A Review of COVID-19 Employment Related Schemes in Ireland – Q&A

Bláthnaid Evans Head of Employment Practice, Leman Solicitors and Shane O'Donovan, Tax Director, PKF O'Connor, Leddy & Holmes Limited, answer your questions following the Review of Covid-19 Employment Related Schemes in Ireland webinar.

This FAQ document seeks to provide guidance to address further queries arising from the Legal Island Webinar on 9 April 2020 regarding the COVID-19 government measures for employers. Further changes to these measures are being introduced by the government on a continuous basis. As such, the answers within may be subject to further review in light these developments. 

Wage Subsidy Scheme

1. I have a 3-part question in relation to a business which is closed at the moment but normally lays staff off from the end of May until mid- September each year.

(i) Can they pay staff as normal and claim the Subsidy until May, and then lay staff off as normal at that stage?

Where the employer qualifies for the Subsidy Scheme, s/he will be entitled to claim the subsidy in respect of eligible employees. Subsequently, the employer may lay the staff off from the end of May, if there is a requirement to do so.

(ii) Should the Staff then apply for Jobseekers rather than the Pandemic Payment?

The Department of Employment Affairs and Social Protection (the “DEASP”) has advised that the Pandemic Unemployment Payment (“PUP”) is available to individuals who have lost their jobs or have been laid off on or after 13 March 2020 due to the COVID-19 pandemic.

As such, where the business has a custom and practice of laying off employees each year from May until September, it may be difficult to establish that the lay off is as a result of the COVID-19 Pandemic. In these circumstances, it may be more suitable for employees to apply for Jobseekers. It is a matter for the employee to apply to DEASP for PUP, however, it is likely that the employee would need confirmation from their employer that they were laid off due to COVID_19.

(iii) What happens if they lay staff off now, i.e. are staff entitled to claim the Pandemic between now and May, and then switch to Jobseekers?

Where employees are laid off now due to the COVID-19 pandemic, where the employee satisfies all other eligibility criteria, they may apply for PUP. DEASP website states that an individual may apply for the PUP if s/he is:

• aged between 18 and 66 years old and
• lives in the Republic of Ireland and
• has lost his/her job due to the COVID-19 pandemic or
• has been temporarily laid off due to the COVID-19 pandemic

DEASP has further advised that individuals should not claim PUP if their employer has not laid them off or if s/he was not previously in employment or if s/he is still in receipt of employment income, or if his/her employer takes them back onto their payroll.

After 12 weeks, if the employee is unemployed, s/he will still need to apply for and be assessed for jobseeker's payments.

DEASP have further advised that if an individual has one adult or more dependant children that they should claim a Jobseeker’s Payment as opposed to PUP. This is because s/he can claim an additional allowance for their adult dependant and child dependants, which will bring their weekly payment in excess of the €350 weekly due under PUP.

2. Under the new wage subsidy scheme, for employees who were initially on layoff and now on the wage subsidy scheme, should we issues letters to these employee’s to say they are officially now not on lay off, even though they are still not working or required to work?

According to Revenue Guidance, eligible employers can participate in the Subsidy Scheme in respect of any eligible employees on their payroll, including those who were temporarily laid off, or staff temporarily laid off but retained on the payroll. As such, it is not necessary to take employees off lay-off in order to apply for the Subsidy Scheme, the employees however, do need to be on the employer’s payroll to be eligible for the Subsidy Scheme.

In addition, DEASP has advised that employees who were claiming PUP previously but whose employers have subsequently applied for the Subsidy Scheme should notify DEASP that they will be receiving payment under the Subsidy Scheme. Where they fail to do so, Revenue has advised that it is sharing data with DEASP who will use this to identify dual payments and will cease future DEASP PUP payments for employees that are benefiting from the wage subsidy scheme.

3. Can an employer oblige/force an employee to work an amount of hours per week if the amount payable under the temporary Wage Subsidy Scheme (with or without employer top-up) means that the employee is receiving less than the minimum wage per hour?  If so, what options are open to the employee? – Refuse to work those hours and risk dismissal? Take a minimum wage case against the employer after the crisis?

Where the employer is unable to top up the subsidy to provide the employee with 100% of their net wage to pay the employee his/her contractual entitlement or where payment in accordance with the Subsidy Scheme results in the employee receiving less than what they are entitled to under statute, it is unlikely the employer would be in a position to compel the employee to work their full contractual hours. Indeed, were an employer to do so, they may expose themselves to a claim under the National Minimum Wage Act 2000, the Payment of Wages Acts or trigger other potential claims such as constructive dismissal or an equality claim. 

