The Temporary Wage Subsidy Scheme (TWSS) is provided for in section 28 of the recently enacted Emergency Measures in the Public Interest (Covid-19) Act 2020.
Of necessity, the underlying legislation and the scheme itself were developed quickly, having regard to the overarching, urgent Government objective of getting much needed financial assistance to employers and employees, where businesses have been seriously affected by the pandemic and the necessary restrictions introduced to fight the spread of the Covid-19 virus. It must be accepted that the scheme cannot be adapted to meet the individual circumstances of employers or employees.
In the context of the need for immediate implementation of the TWSS, the scheme necessarily had to build on data returned to Revenue through its real-time PAYE system. The key conditions of the scheme, as prescribed in the underlying law, are that –
- the business is suffering significant negative economic impact due to the pandemic,
- the employees were on the payroll at 29 February 2020, and
- the employer had fulfilled its PAYE reporting obligations for February 2020 before, in general, 15 March 2020, but extended recently to 1 April 2020.
The latter two conditions were particularly designed with a view to preventing abuse of the scheme.
The wage subsidies provided by the TWSS are designed to be passed on by employers to their employees through payroll. The rates of wage subsidy payable are based, largely, on the emoluments of employees for January and February 2020 as reported to Revenue in employers’ payrolls. The rates are determined in accordance with the underlying law and the determinations of subsidy amounts for particular classes of employees made by me, as Minister for Finance, on 16 April 2020. Those determinations provide as follows:
For employees with previous net emoluments of less than €586 per week, the wage subsidy shall not exceed €410 per week in accordance with the following principles:
- an 85% subsidy is payable in the case of employees whose average net weekly emoluments does not exceed €412;
- a flat-rate subsidy of up to €350 is payable in the case of employees whose average net weekly emoluments is more than €412 but not more than €500.
- a 70% subsidy is payable in the case of employees whose average net week emoluments is more than €500 but not more than €586, with a maximum cap of €410 applying.
In addition, where an employer wishes to pay a greater level of top-up of wages, in respect of employees with net emoluments of less than €412 per week, in order to bring the employee’s pay to €350 per week, then tapering will not be applied to the subsidy.
For employees with previous net emoluments in excess of €586 per week, including those whose previous net emoluments exceeded €960 per week, a tiered approach will apply. The maximum subsidy payable is €350 per week, with a tiered approach operating to take into account both the amount paid by the employer and the level of reduction in pay borne by the employee. In essence:
- a subsidy of €350 is payable to employees with average net weekly emoluments greater than €586, where the employer pays sufficient gross salary which equates to an amount up to 60% of the employee’s net weekly earnings.
- a subsidy of €205 is payable to employees with average net weekly emoluments 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 net weekly emoluments.
- no subsidy is payable to employees with average net weekly emoluments greater than €586, where the employer pays sufficient gross salary which equates to an amount that is more than 80% of the employee’s net weekly earnings.
Finally, for employees whose current net emoluments exceeds €960 per week, no subsidy applies regardless of the level of any reduction in pay. To calculate the level of subsidy payable, current pay is compared with previous average net weekly pay for January/February. This subsidy will be tapered to ensure that the total weekly income consisting of the employer contribution plus the wage subsidy amount does not exceed €960 per week in any individual case.
The Deputy has raised the specific issue of taking into account income from occupational pensions when calculating the amounts of wage subsidy. I am advised by Revenue that the TWSS provides that wage subsidy amounts and limits in relation to individual employees are calculated by reference to the total emoluments of the employee concerned. For this purpose, there is no distinction made between the emoluments from an occupational pension and the emoluments from an employment. Where an individual has two or more sources of emoluments, be they employments or an employment and an occupational pension, all sources are looked at when considering the amounts of wage subsidy available in relation to the employee. It would be inequitable to exclude occupational pension amounts, which can be significant in many cases, when calculating wage subsidy amounts available in relation to individual employees.
I have also been advised by Revenue that during the transitional phase of the TWSS, up to 3 May 2020, if an employee had multiple employments, each employer individually operated the scheme based on 70% of each employee’s average net weekly pay with that employer. During the operational phase of the TWSS from 4 May 2020, earnings from all active employments and occupational pension sources are combined. Thus, the average net weekly pay from each such source is aggregated to calculate the employee’s overall average net weekly pay. This is then used to calculate an employee’s maximum wage subsidy and the wage subsidy entitlement is split across each of the emolument sources based on the percentage of the employee’s average net weekly pay from each such source, with each employer provided with an employer “maximum weekly wage subsidy” and the “maximum weekly employer pay before tapering” to apply to the employee’s payroll. This personalised information will ensure that the employee’s overall position is taken into consideration when calculating the employee’s subsidy entitlements. This is to allow the concentration of resources to protect incomes, in a proportionate way having regard to available resources and employer contributions by way of wage top ups.
It follows that if one of the sources of the employee’s emoluments, such as, in this instance, the occupational pension provider, is not operating the TWSS, the employee will only get the benefit of the wage subsidy in relation to the employment that is operating the TWSS. In the specific case that is the subject of this question, the employee’s total average net weekly pay across his employment and occupational pension is greater than €586. Consequently, the maximum wage subsidy the employee is entitled to would be €350 or €205, depending on the amount of wage top up provided by the employer, and not as has been suggested by the employee concerned a subsidy amount based on 85% of his average net weekly pay from his employment on the grounds that that weekly pay from that employment is €586 or less.
In relation to the administrative process for availing of the TWSS, Revenue advises me that it has repeatedly advised employers that for a claim for the subsidy in relation to an employee to be identified and processed correctly, the employer must use the PRSI rate of J9 for that employee in its payroll submission to Revenue. Where a payroll submission is made to Revenue with a J9 PRSI class, it is extremely important to ensure that the payroll submission is not subsequently deleted or amended. As Revenue’s systems were developed quickly to cater for the TWSS, attempts to delete or amend previous refund-related payroll submissions are necessarily flagged for attention by Revenue and may cause further difficulties for the employer and disrupt the refund process.
Finally, where an employer wishes to engage with Revenue on general issues relating to the scheme, the employer should contact Revenue’s National Employer Helpdesk via the myEnquiries system, providing details of the query and relevant contact information. I have been assured by Revenue that in the case that is the subject of this question the employer concerned received timely communication in relation to each query raised.