Upcoming Operational Phase for the Temporary COVID-19 Wage Subsidy Scheme

Updated 5 May 2020: Revenue have made the CSV file available in ROS Employer Services under “Request RPN’s”. A new option is available called Download Temporary Wage Subsidy Scheme calculation.

Updated 4 May 2020: We have updated our Help Site here with the changes.

With the Operational Phase of the Temporary COVID-19 Wage Subsidy Scheme coming into effect on 4 May 2020, we would like to remind you of the changes that you can expect.

The amount of employees’ wage subsidy and top-up will be calculated differently from 4 May and will no longer use their respective calculation of 70% and 30% of the Average Revenue Net Weekly Pay (ARNWP). Revenue provides information on their website on how you will be required to calculate the subsidy amounts based on the following tiers: 

  • An ARNWP less than €412
  • An ARNWP more than €412, but less than €500
  • An ARNWP more than €500, but less than €586
  • An ARNWP more than €586, but less than €960
  • An ARNWP more than €960

Please make use of the Revenue calculator mentioned below to ensure that your employees are paid the correct subsidy amounts.

Process Overview

Revenue will provide employers with a CSV file, which contains the information required for you to accurately calculate the maximum wage subsidy and the maximum top-up amount above which you will be required to reduce the subsidy amount paid to ensure employees do not earn more than their ARNWP. When the Operational Phase goes live on the 4th of May, Revenue will also provide a calculator on their website. You should use this to calculate the wage subsidy you want to pay your employees if you pay a top-up amount greater than the max top-up amount shown in the CSV. 

Once you have determined the wage subsidy and top-up amounts to use for each of your employees, you can simply add the Temporary COVID-19 Wage Subsidy Scheme item with the correct amounts to your employee’s payslips using our Bulk Inputs functionality. More information on how to add this scheme using Bulk Inputs can be found here. Please note that you will only be able to do this for this particular scheme from 4 May 2020.

Revenue Issue with Cessation Dates

Revenue has informed us that there is a known issue for certain submissions made through the Temporary COVID-19 Wage Subsidy Scheme. Submissions which contain PRSI class J9, but also include the cessation date of an employee may lead to refunds being rejected. They are busy investigating and will look to make a fix after the Operational phase of the scheme goes live on 4 May. 

For more information on the Temporary COVID-19 Wage Subsidy Scheme please visit the Revenue FAQ or take a look at our previous blog to see how to add it on SimplePay.

We hope that this information proves useful to you. If you have any queries on how the above relates to payroll and the SimplePay system, please feel free to get in touch with our customer support team at [email protected]

Keep well. Stay home. Stay safe.

Team SimplePay

Temporary COVID-19 Wage Subsidy Scheme

31 March 2020: Clarified that only submissions made on or after the 26th March 2020, with a Pay Date on or after the 26th March 2020 will qualify for this scheme.

27 March 2020: Included a note that the subsidy amount is reckonable income that may be taxed at a later stage by Revenue.

On Tuesday, 24 March the Government announced a new Temporary COVID-19 Wage Subsidy Scheme which is aimed at providing financial support to employees affected by the COVID-19 pandemic. This new scheme comes into effect for any submissions made from, and with a Pay Date from, the 26 March 2020. This new scheme builds on the previous Employer COVID-19 Refund Scheme, mentioned in our recent blogs:

Employers, who have applied on ROS to operate under the Temporary COVID-19 Wage Subsidy Scheme,  will be able to make a non-taxable subsidy payment to employees along with a taxable top-up contribution through payroll. The subsidy payment will be refunded by Revenue to the employer after the submission is made to Revenue.

The Temporary COVID-19 Wage Subsidy Scheme will be available for employers who keep employees on their payroll throughout the COVID-19 pandemic and is not limited to employees who are temporarily laid-off as per the previous scheme.

