Revenue eBrief No. 117/20

23 June 2020

Temporary Wage Subsidy Scheme - Extension of the Temporary Wage Subsidy Scheme to August 2020 and update on a range of developments under the Scheme

The Temporary Wage Subsidy Scheme (TWSS) came into effect on 26 March 2020 initially to run for a 12-week period up to the week ending 18 June. The Minister for Finance and Public Expenditure and Reform announced on 5 June 2020 that the operation of the TWSS is extended to 31 August 2020. The purpose of this eBrief is: to confirm that the extension of the scheme does not alter how it currently operates; to clarify the application of the eligibility criteria following the scheme’s extension; and to set out how an employer can exit the scheme if they no longer require the support of the TWSS payments. Details of “lessons learned” to date relating to operational aspects of the scheme are also outlined.

The eBrief also provides updates on recent, and planned, developments including:

• Incorporation within the TWSS of apprentices who were on apprenticeship training and education programmes with SOLAS
• The bulk issue of Week 1 Revenue Payroll Notifications (RPNs) to employers in respect of employees in receipt of subsidies under the TWSS
• A facility in MyAccount for employees to look up how much wage subsidy their employer has reported in payroll submissions.

Details of the start of Revenue’s TWSS Compliance programme are also set out.

Eligibility to participate in the Temporary Wage Subsidy Scheme

The eligibility criteria to continue participating within the scheme or to now join the scheme remain unchanged.  The business must have suffered a significant negative economic impact as a result of the Covid-19 pandemic. The indicators of this are a minimum of a 25% reduction in turnover, customer orders or any other ‘reasonable basis’ for the three months to 30 June 2020, Quarter 2.  Details of the eligibility criteria are available on the Revenue website - eligibility criteria document.

In March/April when most businesses joined the scheme they had to make their best estimate about eligibility. For some it was clear cut in that they had to close their business due to public health restrictions, for others it may not have been as straightforward, for example, the construction sector shut down later and re-started trading, albeit in a different fashion, in Phase 1 of re-opening. Now, as we are near the end of Quarter 2, it is clear whether a business did in fact meet the eligibility criteria. If a business did not meet the eligibility criteria but had reasonable grounds for assuming it would, it should immediately cease claiming the subsidy for the extended scheme. Revenue will require evidence of the assumptions supporting the original self-assessment of eligibility and, once the basis is reasonable, will not seek to claw-back the subsidy paid for the original period.  If there was not a reasonable basis, the subsidy is repayable. 

Employers who consider they do not meet the eligibility criteria or who no longer wish to avail of the TWSS, should cease returning J9 PRSI Class payroll submissions to Revenue. Employers should also inform Revenue via MyEnquiries of their intention to exit the scheme and ensure the employee J9 PRSI Class (J9 submissions) is reverted on future payroll submissions for each employee to their normal PRSI class (Pre-Covid-19). Those employers who have stopped participating in the TWSS will be included in the reconciliation phase of the scheme and will be included in the list of TWSS participants published at the end of the scheme.

Calculation of the subsidy per employee

There is no change in the basis of calculation of the subsidy amount for the extended period and the arrangements in place since the start of the Operational Phase on 4 May 2020 continue. The wage subsidy rates remain as follows:

• Where the eligible employee’s Average Revenue Net Weekly Pay (ARNWP) does not exceed €412, a subsidy of 85% of ARNWP, to a maximum of €350, is applicable.  
• Where the ARNWP is more than €412 but not more than €500; a subsidy of €350 is applicable.
• Where the ARNWP is more than €500 but not more than €586, a subsidy of 70% of ARNWP is applicable to a maximum of €410.
• Where the eligible employee’s ARNWP is greater than €586 but not more than €960 and the employee’s current gross pay per week, as reported in the payroll submission, is:
  • not more than 60% of the ARNWP, a subsidy of €350 is applicable.
  • more than 60% and not more than 80% of the ARNWP, a subsidy of €205 is applicable.
  • more than 80% of the ARNWP, no subsidy is payable and J9 PRSI class should not be applied.
• Where employees’ ARNWP is more than €960, and where their current gross pay is below €960 per week and this represents
  • not more than 60% of the ARNWP, a subsidy of up to €350 is applicable.
  • more than 60% and not more than 80% of the ARNWP, a subsidy of €205 is applicable.
  • more than 80% of the ARNWP, no subsidy is payable and J9 PRSI class should not be applied.

