The Emergency Measures in the Public Interest (Covid-19) Bill 2020 (the “Bill”) was published last night with details of a wage subsidy support payment scheme introduced as part of the response by the Government to COVID-19 (the “Scheme”). The Scheme is administered through the Revenue Commissioners and aims to provide a special subsidy to employers to incentivise retention of employees and avoid additional redundancies due to the ongoing pandemic.
The Scheme operates by permitting employers who satisfy certain conditions to obtain subsidies of up to 70% of a specified employee’s net remuneration. Where the employer has satisfied the criteria and applied the payment correctly, they will be reimbursed by Revenue.
The Scheme is to be administered under guidelines issued by Revenue and some guidance has been placed on the Revenue website at this point but it is somewhat lacking in detail.
Scheme Criteria
Specified Employees
The Bill provides that specified employees in relation to an employer means an individual who was on the payroll of the employer as at 29 February 2020, and both of the following conditions are met:
· the employer has submitted to the Revenue Commissioners a notification or notifications of the payment of emoluments to the employee in February 2020 in accordance with Regulation 10 of the Regulations; and
· the employer has submitted the monthly return with details of tax deducted for the month of February 2020 on or before 15 March 2020 (or 24 March 2020 where the return is made electronically and the payment of taxes was made at the same time).
Employers will need to note these conditions as the Scheme will not apply in respect of employees where these conditions are not met.
By way of comment, the above conditions may not have been met by many employers in light of unfolding events where they have not filed their employee PREM submissions on time. Given that the purpose of the conditions is to ensure the Scheme only applies to employees on an employer’s books in February, the conditions on return deadlines being met appear somewhat harsh and could inadvertently result in employers having to opt for laying off staff to manage cashflow.
Employers to whom the Scheme Applies
There are a number of other conditions that must be met by employers, these being:
· The business of the employer must be adversely affected with the result that the employer is unable to pay to a specified employee the emoluments the employer would otherwise have paid to him or her;
· The employer must show there is an intention of making best efforts to pay the employee some of the emoluments that would otherwise have been paid. In this regard, there is no guidance on what are best efforts and this may have to await the additional guidance from Revenue;
· The question of the adverse effect will need to be demonstrated to the satisfaction of Revenue in accordance with their guidelines – 25% reduction in turnover for the period 14 March to 30 June is required to be shown in this regard but the other conditions are unclear as yet; and
· There are certain details to be provided through MyEnquiries by the employer including a declaration to be signed and provision of details of employer bank account. These are listed in the Revenue guidance – see link below.
One point to note is that the Bill provides that all employers participating in the Scheme are intended to be listed on the Revenue website in due course. This is perhaps for State Aid reasons but employers should note that the adverse effect on their business will be made public.
Wage Subsidy
The wage subsidy potentially payable is as follows:
· Where the net pay (were it not for the Covid-19 emergency) payable was not more than €586 per week, an amount not exceeding 70% of the net weekly emoluments. This is not the same thing as €410 as if the net pay per week was €500, then the subsidy will be €350 (i.e. it cannot exceed 70% of the net pay that would have been payable);
· Where the net pay (were it not for the Covid-19 emergency) payable was more than €586 per week but not more than €960 per week, an amount to be determined by the Minister for Finance (this is expected to be €350 per week); and
· Where the net pay is in excess of €960 per week, no subsidy arises.
Whereas the first two categories above set out limits based on net pay that would have been payable were it not for the Covid-19 emergency, the last category does not contain such linkage. This may be relevant in considering the application of the scheme for usually higher paid employees.
Operation of the Scheme
The Revenue guidance published sets out the manner of operation of the Scheme from 26 March 2020.
This can be found here.
The payments will be refunded by the Revenue Commissioners.
Comments on the Scheme
Employers should be cognisant of the following restrictions when considering the Scheme:
· The condition that specified employees can only include employees where the PREM returns were filed on time by the employer for February 2020 will preclude employers who have filed such returns late. In such case, the alternative of laying off employees or placing them on short-time may be the only option to be considered to obtain assistance in this emergency for affected businesses;
· Once participation in the Scheme is taken up, employers will have to be seen to be making efforts to discharge the full amount of the emoluments of the employees that would otherwise have been payable. There is no guidance on what will be required to demonstrate this effort;
· Employers should note that their participation in the Scheme will be listed on the Revenue website; and
· Employers should note the lack of subsidy for higher paid employees although the wording of the legislation may provide some basis for inclusion of such employees where they are working under arrangements where their net pay has been reduced.
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