As part of the BKK practical help series, a mail will be sent every day this week on the key areas that are relevant to our clients. Today’s topic is payroll and the temporary wage subsidy. BKK have collated a list of FAQ’s below that have been coming from our clients, updated by Revenue.
We are here to help and really want to engage with and help you at this time. Please continue to speak with us.
- What is an additional taxable payment in the Temporary Wage Subsidy Scheme?
Sometimes referred to as top-up payments, in the transition phase of the Subsidy Scheme an employer can choose to make an additional payment to the employee to fully or partially make up the difference between the amount provided by the subsidy scheme and the employee’s normal Average Net Weekly Pay. Such additional payments are liable to Income Tax and USC. (Further guidance to be published by Revenue).
- Are there any conditions associated with the Temporary Wages Subsidy Scheme?
The Subsidy Scheme is open to employers who self-declare to Revenue that they have experienced significant negative economic disruption due to Covid-19. You should be able to show that you have meet the criteria laid out in Revenue’s published Guidance on Employer Eligibility and Supporting Proofs.
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. The proofs mentioned below are intended to be illustrative rather than exhaustive and Revenue is open to considering other relevant evidence as a reasonable demonstration of eligibility for the COVID-19 Temporary Wage Subsidy Scheme: –
- If for some reason the decline in turnover was less than 25%* you should retain documentation supporting your rationale for believing that it would suffer such a decline
- Copies of documentation submitted to a financial institution as part of the negotiation of forbearance measures with the financial institution
- Copies of notifications or communications to employees or Trade Unions or staff representative bodies of salary/wage cuts implemented as a direct result of the COVID-19 pandemic
- Copies of documentation that show that any cash reserves in the business that are required to fund debt that is equal or greater than the reserve amount
- Evidence of reliance on the Government Credit Guarantee Scheme or overdraft facilities or other borrowings for capital purposes
- In the case of start-up businesses, for example, evidence of a decline in investment by at least 25% arising from the COVID-19 crisis
- Eligible employers must also retain its employees on its payroll
*In relation to the likely reduction in turnover of 25% or more, 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.
- Must all my employees be affected to avail of the Temporary Wages Subsidy Scheme?
Eligible employers can participate in the scheme in respect of any eligible employees on their payroll, including those on reduced hours, rehired staff who were temporarily laid off or staff temporarily laid off but retained on the payroll Employee.
- What is an eligible employee?
An eligible employee is someone who their employer cannot afford to fully pay because of the COVID-19 crisis who is being kept on the books of the employer. The employee must be on the payroll on 29 February 2020 and the employer must, between 1 February 2020 and 15 March 2020, have made payroll submissions for payments to the employee to Revenue with pay-dates between 1 Feb 2020 and 29 Feb 2020. There is no age restriction for employees to be eligible and it includes those employees on fulltime, part-time and short-time work arrangements.
- Is the scheme open to directors?
If directors are paid through the payroll system and are included in the relevant payroll submissions for an eligible employer, then they are eligible to receive the wage subsidy.
- What if an employee is in receipt of a DEASP Covid support?
Employers must not operate this scheme for any employee who is making a claim for duplicate support (e.g. Pandemic Unemployment Payment) from the DEASP. Where an employee previously laid off has been re-hired, the employee will qualify for the Subsidy scheme if their DEASP claim is ceased. Revenue will share data with DEASP.
- Can staff who are on sick leave and/or isolating qualify for the scheme?
If the eligible employer retains them on the payroll then they can continue to operate the wage subsidy scheme.
- If my employee has been laid off and claimed a jobseeker’s payment from DEASP, can an employer claim a subsidy?
Employers should not claim a subsidy in respect of an employee who is receiving a jobseeker’s payment from DEASP unless they rehire the employee and the employee notifies DEASP that they are “signing off” and re-joining their employer.
- Is an employee who resides in Northern Ireland eligible?
Employers can claim the subsidy in respect of cross border workers where the employee is exercising a contract of employment in the Republic of Ireland, and where the employer satisfies the conditions of the scheme.
Operating the scheme.
- How will Employers operate the Subsidy Scheme during the Transitional Period?
To avail of the wage subsidy, the wage subsidy plus any additional pay must not exceed the Average Net Weekly Pay.
Penalties will apply to any abuse of the Subsidy scheme by an employer self-declaring incorrectly, not providing funds to employees or non-adherence to Revenue, and any other relevant guidance issued.
- How do I calculate Average Net Weekly Pay
Most software packages have a built-in calculator for this. When processing a help and steps box automatically appears. Please feel free to contact us when getting ready to process your next payroll and we will happily walk you through it.
- When is the scheme starting from/Can I revise previous payments/Can I back-date?
- The scheme applies from 26 March, for payroll submissions relating to pay dates on or after 26 March. The expectation is that this would cover payroll for the week commencing Monday 23 March.
- Submissions made before the introduction of the Temporary Wages Subsidy Scheme, on 26 March 2020, cannot be processed under the Temporary Wages Subsidy Scheme and are covered under the previous Employer Refund Scheme.
- Submissions made on or after the introduction of the Temporary Wages Subsidy Scheme, on 26 March 2020, with a pay date prior to 26 March 2020 will be processed under the previous Employer Refund Scheme.
- Submissions made on or after the introduction of the Temporary Wages Subsidy Scheme, on 26 March 2020 with a pay date of 26 March 2020 or later will be processed under the Temporary Wages Subsidy Scheme.
- How should BIK for eligible employees be treated for the duration of the scheme?
Eligible companies can suspend the operation of BIK for eligible employees for the period that the employee is on the scheme. For employees covered by this scheme, BIK or notional pay does not need to be included in Gross Pay, however the notational pay will be liable to tax and USC on review at the end of the year.