Revenue has calculated employees’ ARNWP and provides this information along with other data such as the maximum weekly wage subsidy (MWWS) applicable and maximum weekly employer pay before tapering (MWEPBT) across the range of tiers to employers in respect of each of their employee’s active employments. The information is provided for download in the Employer ‘CSV file’.  Further details on the rates, tiering and tapering of the subsidy are available in Revenue FAQs.

The subsidy paid to some employees earning over €586 per week has been underpaid due to the interaction of gross and net pay – see section 1.2 of the FAQs.  Revenue is developing a solution whereby the underpaid subsidy amount will be calculated and paid directly to the employees affected towards the end of July 2020.

As the economy and business start to recover from the effects of the pandemic, and public health restrictions are lifted, employers are increasing the amounts of wages that they are paying. Where wages return close to or above each employee’s normal pre-Covid wages, the wage subsidy amounts available to employees through their employer will reduce through the tapering mechanism and, in some cases, may result in no subsidy being refunded. 

Lessons learned from operation of the scheme to date

The majority of TWSS payroll submissions are processed for refund the day after they are received by Revenue. However, there are J9 submissions in respect of which no refund issued.  The main issues that have arisen to date include:

• The refund has been processed but cannot be paid to the employer as there are no bank details available to make the refund. The employer must follow the steps set down in section 2.2 of the FAQs to provide Revenue with refund bank details. Once bank details are updated on ROS any pending refunds issue the following day
• PRSI Class of J9 was not used in the payroll submission claiming TWSS refund
• A previous line item correction was used to update a non J9 submission to a J9 submission
• The employer created additional employments where there are no qualifying payroll submissions and then made the J9 submissions under these new employment IDs
• The employer made a J9 submission without rehiring the employee correctly
• The employer is entering the subsidy figure in Gross Pay
• The level of payment made by the employer has reduced the subsidy to Nil
• The subsidy paid to the employee does not correspond with the employee’s Average Revenue Net Weekly Pay (ARNWP), the Maximum Weekly Wage Subsidy (MWWS) or the tapered value.

More detail on the issues outlined are available in section 5.6 of the FAQs.  Employers should review their processes, with particular reference to the FAQs, the ARNWP for each employee and other subsidy data provided by Revenue in the Employer ‘CSV file’. Employers are reminded not to amend or re-submit any TWSS payroll submissions as this may result in further non-processing of refunds. Employers are also reminded of the importance of accurate and timely information in data submitted so that subsidy payments are not delayed or stopped, or incorrect amounts claimed or refunded.

The legislation governing the scheme obliges an employer to include details of the subsidy payment on its employees’ payslips under the legend ‘GovCov19 WageSub’.  Revenue also notes, and welcomes, that a significant number of third-party payroll software has been re-developed to include the subsidy amount paid by employers to its employees on its regular payroll submissions to Revenue.

Week 1 Basis

TWSS payments made to employees are liable to income tax and Universal Social Charge (USC), while the Pandemic Unemployment Payment (PUP) is liable to income tax. However, the subsidy and PUP are not being taxed in real-time through the PAYE system and instead will be calculated as part of the employee End of Year review. With the continuation of the TWSS to the end of August 2020, to mitigate the possible impact on the employee End of Year review, Revenue will place all employees that received payments under either the TWSS or the PUP on a Week 1 basis. 

Notifications to employers to operate the Week 1 basis are available in ROS since 21 June 2020. It is important that employers utilise the most up-to-date Revenue Payroll Notification (RPN) when running payroll so that employees are correctly switched to the Week 1 basis as quickly as possible. Where an employee is already on the Week 1 basis no further action is needed.

