Budget 2021 – Key Highlights for Employers and Employees
We analyse the key measures of support and protection introduced for employers and employees in Ireland's biggest ever budget.

At an unprecedented €17.75bn, Budget 2021 is the largest in Irish history. The funding supports dedicated to the employment sector supplement the measures announced earlier this year in the €7.4bn July Jobs Stimulus Package. The key supports are detailed below. 

Remote working 

While no tax measures were announced for remote workers, Minister Donohoe highlighted the development of a remote working strategy which is being undertaken by an interdepartmental group. This is further to the commitment to a national remote working policy already made in the Programme for Government (Programme). 

The budget did however address working from home expenses and up to €3.20 per day may be paid to employees towards such costs without a benefit-in-kind arising. Workers may also claim a tax deduction for utility expenses like light, heat and the cost of broadband, the latter being a new introduction in 2020. 

Pandemic Unemployment Payment (PUP) 

No changes to PUP rates were announced on budget day itself but the decision by government one week later to increase Covid-19 restrictions saw a restoration of the support, which will be similar to September levels. Those who had prior earnings (pre-pandemic) of €400 a week or above will receive €350, those who were earning €300 to €400 will receive €300, those earning €200 to €300 will receive €250, while those earning below €200 will continue to receive €203. These rates will remain in place until January 2021. 

The majority of PUP recipients will receive a 100% Christmas bonus this year, if they have been in receipt of the payment for four months. This differs from the regular 15-month requirement that had previously applied. Self-employed workers will be able to earn up to €480 a month (gross) and maintain their PUP.  

Employment Wage Subsidy Scheme (EWSS) 

A commitment has been made to sustain the EWSS until at least April 2021 . Further announcements from the government on the EWSS for the remainder of 2021 are to follow. 

Parent's Benefit 

Parent's Benefit will be increased from two weeks to five weeks for parents of children born or adopted after 1 November 2019. This is paid at a rate of €245 per week and is paid to those who take parent's leave from work within their child's first year. 

Illness Benefit

From the end of February 2021, illness benefit will be available from the third day of illness (currently available from the sixth day).  

PRSI and USC 

The weekly threshold for the higher rate of employer's PRSI will increase from €394 to €398, while the USC band ceiling is increased from €20,484 to €20,687. Both changes will take effect from 1 January 2021. 

State Pension 

Eligibility for the State pension is to remain at 66 years, thereby postponing previous plans to increase the eligibility age to 67 years. Legislation to effect this will be implemented by the end of 2020. The budget announcement confirms the commitment made in the Programme that the State pension will be increased. It has been reported that the Commission on Pensions, who will oversee this, is set to be established this month. 

Youth support 

Minister Donohue highlighted the plight of young jobseekers who have suffered a "disproportionate impact" from the pandemic over the previous six months.  The €10min funding dedicated to helping people get back to work has been introduced with a specific focus on youth unemployment.

Covid Restrictions Support Scheme (CRSS)

Under the CRSS, businesses that are closed as a result of level 3 or higher restrictions can apply for a cash payment based on their 2019 average weekly turnover, subject to a maximum weekly payment of €5,000. To qualify, turnover must be down by at least 80% compared to the corresponding 2019 period. 

Final comments

The requirement for the government to tackle such widespread and drastic changes in the workplace over such a short period of time is unprecedented. Covid-19 related challenges combined with a looming Brexit meant that innovation was key in Budget 2021, but only time will tell whether these ambitious measures will prove effective. 

 
 

Contributed by Ruth Fahy

 

Key Contacts

Ailbhe Dennehy Partner

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