In the circumstances, the employer should discuss this matter with the employee to mitigate the risk of any potential claim(s). The parties may also consider implementing alternative remedies in the interim eg agreeing to additional annual leave entitlements, deferral of wages or a pay reduction.

From a practical perspective, early and frequent communication buy-in (i.e. explaining that the rationale is to avoid/minimise lay-off and redundancies, etc.) may assist in obtaining employee agreement. If the reason for these issues are explained, along with the consequences for the business and jobs if cuts or certain measures are not taken, employee consent may be obtained. It should be made clear that any measures implemented are being applied consistently.

4. If we reduce the gross pay by the subsidy this will increase the employees’ net pay that will impact the level of subsidy that can be collected, taking some employees out of the subsidy. Is this something the revenue will allow, or will this be disallowed?  For an employee on €950 net pay and entitled to the €350 subsidy, If I reduce the employee’s taxable pay by €350 and grant the subsidy of €350, their net pay will then exceed the €960 threshold. Will revenue still pay the €350 subsidy or is he to be excluded.

Revenue has advised that an employee is not eligible for the Scheme if their average net weekly pay is in excess of €960. However, as the average net weekly pay is calculated on the basis of the employee’s pay in January and February, this resulted in certain employees being excluded from the Scheme, despite the fact that those employees had subsequently suffered a pay reduction in March or April. 

In order to address this issue, the Department for Finance issued a press release on 15 April 2020 to the effect that an employee who was earning over €76,000 gross per annum will be eligible for the Scheme where their wage has been reduced to below €960 net pay per week and:

• the reduction is more than 20%, then a subsidy of up to €205 will be payable; or
• the reduction was more than 40%, then a subsidy of up to €350 will be payable.

To calculate the level of subsidy payable, the Department has advised that the current gross pay will be compared with previous average net weekly pay for January/February. This subsidy will be tapered to ensure that the total net income (employer contribution plus wage subsidy) does not exceed €960 net per week.

5. Employees who are on wage subsidy scheme at 70% of their net earnings and working 2 days per week, are we required to pay them 70% average net and an additional 16 hours for their 2 days working?

As you may be aware, the Subsidy Scheme is currently in Phase 1/the Transitional Phase, which provides a maximum of €410 in respect of eligible employees for employers who operate the Subsidy Scheme regardless of whether the employer makes an additional payment to the employee’s earnings or not. In many cases the €410 payment will exceed the subsidy that the employee is entitled to receive. In these cases, the employer is obliged to hold the excess of the subsidy payment received over the amount of subsidy actually paid to each employee.

In the operational phase/Phase 2 of the Scheme, which is due to commence on 4 May 2020, the excess amount paid during the Transitional Phase will be taken into account by Revenue when paying future subsidy payments to the employer or will be repaid directly to Revenue. Phase 2 will ensure that the Subsidy paid to employers will be based on each individual employee’s Average Net Weekly Pay, subject to the maximum weekly tax-free amounts.

Employees earning less than €586 net per week will be divided into three pay categories to provide additional support for lower paid employees. As such, for employees whose previous average net weekly pay is:

• Less than €412 (equivalent to almost €24,400 gross per annum), the subsidy will be increased from 70% to 85% of their previous net weekly pay.
• Between €412 and €500 (equivalent to €24,400-€31,000 gross per annum), the subsidy payable will be up to €350 per week.    
• Between €500 and €586 (equivalent to €31,000-€38,000 gross per annum), the subsidy will remain the same and employees will continue to receive a subsidy of up to 70% of previous net income, up to a maximum of €410 per week.

While the employer is expected to make best efforts to maintain as close to 100% of normal income as possible for the duration of the Subsidy Scheme during the emergency period, there is no minimum amount that the employer must pay in order to be eligible for the Subsidy Scheme, however, the employer will need to enter at least €0.01 to run payroll.

6. Employees who are on wage subsidy and refuse to work 1 day per week, what should we do?

We would advise that you firstly refer to the terms and conditions of the contract of employment.

Where the employee’s contract provides that s/he is required to work one day per work, and the employee is remunerated accordingly for this day, the employee may be in breach of his/her contract. 