Employee subsidy information viewable in myAccount

Details of TWSS subsidy payments being made to employers on behalf of employees are now viewable in each employee’s Revenue record, which can be accessed via myAccount. Through this facility, employees can see whether their employer is participating in the TWSS and being refunded a wage subsidy on their behalf. Employees can view this information by accessing the ‘Manage your Tax 2020’ link on the ‘PAYE Services’ card in myAccount and select the ‘View’ link beside the relevant employment. The employee should click on the ‘View’ link next to any payroll submission they wish to see.

Where employees identify discrepancies between the TWSS amounts shown in myAccount and those provided by the employer, Revenue advises employees to firstly contact their employer to have the matter rectified (employers are obliged to rectify any issue identified). If it is not subsequently rectified to the employee’s satisfaction, they should contact Revenue directly via MyEnquiries under the category 'PAYE (Pay As You Earn) employee/pensioner - Other' and the subcategory 'Employee Payroll Reporting - Compliance'.

Employees returning to work following a period of maternity or other related leave or, having been in receipt of Illness or other benefits paid by the Department of Employment Affairs & Social Protection (DEASP)

Employers who have employees returning to work following a period of maternity or other similar leave are reminded that that they can now claim wage subsidy in respect of such employees.  On 8 June last, Revenue implemented a change to the TWSS to accommodate employees returning to work:

• following a period of Maternity, Adoptive leave or related unpaid leave, or a period of Paternity, Parental or related unpaid leave,
• having been in receipt of Health and Safety or Parent's benefit paid by the DEASP for February 2020,
• having been in receipt of Illness benefit paid by the DEASP for February 2020

and may not have been on their employer’s payroll on 29 February 2020 or may not have been paid in January or February 2020.  Details are available in eBrief 106/20.

Apprentices Returning to Work

Following an announcement earlier today by the Minister for Finance and Public Expenditure and Reform, Paschal Donohoe TD, and recognising that the exclusion from the TWSS of apprentices on block release from their employers for training purposes was an unintended consequence, Revenue has implemented a change to the TWSS which will accommodate apprentices returning to work who, in February 2020, were on an apprenticeship education and training programme run by SOLAS and were not on their main employer’s payroll in February 2020. 

Employers wishing to access the TWSS subsidy on behalf of apprentices returning to work since 26 March 2020, should log on to ROS MyEnquiries, click ADD “A New Enquiry” and select the category “Covid-19: Temporary Wage Subsidy”, subcategory: “TWSS - Apprentices”. Revenue will then manually calculate a net weekly pay for each apprentice concerned and will create a revised ‘CSV file’ for the employer.

For each apprentice returned to the payroll by the employer, Revenue will apply the scheme retrospectively to the date of return to employment, or, the date the employer joined the scheme, or 26 March 2020, whichever is the latest. For apprentices who were ceased from payroll and in receipt of the Pandemic Unemployment Payment, no retrospection to TWSS can apply. However, employers may rehire these apprentices and can operate TWSS to subsidise their pay.

Compliance Programme

To ensure the TWSS is operating correctly Revenue is conducting a programme of compliance checks on all employers availing of the scheme and will be contacting all employers to confirm that:

• They meet the eligibility criteria;
• Employees are receiving the correct amount of subsidy; and
• The subsidy amount is being correctly recorded in employee payslips.

The compliance check programme will also address any identified issues in respect of the operation of Real Time PAYE (PMOD) by employers over 2019 and 2020 and will also provide an opportunity for employers to address any other outstanding tax issues. This will be of importance to employers who may intend to avail of the 'debt warehousing' scheme for Employer PAYE and VAT liabilities incurred during the pandemic period as up-to-date compliance will be a pre-requisite in order to avail of that scheme.   

Letters will issue to employers and their agents, where relevant, mainly through the ROS Inbox. The programme is expected to last for several months.

It is essential that employers respond promptly as failure to do so may lead to suspension of future payments.

Further guidance

Further guidance is available from Revenue’s website in the 'FAQ's on Guidance on the Operational Phase of the Temporary Wage Subsidy Scheme'.  Any queries can be sent via MyEnquiries to the National Employer Helpline.