On 21 April 2020, the Revenue issued updated guidance on the Temporary Wage Subsidy Scheme (TWSS). This reflects the amendments to the TWSS outlined by the Department of Finance in its announcement on 15 April and the Minister of Finance in his letter to the Chairman of the Revenue Commissioners on 16 April 2020. One of the key changes is that revised subsidy levels will apply to payroll dates that fall on or after 4 May 2020. In addition, employees whose pay has been reduced below the eligibility threshold of €960 a week will now qualify for the scheme from 16 April 2020. We have summarised the revisions to the TWSS below, based on the information that has been supplied by the Department of Finance and the Revenue to date.
Background to the TWSS
The purpose of the TWSS is to encourage employers to keep employees on the payroll, so that they are ready to resume work once the economy reopens. The TWSS was introduced on 26 March 2020 to subsidise the wages of specified eligible employees where, subject to qualifying thresholds, an employer’s business activities have been or will be adversely impacted by the COVID-19 pandemic. The Revenue expects an employer to use its “best efforts” to top up the subsidy so that an employee receives as close as possible to their normal take home pay. The Emergency Measures in the Public Interest (Covid-19) Act 2020 gives the Minister for Finance the power to determine the level of wage subsidy that will apply to different classes of employee. See our previous article on the TWSS here.
Current Levels of Support
The subsidy is based on an employee’s average weekly net pay during January and February 2020 (AWNP). At present, the level of the subsidy is 70% of an eligible employee’s net pay. The maximum subsidy is €410 a week for employees with average net pay of €586 or less, and €350 a week for employees with average net pay between €586 and €960. Employees with average net pay above €960 are not eligible for the scheme.
Anomalies in the TWSS
The Government says that it has amended the TWSS to address anomalies in the scheme. For instance, it has been reported that some part-time and lower paid employees are financially better off if they collect the COVID-19 Pandemic Unemployment Payment rather than participate in the TWSS.
Revisions to the TWSS
According to the Minister’s letter to the Revenue and the updated Revenue TWSS guidance, the following revised subsidy levels will apply:
| Eligible employee’s AWNP | Level of subsidy | |
| Does not exceed €412 | 85% of the employee’s previous net weekly pay | |
| More than €412 but not more than €500 | A flat rate of €350 | |
| More than €500 but not more than €586 | 70% of the employee’s previous net weekly pay, up to a maximum of €410 | |
| More than €586 but not more than €960. | No subsidy is payable where the gross amount paid by the employer is more than 80% of the employee’s net weekly earnings | The “tiered arrangement” |
| €205 where the gross amount paid by the employer is more than 60% but not more than 80% of the employee’s net weekly earnings | ||
| €350 where the gross amount paid by the employer is up to 60% of the employee’s net weekly earnings |
Tapering
The subsidy is subject to a tapered reduction if the subsidy plus the gross amount paid by the employer is greater than the employee’s previous average net weekly income. However, the taper will not apply where an employer tops up an employee’s pay to €350 and that person’s previous average weekly net pay is under €412.
Employees Whose Pay is Reduced Below €76,000
From 16 April 2020, an employee whose pre-COVID-19 salary was greater than €76,000, but whose gross post-COVID-19 salary has fallen below €76,000, will be eligible for the scheme as outlined below:
| Reduction to eligible employee’s current gross pay compared with AWNP | Level of subsidy |
| Less than 20% | No subsidy is payable |
| Between 20% and 39% | Up to €205, subject to tapering to ensure total net income does not exceed €960 net per week |
| 40% or more | Up to €350, subject to tapering to ensure total net income does not exceed €960 net per week |
What’s Next?
Aspects of the updated scheme require clarification. We will keep you updated when further guidance on the operation of the revised TWSS is issued by the Revenue or the Department of Finance.
While the TWSS is in place for now, the Minister has said that “we will not be able to continue these kinds of measures indefinitely”. When the TWSS concludes employers will need to consider their options if they are not in a position to sustain workforce costs at pre-crisis levels. Before implementing measures such as lay-offs, redundancies or pay cuts, we recommend that employers seek advice on their employment law obligations.
We are available to advise businesses with any issues they face. Please contact your William Fry contact with any queries. Our partners, associates and our support teams are available as usual to support your business. We also have a specific COVID-19 Hubto help you.
Contributed by Ben Conway