However, where due to the COVID-19 pandemic, the employees’ hours of work and pay have been reduced without employee consent or in breach of the employee’s contract, the employer may expose themselves to a potential claim under the Payment of Wages Acts, breach of contract or potentially constructive dismissal claim.

We would advise that you seek to communicate with the employee to reach agreement around revised hours or duties in order to maintain the employment relationship. A record of any meetings with the employee should be kept in order to demonstrate your willingness to engage with the employee, retain them in employment and reach agreement. Where agreement is not possible, this may lead to the contract becoming frustrated or terminated.

Where the employee intends to apply for PUP, it should be noted that DEASP has advised that an individual is not eligible for PUP where the s/he has voluntarily left employment.

7. Number of employee’s on wage subsidy scheme are receiving high tax refunds through payroll, will they owe these refunds back at end of year and if so, is this taken back through reduction of tax credits?

According to Revenue Guidance, the wage subsidy scheme payments are liable to income tax; however, the subsidy is not taxable in real-time through the PAYE system during the period of the Subsidy scheme. Instead the employee will be liable for tax on the subsidy amount paid to them by their employer by way of review at the end of the year.

As such, when an end of year review takes place, it may be the case that an employer’s unused tax credits will cover any further liability that may arise. Where this is not the case, and should Income Tax liability arise, it is normal Revenue practice to collect any tax owing in manageable amounts by reducing an individual’s tax credits for a future year(s) in order to minimise any hardship. Additionally, if an individual has any additional tax credits to claim, for example health expenses, this will also reduce any tax that may be owing.

8.For employees who did not wish to join wage subsidy scheme but have received lay- off letters with no end date, should we issue further follow up lay off letters to them?

Where you are aware of the end date or wish to keep employees updated on when it is expected that they may resume their duties, we would advise that written communication is issued to reflect this. Given the uncertain nature of the pandemic however, it may be difficult for the business to ascertain the end date. Nonetheless, we would always encourage the employer to retain links with the employee where s/he is laid off in order to demonstrate its willingness to maintain the employment relationship to avoid any potential redundancy that may ensue in the future. 

In this regard, it should be noted that Section 29 of the Emergency Measures in the Public Interest (Covid-19) Act 2020 amends Section 12 of the Redundancy Payments Act 1967 to the effect that an employee shall not have a right to claim redundancy during the emergency period in respect of an employee who has been laid off or kept on short-time due to the effects of measures required to be taken by his or her employer in order to comply with, or as a consequence of, Government policy to prevent, limit, minimise or slow the spread of infection of Covid-19.

9. For employees on covid-19 payment from DEASP receiving €350 but would not normally earn €350 net per week, will they have to pay back this back and if so how?

Unfortunately, no guidance has been issued by DEASP to date to indicate that this is the case.

10. If the employee is to have 9 weeks consecutive on the payroll from start of January to end of February, does that mean that for example an employee who say only started in early February is ineligible for the Wage Subsidy Scheme, or if for example and employee was off sick for a few weeks in February are they also ineligible?

In order to be eligible for the Subsidy Scheme, the employee should be in employment on 29 February 2020.

Revenue has advised that an employee’s average net weekly pay is based on January and February payroll submissions made to Revenue by the employer by 15 March 2020. The Revenue Guidelines currently available advise that “there can be cases where an employee was in employment but who did not receive normal pay in January or February, such as reduced pay or off-pay leave, the employee may decide not to participate in the Temporary Wage Subsidy Scheme and instead apply directly to the Department of Employment Affairs and Social Protection for the Pandemic Unemployment Payment.”

In order to confirm this position or whether it is possible to calculate the average net weekly pay based on February figures only, we would advise that you contact Revenue to seek further clarification.

11. For the WSS my understanding is that the average weekly wage will be calculated based on Jan and Feb 2020, therefore a pay cut would have no effect during the operation of this scheme, is this correct? 

It is permissible to affect a wage reduction despite the fact that the subsidy is based on the employees’ average net weekly pay for January and February 

While the employer is expected to make best efforts to maintain as close to 100% of normal income as possible for the duration of the Scheme during the emergency period, there is no minimum amount that the employer must pay in order to be eligible for the Scheme, however, the employer will need to enter at least €0.01 to run payroll.

As such, for example, where an employee is eligible to receive a 70% subsidy payment, and the employer implements a 10% reduction in pay, the employer may decide to top-up the employee’s wage by only 20%.