How to Add the Temporary COVID-19 Wage Subsidy Scheme item on SimplePay

We have revised the scheme item we previously blogged about and have introduced a new Temporary COVID-19 Wage Subsidy Scheme item. This item can be added as follows:

  • Go to Employees
  • Select an employee
  • Select Add next to Payslip Inputs
  • Select the Temporary COVID-19 Wage Subsidy Scheme item
  • Enter the Subsidy amount
  • Enter the Top-up amount

In an effort to allow employers to continue to pay their employees the amount they would normally be paid, Revenue have allowed for a maximum amount of 70% of the employee’s Average Net Weekly Pay to be subsidised by the Department of Employment Affairs and Social Protection (DEASP) and a maximum amount of 30% of the employee’s Average Net Weekly Pay to be topped up by employers. More information on this is provided below.

Subsidy Amount

The Subsidy amount entered should be equal to 70% of the employee’s net weekly pay, with:

  • A maximum of €410 per week where the Average Net Weekly Pay is less than or equal to €586; or
  • A maximum of €350 per week where the Average Net Weekly Pay is greater than €586 and less than or equal to €960

The Subsidy amount will not be subject to Income Tax, USC or PRSI.

Please note: the Subsidy amount is reckonable income, which may be taxed at a later stage by Revenue. Revenue will be providing information on this on their website.

Top-Up Amount

If an employer wants to make a taxable payment to their employee, they can capture an amount less than or equal to 30% of the employee’s Average Net Weekly Pay in the Top-up amount field. This amount will be included in Gross Pay and will be subject to Income Tax, USC and PRSI as calculated by the RPN. However, there will be no employee PRSI applied and the employer PRSI will be reduced to 0.5% of the top-up payment. 

Note that if the employer captures more than 30% in the Top-up amount field (i.e. the employee receives more than their Average Net Weekly Pay), Revenue may reduce the Subsidy amount refunded to the employer. 

Calculating the Average Net Weekly Pay

For now, employers are required to calculate the employee’s Average Net Weekly Pay when capturing these amounts. To calculate the Average Net Weekly Pay, employers must use the values in the payroll submission for each pay date in Jan and Feb 2020:

  1. Take the employee’s “Gross pay” and from it subtract the “Income Tax Paid”, the “USC Paid” and the “Employee PRSI Paid“.
  2. Total this figure for each pay date in Jan and Feb 2020 and divide this by the number of insurable weeks (capped at 9) for the period.
  3. This gives you the employee’s average pay that is to be used for the Subsidy amount field.

Revenue has published guidance in the form of Frequently Asked Questions, which provide a worked example for the calculation of the employee’s Average Net Weekly Pay. This can be found here.

PRSI Class J9

Finalised payslips with the Temporary COVID-19 Wage Subsidy Scheme item added will generate a submission, with the J9 PRSI class included. This PRSI class lets Revenue know that the employee has been paid under the Temporary COVID-19 Wage Subsidy Scheme. You will not need to make any changes to the employee’s PRSI class or PRSI exemption status, this is done automatically when the Temporary COVID-19 Wage Subsidy Scheme item is added.

Gross Pay of €0.01

Revenue have stated that a pay amount of €0.01 should be included in Gross Pay if no Top-up amount is captured. The reason for this is that some payroll systems require a sum submitted under salary in order to function. Luckily for you, with SimplePay no amount is needed under Basic Salary for you to run your payroll, meaning the payslips’ basic salary will read zero. Revenue has communicated directly with us that the €0.01 is not required and employers will still receive a refund when submitting €0.00.

How to Apply to the Scheme:

Employers, and their agents, will need to apply to Revenue to operate the Temporary COVID-19 Wage Subsidy Scheme. To do this, please follow the steps outlined by Revenue in the “Registering for the Temporary Wage Subsidy Scheme” section. Employers, already registered with Revenue for the purposes of the Employer COVID-19 Refund Scheme, are not required to take any further action.

Employers must not operate this scheme for any employee who is making a claim for duplicate support (e.g. Pandemic Unemployment Payment) from the DEASP.

More information on the scheme can be found on Revenue’s website here.

As always, we’re here to help where we can. Please feel free to get in touch if you need help with any of the above on SimplePay.

Team SimplePay