The Temporary COVID-19 Wage Subsidy Scheme is aimed at providing financial support to employees affected by the COVID-19 pandemic. This new scheme came into effect on 26 March 2020. This scheme also serves to allow the relationship between employers and their employees to continue. Employers can apply to operate under the Temporary COVID-19 Wage Subsidy Scheme by applying on ROS under myEnquiries. The steps to apply can be found here.
Under this scheme, employers are able to pay a weekly subsidy payment, limited to a maximum amount, to their existing employees affected by COVID-19. Employers will be refunded this pay, plus the amount of any tax and USC refunded to each employee, after the payroll submission is made to Revenue.
Only submissions made on or after the 26th March 2020, with a Pay Date on or after the 26th March 2020, will be eligible under the Temporary COVID-19 Wage Subsidy Scheme.
SimplePay has a built-in item to accommodate the subsidy payment, top-up payment and submission requirements for employees that are catered for under the Temporary COVID-19 Wage Subsidy Scheme.
Employers looking to use the Temporary Wage Subsidy Scheme should read through the comprehensive Frequently Asked Questions on Revenue’s website.
Adding the COVID-19 Employer Refund Scheme Item
The Temporary COVID-19 Wage Subsidy Scheme item can be added on SimplePay as follows:
Add to a individual employee:
- Go to Employees
- Select an employee
- Select Add next to Regular Inputs
- Select the Temporary COVID-19 Wage Subsidy Scheme item
- Enter the Subsidy amount
- Enter the Top-up amount
Add to multiple employees:
- Go to Employees > Bulk Actions > Regular Inputs
- Change the filter from Basic Salary to Temporary COVID-19 Wage Subsidy Scheme
- Enter the Subsidy amount for all employees
- Enter the Top-up amount for all employees
- Save
For more information on Bulk Inputs, please refer to our help article here:
Employer CSV and Subsidy Calculator
From 4 May 2020 the scheme moved into its Operational Phase. In the Operational Phase, Revenue will make a CSV file available to all employers which will contain the employee’s Average Revenue Net Weekly Pay (ARNWP), maximum wage subsidy and maximum top-up payment permitted by the employer under the scheme. The CSV file will be available to download from ROS. You should use this CSV in conjunction with Revenue’s Online Subsidy Calculator found here to work out the correct amount of subsidy and top-up that you can pay your employees. You can upload the information in the CSV file into the Temporary Wage Subsidy Scheme – CSV Sample Subsidy Calculator file Revenue provides. Please follow the instructions in the calculator file in order to calculate the correct subsidy for each employee based on any top-up amounts you want to pay employees.
Note: If an employee is entitled to a subsidy, you must pay the employee the full amount.
If you won’t be paying your employees a top-up amount, you can simply use the maximum wage subsidy amount per employee in the CSV file.
If you intend to pay a top-up amount, it is advisable to use Revenue’s Online Subsidy Calculator. Revenue calculates the subsidy amount based on each employee’s ARNWP. Depending on the ARNWP of the employee and the top-up amount paid to the employee, the Subsidy amount refunded to the employer may be reduced (tapered) by Revenue to ensure the employee doesn’t receive more than they would have normally earned.
Note: The CSV file is available in ROS Employer Services under “Request RPN’s”. A new option is available called Download Temporary Wage Subsidy Scheme calculation.
The CSV can be opened in Excel or Google Sheets. If the employee’s ARNWP does not exceed €586, the maximum wage subsidy amount and maximum top-up amounts you can pay your employees can be found in the Tier1MWWS and Tier1MWEPBT columns respectively. For employees with an ARNWP above €586, you should use Revenue’s Online Subsidy Calculator to determine the correct subsidy amount.
How Revenue Calculates the Maximum Wage Subsidy and Top-Up Amounts
For Payroll Submissions made on or after the 4th May with a pay date on or after the 4th May, the wage subsidy amounts payable to an employee and refundable by Revenue, will be calculated by Revenue as follows:
An ARNWP less than €412
Where the employee’s ARNWP does not exceed €412, the wage subsidy will be calculated as 85% of the employee’s ARNWP up to a maximum of €350 per week and subject to tapering to ensure that the aggregate of the wage subsidy amount and the Gross Pay on the submission does not exceed the employee’s ARNWP. However, tapering will not apply where the aggregate of the wage subsidy amount and the Gross Pay on the submission does not exceed €350 per week.
