The Emergency Measures in the Public Interest (COVID-19) Act 2020 (the Act) includes the latest in a raft of emergency income support measures to support employers and employees adversely impacted by the Covid-19 pandemic – the State funded wage subsidy scheme (the Subsidy Scheme). While initially welcomed by employers as a means of “keeping the lights on” and continuing to employ staff with the benefit of some wage funding from the State, important questions are being asked about how the Subsidy Scheme will operate in practice.

• How can employers clearly evidence their business has suffered a 25% decline in turnover or customer orders?
• Why are employees who earn in excess of €76,000 seemingly out of scope?
• To what extent does an employer have to show it has made “best efforts” to pay wages and/or top up affected employees’ income? 
• What does it mean to be “unable to pay” wages?

We summarise below the key features of the Subsidy Scheme. Revenue will operate the Subsidy Scheme and has published FAQs. We will continue to keep you updated via our dedicated COVID-19 hub.

The Subsidy Scheme

Subject to the employee satisfying the eligibility requirements and the employer satisfying the qualifying conditions detailed below, the Subsidy Scheme will reimburse the following amounts:

How do you know if you can avail of the Subsidy Scheme? 

There are a number of pre-conditions that employers will need to satisfy before availing of the Subsidy Scheme including:

1. Self-declare: the employer will be required to self-declare to the Revenue that its business has been adversely affected as a result of COVID-19;
2. Demonstrate: the employer must be able to demonstrate (1) it has experienced at least 25% decline in turnover or customer orders (between 14 March 2020 and 30 June 2020); and (2) an inability to pay wages/outgoings;
3. Payroll: the employer must continue to employ benefiting employees by keeping them on the payroll; and
4. Top-up: the employer is required to use its “best efforts” to top up salaries. It is unclear to what extent an employer will be required to demonstrate such efforts.

Who is in scope? 

Employees (at a certain salary level as detailed below) are eligible to avail of the Subsidy Scheme where:

1. They were paid by their employer between 1 February 2020 – 15 March 2020;
2. They were on their employer’s payroll on the snapshot date of 29 February 2020; and
3. They remain on their employer’s payroll during the Subsidy Scheme period.

It is intended that the Subsidy Scheme will replace the current COVID-19 Refund Scheme and employees of private sector companies, whether carrying out their duties (as normal or on short-time) or not at all, will benefit from the Scheme – subject to the eligibility requirements set out above. However, any employees availing of other COVID-19 payments, such as the COVID-19 pandemic unemployment payment of €350 per week, cannot avail of the Subsidy Scheme.

How long will the Scheme run?

Once up and running, it is currently intended that the Subsidy Scheme will run for 12 weeks, although this timeframe may be reviewed depending on the development of the Covid-19 situation.

Are there sanctions to consider?

Yes. The Bill provides for penalties and interest for an abuse of the Subsidy Scheme or failure to pay the subsidy amount to in scope employees.

What next?

The introduction of the Subsidy Scheme and enhancements to other income support measures in connection with the COVID-19 pandemic are vital steps forward in the Government’s efforts to balance the public health and economic priorities of the country. The intentions behind the Subsidy Scheme to keep employees employed and maximise the State’s ability to hit the ground running post-pandemic, make sense. However, the workings of the Scheme in practice still need to be ironed out to ensure it is fit for purpose.

We will continue to keep you abreast of all developments via our dedicated COVID-19 hub.

Contributed by: Richard Smith

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