COVID-19: Clarity Needed on Changes Announced to the Temporary Wage Subsidy Scheme

The Temporary Wage Subsidy Scheme (TWSS) was introduced on 26 March 2020, for a period of 12 weeks, to provide support to employers who would otherwise have been forced to lay off employees due to the COVID-19 pandemic. The primary aim of the TWSS is to maintain employees’ jobs for the period of lockdown so that when businesses resume normal operations they will be able to restart commercial activity as quickly as possible.

Updates to the TWSS

The TWSS was drafted in haste and anomalies became apparent in its practical application by employers. Minister Donohoe announced changes on Wednesday 15 April to how the TWSS will be applied in light of these anomalies and to implement the previously flagged “Phase 2” of the TWSS. Phase 2 will now commence from 4 May 2020 (rather than 20 April as previously published).

The changes that employers should be aware of include:

• The subsidy will increase from 70% to 85% for employees with a previous average net pay below €412 per week

• The subsidy will be up to €350 per week for employees with a previous average net pay between €412 and €500 per week

• The subsidy will be up to €410 for employees with a previous average net pay of between €500 and €586 per week

• A tiered system has been introduced for employees with a previous average net pay of over €586 per week as follows:

  • A subsidy of up to €350 will apply where employers are paying up to 60% of an employee’s previous average net weekly pay

  • A subsidy of up to €205 per week where employers are paying between 60% and 80% of an employee’s previous average net weekly pay

  • A subsidy will not be payable where employers are paying over 80% of an employee’s previous average net weekly pay

The tiered system will now also apply to employees whose previous net pay was more than €960 per week but who have now had their pay reduced to below that amount as consequence of the pandemic.

The above rates apply from 4 May and will not be backdated. There is no change to the qualification criteria for employers.

Although these changes were announced in an effort to resolve anomalies in the original TWSS structure, there are still many questions relating to how these changes will operate in practice. Revenue have advised that further guidance will be published shortly, which will hopefully provide clarification.

Conclusion

These changes ensure that more employees are eligible for the TWSS and they provide a welcome increase to the subsidy for employees who had a previous average net pay of less than €412 per week.

However, outstanding queries remain on certain aspects of the changes, and clarity from the Revenue Commissioners is eagerly awaited, which we will let you know about once it is published.

This article provides an only a brief outline of the changes recently announced by the Irish Government. The mechanics of the TWSS, to include the recently announced changes, are very technical. Please contact a member of the Employment and Benefits team if you are considering applying for the scheme or if you have any queries in light of the recent changes.

For expert advice on navigating the novel issues arising as a result of the COVID-19 pandemic, contact a member of our Employment & Benefits team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.