Revenue provides updated guidance on Coronavirus Transitional Wage Subsidy Scheme

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 21 April 2020, Revenue has provided updated guidance in respect of recent Government changes to the Transitional Wage Subsidy Scheme (“TWSS”) which will be effective from 4 May 2020.

Change to availability of the wage subsidy

Previously those who earned over €76,000 had no eligibility to avail of the TWSS. However, this has now changed and the new guidance outlines that where an employee had pre-Covid salary which was greater than €76,000 but their post-Covid salary has fallen below €76,000 then, subject to the tiered arrangement and tapering to ensure the net pay does not exceed €960 per week, such an employee will be eligible to the wage subsidy.

Queries in respect of Transfer of Undertakings

An issue which Revenue has highlighted is that the transfer of employees under the European Communities Transfer of Undertakings (Protection of Employment) Regulations 2003 (the “Regulations”) can cause difficulties in respect of the eligibility of the employees when it comes to the wage subsidy. This is because the employee may not be on the payroll of the new business at 29 February 2020 and the new owner would not have been paying the employees wages in January and February of this year either which are both criteria required for an employee to be eligible for the payment.

Revenue have now explained that where an employee has transferred to a new employer as a result of Regulation 4(1) of the Regulations then the eligibility criteria for the employee will operate as though the employee’s employer did not change. On a practical level, the new employer should contact the relevant Revenue Division prior to submitting any payroll. New employers should provide Revenue with the following information:-

• Details of the on the restructuring
• The legal agreement
• Details of the affected employees

Can an employee receive a Pandemic Unemployment Payment (“PUP”) and wage subsidy?

The Guidance clarifies that where an employee was receiving a PUP and subsequently started getting the wage subsidy, the PUP will then be stopped.

What are the thresholds for the wage subsidy?

Employers will have to enter a non-taxable amount equal to 70% of the employee’s average Revenue net weekly pay up to:

• a maximum of €410 per week where the average Revenue net weekly pay is less than or equal to €586, or
• a maximum of €350 per week where the average Revenue net weekly pay is greater than €586 and less than or equal to €960, or
• as outlined above, the wage subsidy is available to support employees whose average Revenue net weekly pay was greater than €960, and their current gross pay is below €960 per week, subject to the tiered arrangements and tapering.

The tiered system provides that where the current gross pay, as reported in the payroll submission, represents a reduction from the average Revenue new weekly pay by:-

• less than 20% then no subsidy will payable;
• between 20% and 39% then a subsidy of up to €205 is payable; and
• 40% or more then a subsidy of up to €350 is payable.

From 4 May 2020 there will also be the measures of an 85% subsidy payable in the case of employees whose average revenue net weekly pay does not exceed €412. There will also be a flat rate subsidy of up to €350 payable in the case of employees whose average revenue net weekly pay is more than €412 but not more than €500.

It has also been clarified in the Guidance that the maximum additional payment an employer can make is the difference between the employee’s average Revenue net weekly pay and their maximum weekly wage subsidy.

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 lgraham@reddycharlton.ie