12. My understanding is that an employee cannot be on two types of ‘leave’ at the same time i.e. lay off and sick leave, a question was asked if someone was on sick leave could they be laid off – I don’t believe it is, can someone clarify this please?

Generally, where an employee is absent due to sickness, it is advised that an employer refrains from laying off or dismissing the employee in order to avoid any potential discrimination claim under the Employment Equality Acts 1998-2015 on the grounds of disability. As such, employers should exercise caution when selecting employees for lay-off or short-time, apply objective selection criteria when deciding which employees to lay-off or place on short-time and be mindful of not discriminating, directly or indirectly, against employees. 

In light of the current economic climate, where lay-offs are necessary for a business and the appropriate objective selection criteria apply, it may be permissible to lay-off employees. Where eligible, an employee may apply for Illness Benefit for COVID-19 absences of €350 per week for a maximum of:

• 2 weeks where a person is self-isolating due to being a possible source of infection; and
• 10 weeks if a person has been diagnosed with COVID-19 (Coronavirus).

 If a person has been certified as sick for less than 10 weeks, they will be paid for the duration of their certificate.

Where an employee in receipt of the COVID-19 Illness Benefit has been laid off, the employee can remain on the COVID-19 Illness Benefit. Where the employer subsequently applies for the Subsidy Scheme, the employee must decide which scheme to apply for i.e. an employee cannot be in receipt of illness benefit and the Wage Subsidy Scheme. 

Salary over €76k Band:

13. If pay cuts have been implemented in March which takes people below the €76k band, are they excluded from subsidy because of the Jab/Feb average?

Please see question 4 above.

14. We have a staff member who salary is under the €76k threshold but on a normal year commission would take them over this by some distance.  This is unlikely to be a normal year – can I claim the subsidy?  We have another staff member who has 2 employments whose salary with us is well below threshold but combined is over.  Can they claim the subsidy?

The average net weekly is calculated by reference to January and February’s 2020 payroll submissions made to Revenue by the employer by 15 March 2020. Where on calculation of the employee’s average net weekly pay, this results in the employee’s pay being less than €76,000 (gross) per annum/€960 net per week, s/he will qualify for the Scheme.

In relation to the second question, Revenue has stated that if an employee has multiple employments, each employer can operate the scheme based on 70% of each employee’s net weekly earnings. In the operational phase, all such earnings will be combined and reconciled and each employer will be provided with an employer “Maximum additional payment employer can make to receive full subsidy” to apply to the employee’s payroll. Revenue has stated that further guidance will be provided on the operation of this.

15. Is the Wage Subsidy scheme payable to all after April 19th (i. those on higher salaries) 

The Department of Finance has clarified that Phase 2 of the Scheme, which was originally scheduled to commence on 20 April 2020 but has been postponed to 4 May 2020 to allow Revenue to implement further changes to the Subsidy Scheme.

Revenue have stated that the Subsidy Scheme will not apply to employees on an annual salary of €76,000 or more.

16. Do you believe that it is fair to exclude those employees whose net weekly wage exceeds €960? Has there been any indication from Government/Revenue that this will be addressed?

It is understood that the rationale for the maximum cap was to ensure that the Subsidy Scheme would be available for employees on lower to middle incomes.

As referenced at our response to question 4 above, the Department of Finance has introduced changes to the effect that employees whose wages are reduced to below €960 net per week may be eligible for a subsidy.

17. If first doing this in April monthly payroll do we use March in average net pay calculations?

Revenue has advised that the subsidy available under the Subsidy Scheme is calculated on the basis of the employee’s average net pay for January and February 2020.

18. What if your employees are continuing to work and their hours fluctuate significantly week to week? If you base it on the average in Jan/Feb they will be left short. Can employees take a case in regard to the payment of wages act ' basically they are getting a pay cut inadvertently without consent. 

Employee consent may be required in respect of any ancillary reason for placing the employee on the Subsidy Scheme which impacts on their wages/employment, e.g. this includes a reduction in wages, reduction in hours, being laid off etc.

Where employee is not being paid for all hours worked or the employer is not in a position to top-up the subsidy payment which results in the employee receiving less pay than they are entitled to under their contract of employment, the employer is advised to seek to engage and communicate with the employee to reach agreement around revised hours or duties to reflect the reduction in remuneration and to mitigate the risk of any potential claim(s). The parties may also consider implementing alternative remedies in the interim e.g. agreeing to additional annual leave entitlements, deferral of wages.

