Covid-19 – Coronavirus Wage Subsidy Scheme changes

Covid-19 – Coronavirus Wage Subsidy Scheme changes

This note is part of a series that the lawyers of Reddy Charlton will issue on the major legal, personal and business issues that will confront us all during the Covid-19 crisis.

On 24 March 2020, the Government announced the Coronavirus Wage Subsidy Scheme (the “Scheme”) which was brought into force on 27 March 2020 by the Emergency Measures in the Public Interest (Covid 19) Act 2020 (the “Act”). The Scheme supersedes the Employer Covid Refund Scheme.

The Scheme differs from the original Employer Covid Refund Scheme in respect of the payments which are provided, as can be seen in the table below. The Government Subsidy Payment Amount was amended yesterday, 15 April 2020 to address some anomalies in the scheme. These will apply from 4 May 2020 and are reflected in the table below.

It is worth noting that it will be up to the employer to decide whether the employee is paid under the Scheme rather than the Pandemic Unemployment Payment.

The Scheme allows for and encourages employers to make additional payments to the employee on top of the payment provided by the Government. After the Scheme has expired, the names of all the employers using the Scheme will be published on the Revenue website.

Employee’s Average Net Weekly Pay Government Subisdy Payment Amount
Less than or equal to €412 85% of an employee’s average weekly pay
Over €412 or less than or equal to €500 The lesser of:-
– €350 per week or
– 70% of an employee’s average weekly pay
Over €500 or less than or equal to €586 The lesser of:-
– €410 per week or
– 70% of an employee’s average weekly pay
Over €586 and less than or equal to €960 A tiered system is in place (see table below)
Over €960 per week Eligible for payment – a tiered system is in place (see table below)

Tiered System

For employees with previous net pay in excess of €586 per week, a tiered system will be in place. The maximum subsidy payable will continue to be €350 per week. The tiered system takes into account both the amount paid by the employer and the level of reduction in pay by that employee as outlined below:

Gross amount paid by Employer Government Subsidy Payment Amount
Up to 60% of employee’s previous average net weekly pay
Up to €350 per week
Between 60% and 80% of employee’s previous average net weekly pay Up to €205 per week
Over 80% of employee’s previous average net weekly pay No subsidy available

The wage subsidy will also be available to employees whose average net pre-COVID-19 salary was greater than €76,000, and their gross post-Covid salary has fallen below €76,000. The tiered system above will apply.

What are the criteria to apply for the Coronavirus Wage Subsidy?

Part 7 of the Act provides the framework for applying for the Coronavirus Wage Subsidy (the “Subsidy”). Section 28 of the Act provides that the Subsidy will be available if:

1. the business of an employer is adversely affected by the coronavirus to a significant extent;
2. that the result is that the employer is unable to pay the employee the emoluments that the employer would otherwise normally pay; and
3. the business has the firm intention of continuing to employ the employee and to pay them and is making best efforts to pay the employee some emoluments.

To satisfy the criteria of being ‘adversely affected’ to a significant effect, an employer has to demonstrate to the satisfaction of the Revenue Commissioners that as a result of coronavirus and the disruption to commerce which it has caused, that during the period from 14 March 2020 and 30 June 2020 there has been a 25% reduction in either the employer’s turnover or in customer orders being received by the employer.

It was argued that the reference to turnover in the Act should have been altered as it is vague and can be difficult for employers to understand, however, it remains in the final Act. Nonetheless Revenue have confirmed that the key focus will be on the fact of “significant negative economic disruption on the employer due to Covid-19”. Revenue have stated that they will not be looking for proof that companies comply with the above criteria at this stage, however, employers should collate and retain records to demonstrate how they made the assessment.

Does an employer have to top up the Subsidy?

The Revenue Guidance explains that employers are expected to make best efforts to maintain the employee’s net income as close as possible to normal net income. While on the one hand there is no minimum amount that the employer has to pay to be eligible for the Subsidy, the employer will need to enter at least €0.01 in Gross Pay when running its payroll. However cash reserves will be considered by Revenue after the Subsidy is paid and those with cash reserves will be expected to provide a significant top up to employees.

How does an employer apply for the Subsidy?

In order to apply for the Subsidy for an employee, the employer will have to log on to the Revenue Commissioners online system and make a self declaration on the system that they have been significant affected to a significant effect in accordance with the criteria outlined above.

Is applying for the Subsidy an admission of insolvency?

It had been queried as to whether the inability to pay an employee’s wages was effectively an admission that the business was trading while insolvent. However, Revenue has since confirmed that employers will not be deemed insolvent if they apply for the Subsidy for employees.


The Guidance from Revenue on the Scheme is evolving and is now up to its 5th edition of guidance already and will likely need to change to accommodate the new payment structure in place. Employers should keep up to date with the any new editions of guidance on the Scheme. Whilst the Act is fairly new, there have been welcome clarifications in respect of cash reserves and insolvency already.

How can Reddy Charlton help?

During this Covid 19 crisis, Reddy Charlton Solicitors are eager to support, encourage and guide your business. For further information on this topic, please contact Laura Graham at

Laura Graham
Author: Laura Graham