  • It is important that employers do not include the Temporary COVID-19 Wage Subsidy payment in Gross Pay.
  • The wage subsidy plus any additional pay must not be more than the average net weekly pay.
  • It is important that employers do not include the Temporary COVID-19 Wage Subsidy payment in Gross Pay.
  • The payroll submission must include pay frequency and period number.

Income tax, USC, LPT, if applicable, and PRSI are not deducted from the Temporary Wage Subsidy.

Employers must to show the amount of the TWSS payments on their employees’ payslips under the heading ‘GovCov19WageSub’.

Childcare Providers

The Department of Children and Youth Affairs (DCYA) has a Temporary Wage Subsidy Childcare Scheme which ended on 28 June 2020. Since 29 June 2020, childcare providers can avail of Revenue’s Temporary COVID-19 Wage Subsidy Scheme. Childcare providers can find further information on gov.ie. See section 4.2 of FAQ’s.

The DCYA announced grants for registered centre-based providers, to help with additional costs associated with reopening after COVID-19.

You can find out more about Childcare and COVID-19.

Operating the scheme after 4 May 2020

From 4 May 2020, the maximum weekly wage subsidy for each individual employee is based on the employee’s Average Revenue Net Weekly Pay as calculated by Revenue.

All eligible employers have been provided with the new maximum weekly wage subsidy amount for each individual employee on their payroll. Employers can download this information from a CSV file on Revenue’s Online Service (ROS).

These new wage subsidy rates will apply to payroll submitted from 4 May with a pay date on or after that date until the end of the scheme. There will be no backdating of the revised rates to before 4 May 2020.

Employers can view their Temporary Wage Subsidy Scheme payroll submissions and refunds through the View Payroll link on ROS. Employers can see if the refund was paid or not paid and a reason for non-payment.

Revenue has added a new facility through its MyAccount service online, where employees can look up their TWSS payments. You can follow these steps:

  1. Sign in to myAccount
  2. Go to the ‘PAYE Services’ section
  3. Click on ‘Manage your tax 2020’ link
  4. Select your employment
  5. Click ‘View’ link to view if your employer is participating in TWSS and to view any payroll submission you want to see

If an employee finds differences between the TWSS amounts shown in myAccount and those on their payslip, they should contact their employer. If they are not happy with the response, they should contact Revenue directly using MyEnquiries. Employees should go to the 'PAYE (Pay As You Earn) employee/pensioner - Other' section and select 'Employee Payroll Reporting - Compliance'.

You can get further details in section A4 and in Appendix 2 of the Frequently Asked Questions Guidance on the Operational phase of the COVID-19: Temporary Wage Subsidy Scheme or there is a video available on the Revenue site outlining the step by step procedure for downloading the information.

Taxation of Temporary COVID-19 Wage Subsidy Scheme

In many cases, the payment of the Temporary COVID-19 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. Any income tax and USC refunds that arise as a result of the application of tax credits and rate bands can be repaid by the employer and Revenue will also refund this amount to the employer.

Based on the information provided in payroll submissions and the maximum limits, described above, Revenue will credit employers with the temporary wage subsidy paid to each employee.

The names of all employers operating this scheme will be published on Revenue’s website after the scheme has expired.

What if I want to stop operating the Temporary COVID-19 Wage Subsidy Scheme?

Employers will need to notify Revenue and the Department of Employment Affairs and Social Protection (DEASP) if their circumstances have changed and they want to stop payment of the Temporary COVID-19 Wage Subsidy Scheme.

Notifying Revenue

If you want to stop operating the TWSS, you can stop making a payroll submission and Revenue will stop making refunds.

You will need to:

  • Cease making a payroll submission to revenue for the Temporary COVID-19 Wage Subsidy Scheme and
  • Ensure the PRSI class for your employee is returned to the correct PRSI class
  • Keep records of all the payments to your employees. Revenue will provide guidance on reconciling payments if needed.
  • Cease employment for the individual employee with Revenue. Give the date you ended the wage subsidy scheme to the employee, so that they can apply for the COVID-19 Pandemic Unemployment Payment if they need too.

Notifying the Department of Employment Affairs and Social Protection

You will need to:

  • Email StopAlertTWSS@welfare.ie if you stop paying your staff using the Temporary Covid-19 Wage Subsidy Scheme
  • Include the PPSN details of the staff members you have stopped paying

This notification is important and is in the interests of your staff, as it will assist DEASP in processing their COVID-19 Pandemic Unemployment Payment.

The COVID-19 Pandemic Unemployment Payment is a new social welfare payment for employees and self-employed people who have lost all their employment due to the COVID-19 public health emergency.

An employee can apply online at MyWelfare.ie. You can get more information in our document on the COVID-19 Pandemic Unemployment Payment.

Further information

Employers should contact Revenue’s National Employer Helpdesk through the myEnquiries system, providing details of the query and a direct telephone number.

Employers should make sure to select ‘Employer’s PAYE’ and then ‘Employer’s PAYE General Enquiry’ when submitting the query through myEnquiries.

You can read more about COVID-19 Temporary Wage Subsidy and a list of frequently asked questions on the Revenue website.

If you have a question about your situation during the COVID-19 emergency period, you can request a call back from the Citizens Information Service.

You can read more in our documents:

Page edited: 8 July 2020