19. Do you have to be down 25% to qualify for the wage subsidy scheme at all? 

Application for the Subsidy Scheme is based on self-assessment principles, a qualifying employer declares that it is significantly impacted by the crisis. Key indicators are that the employer’s turnover is likely to decrease by 25% for quarter 2, 2020; that the business is unable to meet normal wages or normal outputs and any other indicators set out in Revenue guidelines.

In relation to the likely reduction in turnover of 25% or more, Revenue has advised that this is a reduction in expected turnover for Q2, 2020. The employer is best placed to determine that and may base this judgement on the decline in orders in March 2020, in comparison to February 2020, or the likely turnover for the quarter compared to Q1 or if appropriate Q2, 2019, or on any other basis that is reasonable.

The critical requirement is to be able to show significant negative economic disruption due to COVID-19. The evidence in that regard will contribute in large part to demonstration of compliance with the other criteria. For further guidance on eligibility criteria please see Revenue Guidelines which can be accessed here.

20. Two Part Question:

(i) Can an employer oblige/force an employee to work an amount of hours per week if the amount payable under the temporary Wage Subsidy Scheme (with or without employer top-up) means that the employee is receiving less than the minimum wage per hour? If so, what options are open to the employee? – Refuse to work those hours and risk dismissal? Take a minimum wage case against the employer after the crisis? 

Please see response to question 3 above.

(ii) Can an employer force an employee to be part of the TWSS if the employee would prefer to apply for the Covid-19 PUP payment due to the amount of entitlement being greater given the employees particular circumstances? 

While there is no requirement under the Subsidy Scheme to apply for employee consent, it may be difficult to compel an employee to be part of the Subsidy Scheme where s/he refuses to do so. In addition, employee consent may be required in respect of any ancillary reason for placing the employee on the Subsidy Scheme which impacts on their wages/employment, eg this includes a reduction in wages, reduction in hours, being laid off etc. In addition, prior to implementing the Subsidy Scheme, employers should notify employees that they may become subject to further tax where an employee’s unused tax credits do not cover any further liability that may arise. In this regard, Revenue has advised that it is normal practice to collect any tax owing in manageable amounts by reducing an individual’s tax credits for a future year(s) in order to minimise any hardship.

Where an employee wishes to apply for PUP in lieu of the Subsidy Scheme, the DEASP advised that the employee must have lost their job or have been laid off as a result of the COVID-19 pandemic to be eligible to apply. The DEASP also advises on its website that that an individual is not eligible to avail of PUP if s/he has voluntarily left their employment, or s/he has not been laid off by their employer.

DEASP has advised that it will review all claims and is engaging with the Revenue Commissioners 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.

21.  Has the tax liability at year end been confirmed?

According to recent guidance issued by Revenue, there has been no confirmation of tax liability payable at year end. 

Revenue has advised when an end of year review takes place, it may be the case that an employer’s unused tax credits will cover any further liability that may arise. Where this is not the case, and should Income Tax liability arise, it is normal Revenue practice to collect any tax owing in manageable amounts by reducing an individual’s tax credits for a future year(s) in order to minimise any hardship. Additionally, if an individual has any additional tax credits to claim, for example health expenses, this will also reduce any tax that may be owing. 

22. Hi, just on the cashflow point, what if a company applies for this scheme but they don’t have the cash to pay staff BEFORE they get the 'rebate' from revenue? What can they do?

The employer may consider laying off the employees. Before doing so, we would advise that the employer refers to the employee’s contract of employment to confirm whether it provides for the right to lay off and whether it provides for a right to lay off without pay. If it doesn’t refer to this, the employer may be able to rely on an implied right through custom and practice not to pay employees during lay off. The employer will need to show that such a practice was reasonable and within the knowledge of the employees. Where this is not the case, or alternatively, employers, could seek employees’ agreement to be laid-off without pay. In exceptional circumstances, an employer is generally not required to pay employees on lay-off, which may include the Covid-19 pandemic.

If the employee is laid off, and s/he is not receipt of pay from their employer, the employee may apply to DEASP for PUP.

Subsequently, where the employer wishes to apply the Subsidy Scheme, DEASP has advised that employees who were claiming PUP previously should notify DEASP that they will be receiving payment under the Subsidy Scheme. Where they fail to do so, Revenue has advised that it is sharing data with DEASP who will use this to identify dual payments and will cease future DEASP PUP payments for employees that are benefiting from the wage subsidy scheme.

Older Workers:

23. Do you know if there will be any movement on the current refusal to pay subsidies to aged 66 + persons who were in employment?

There is no age limitation to apply for eligible employees under Subsidy Scheme.

However, current DEASP guidance states that persons over 66 cannot avail of PUP.

24. I believe that as they are technically a pensioner, they don’t qualify, but many people of this age still work and pay tax – what, if anything, are they entitled to? 

There is no age restriction to apply for the Subsidy Scheme and where eligible, the employee may come within the remit of the Scheme.

Employer top up

25. Following discussions between the GUI and Government, the restriction with regard to Greenkeepers being able to work on the Golf Course has been removed.  Our green-keeping staff are now on the wage subsidy scheme and with no incoming revenue for the business am I in a position to ask the staff to work a three day week and pay them the 70% subsidy?  At present I am not in a position to top up the payment.

An employer is not required to make an additional payment to the employee to be eligible for the Scheme. However, the employer is expected to make best efforts to maintain as close to 100% of normal income as possible for the duration of the Scheme during the emergency period. 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.       

As such, where eligible, the employee may come within the remit of the Subsidy Scheme, despite the fact that you are unable to top-up the subsidy payment.

26. Is the subsidy reduced if you increase the top up to more than 30% of net 586 or more than 30% of their normal net pay? 

The Department of Finance has recently provided clarification in relation to how the subsidy payment of a maximum of €350 will apply to employees whose previous average net weekly pay is in excess of €586. This provides that a tiered approach will apply, which is contingent on both the amount paid by the employer and the level of reduction in pay borne by that employee. Where the gross amount paid by the employer is:

• Up to 60% of employee’s previous average net weekly pay, a subsidy of up to €350 per week will apply;
• Between 60% and 80% of employee’s previous average net weekly pay, a subsidy of up to €205 per week will apply; and
• Over 80% of employee’s previous average net weekly pay, no subsidy is payable.

Tapering of the subsidy will apply to all cases where the gross pay paid by the employer and the subsidy exceed the previous average net weekly pay. This is calculated by subtracting the amount paid by the employer from the previous average net weekly pay. This is to ensure that no employee would be better off under the scheme. 

However subject to further updates introduced by the Department of Finance on 15 April 2020, this requirement will not apply to employees whose average net weekly pay is less than €412 (or approximately €24,400 gross per annum). In these circumstances, where an employer wishes to pay a greater level of top-up in excess of the outstanding 15% of previous pay in order to bring the employee’s pay to €350 per week, then tapering would not be applied to the subsidy. 

PUP Scheme:

27. Can employees request to be laid off without pay so they can avail of PUP? In essence their contract is frozen?

DEASP website states that in order to qualify for PUP, an individual may have lost their job or have been temporarily laid off due to the COVID-19 pandemic. It further states that PUP is not available to employees who have voluntarily left their employment.

Where an employee is laid off, this effectively means that their contract of employment is paused temporarily.

28. I have a question in relation to the pandemic unemployment payment. Can this payment still be made to an employee from an employer or has it been substituted by the wage subsidy scheme?

PUP is paid by the Department of Employment Affairs & Social Protection. One of the eligibility requirements for PUP is that the employee must not be on the employer’s payroll. 

The payment under the Subsidy Scheme is made by the State to the employer, who is obliged to pass on the payment to the employee.

29. If an employee also, and separately from the employment has got his or her own Self-employment, ay that employee apply for PUP?

DEASP website advises that where a self-employed individual pays themselves as a PAYE worker through payroll then s/he can apply for the Temporary COVID-19 Wage Subsidy Scheme from Revenue. 

However, if they don’t pay themselves as a PAYE worker then s/he should claim the emergency COVID-19 Pandemic Unemployment Payment.

Where s/he is still in employment and in receipt of pay from their employer, they are not eligible for PUP.

Annual Leave During TWSS

30. If we give an employee 30 days’ advance notice can we request that they take paid annual leave during the crisis?

In short, yes. The Organisation of Working Time Act 1997 requires an employer to give the employee at least 30 days’ notice before requiring the employee to take annual leave.

31. How does being on the TWSS correlate with annual leave payments/accrual and public holiday payments? 

There is no change to annual leave and public holiday entitlements for an employee receiving payment under the Subsidy Scheme.

Employees do not accrue annual leave while off on temporary lay-off. However, pursuant to Schedule 3 of the Organisation of Working Time Act 1997 (as amended), employees are entitled to benefit for the public holidays that fall within the first thirteen weeks of lay-off.

32. Employees don't accrue holidays while on TWSS - is that correct?

Revenue Guidance does not provide that employees do not accrue holidays while on the Subsidy Scheme. However, as per question 34, employees do not accrue annual leave while off on temporary lay-off.

33. Can we place employees on TWSS on holidays next week (they are due to be) and pay full normal wage and still claim back 70% from the scheme?

An employer can still apply for the Subsidy Scheme in respect of eligible employees who avail of their annual leave.

34. If you were temporary laid off do you still accrue annual leave during this time?

Please refer to question 34 above.

Self-Employment:

35. As a self-employed person, I have been advised to apply for Covid 19 payment scheme €350 p/w. I was also told I should apply for the Self-Employed Job Seekers allowance but I don't know if this is correct? I hope my business will be back to normal in a few weeks after all of this. Can you confirm if Job Seekers for Self Employed applies also?

DEASP website advises where a self-employed individual pays themselves as a PAYE worker through payroll then s/he can apply for the Subsidy Scheme from Revenue.

However, if they don’t pay themselves as a PAYE worker then s/he should claim the emergency COVID-19 Pandemic Unemployment Payment.

For individuals that have one adult or more dependant children, the DEASP website states that they should claim a Jobseekers Payment instead of the COVID-19 payment. This is because an individual can claim an additional allowance for adult and child dependants which will bring weekly payment to in excess of the €350 under PUP.

We do not have sufficient information to specifically advise which support is appropriate in the circumstances. In order to determine which scheme is more suitable, it is advised that you contact the DEASP Income Support Helpline for COVID-19 on 1890 800 024.

36. Is the Covid-19 Pandemic Unemployment Payment of €350 per week in respect of the lost self-employment? whilst on the Wage Subsidy scheme in respect of his/her Employment?

PUP is available for employees who:

• are aged between 18 and 66 years old and
• live in the Republic of Ireland and
• have lost your job due to the COVID-19 pandemic or
• have been temporarily laid off due to the COVID-19 pandemic 

Eligible employers can participate in the Subsidy Scheme in respect of any eligible employees on their payroll, including those on fulltime, reduced hours, rehired staff who were temporarily laid off, or staff temporarily laid off but retained on the payroll.

37. Is the Covid payment for self-employed and temporary layoff for PAYE taxable at the end of the year?

No guidance has been provided by the DEASP to indicate whether PUP is taxable at year end.

38. I am a farmer and I run my business as a limited company can I apply for the covid payment?

According to the DEASP, PUP is available to employees and the self-employed who have lost employment or been laid off as a result of COVID-19.

DEASP advises where a self-employed individual pays themselves as a PAYE worker through payroll then s/he can apply for the Subsidy Scheme from Revenue.

However, if they don’t pay themselves as a PAYE worker then s/he should claim the emergency COVID-19 Pandemic Unemployment Payment. 

Consent

39. Was it stated that consent not strictly required for TWSS if reducing to 70% pay level? 

There is no requirement under the Subsidy Scheme to apply for employee consent. Notwithstanding this, employee consent may be required in respect of any ancillary reason for placing the employee on the Subsidy Scheme which impacts on their wages/employment, e.g. this includes a reduction in wages, reduction in hours, being laid off etc.

40. I didn't think you could reduce the salary of staff and apply for WSS - since it's based on the Av net weekly earnings in Jan/Feb then a wage decrease now would have no effect?

It is permissible to effect a wage reduction despite the fact that the subsidy is based on the employee’s average net weekly pay for January and February.

While the employer is expected to make best efforts to maintain as close to 100% of normal income as possible for the duration of the Scheme during the emergency period, there is no minimum amount that the employer must pay in order to be eligible for the Scheme, however, the employer will need to enter at least €0.01 to run payroll.

As such, for example, where an employee is eligible to receive a 70% subsidy payment, and the employer implements a 10% reduction in pay, the employer may decide to top-up the employee’s wage by only 20%.

Disclaimer: The above questions were answered by Bláthnaid Evans Head of Employment Practice, Leman Solicitors and Shane O'Donovan, Tax Director, PKF O'Connor, Leddy & Holmes Limited but do not constitute legal or professional accounting advice. Appropriate advice should be sought from your legal and financial advisers, as appropriate before relying on the information in this article. This is particularly important because the rules surrounding the TWSS and other financial support are subject to change at very short notice.