An ARNWP more than €412, but less than €500
Where the employee’s ARNWP exceeds €412 but does not exceed €500, a flat rate subsidy of up to €350 per week applies subject to tapering to ensure that the aggregate of the wage subsidy amount and the Gross Pay on the submission does not exceed the employee’s ARNWP.
An ARNWP more than €500, but less than €586
Where the employee’s ARNWP exceeds €500 but does not exceed €586, the wage subsidy is calculated as 70% of the employee’s ARNWP subject to a maximum of €410 per week and subject to tapering to ensure that the aggregate of the wage subsidy amount and the Gross Pay on the submission does not exceed the employee’s ARNWP.
An ARNWP more than €586, but less than €960
Where the employee’s ARNWP exceeds €586 but does not exceed €960, the wage subsidy amount is dependent on the Gross Pay on the submission made by the employer as follows:
- Where the Gross Pay on the submission does not exceed 60% of the employee’s ARNWP, a subsidy of up to €350 is payable, subject to tapering.
- Where the Gross Pay on the submission is greater than 60% but does not exceed 80% of the employee’s ARNWP, a reduced subsidy of up to €205 is payable, subject to tapering.
- Where the Gross Pay on the submission is greater than 80% of the employee’s ARNWP, no subsidy is payable. PRSI should be operated at the individual’s normal PRSI Class, to do this you will need to remove the Temporary COVID-19 Wage Subsidy Scheme item from the payslip.
An ARNWP more than €960
Where the employee’s ARNWP exceeds €960, the wage subsidy amount is dependent on the Gross Pay on the submission made by the employer as follows:
- Where the Gross Pay on the submission does not exceed 60% of the employee’s ARNWP and does not exceed €960, a subsidy of up to €350 is payable, subject to tapering.
- Where the Gross Pay on the submission is greater than 60% but does not exceed 80% of the employee’s ARNWP and does not exceed €960, a reduced subsidy of up to €205 is payable, subject to tapering.
- Where the Gross Pay on the submission is greater than 80% of the employee’s ARNWP or greater than €960, no subsidy is payable. PRSI should be operated at the individual’s normal PRSI Class.
Note: Where there are no other payslip items besides the Temporary COVID-19 Wage Subsidy Scheme, the Gross Pay on the submission will be equal to the Top-Up amount.
How do benefits-in-kind, allowances and other income types impact the Maximum Wage Subsidy and Top-up Amount?
You may receive a warning on SimplePay that asks you to reduce the Top-up amount in the Temporary COVID-19 Wage Subsidy Scheme system item.
The warning appears because the total Gross Pay and Subsidy amount cannot be greater than the ARNWP. The Gross Pay amount includes top-up amounts, benefits, allowances and other income items. You must therefore reduce the Subsidy amount by the total of the other system items that impact Gross Pay.
For example:
Suppose that the following has been calculated for an employee:
- ARNWP = €400
- Max allowable subsidy = €280 (0.7 x €400)
- Max allowable top-up = €120 (400 – 280)
If you then capture a benefit-in-kind on the system of €50, you must reduce the subsidy amount to €230, and capture the following on the system:
- Subsidy amount = €230 (€280 less €50 benefit-in-kind)
- Top-up amount = €120
- Benefit-in-kind = €50
Should you fail to do this, the calculated wage subsidy that you pay for an employee may be tapered. This tapering may result in you receiving a smaller refund, or in some cases, no refund at all from Revenue.
Can I correct submissions already made for COVID refund scheme?
Once a submission is made to Revenue with a J9 PRSI class, it is extremely important to ensure that the payroll submission is not subsequently deleted or amended. As Revenue’s systems were developed quickly to cater for the Temporary COVID-19 Wage Subsidy Scheme, attempts to delete or amend previous COVID refund submissions may cause further difficulties for employers and may disrupt the refund process. In any such cases, a detailed message should be submitted to Revenue through myEnquiries seeking further instructions.
PRSI Class J9
Revenue requires that the payroll submission contains a PRSI class of J9. This PRSI class lets Revenue know that the employee has been paid under the COVID-19 Employer Refund Scheme. Revenue will refund the employer the day after the payroll submission is made.
Note: You do not need to make any changes to the employee’s PRSI class or PRSI exemption status, this is done automatically when the COVID-19 Employer Refund Scheme item is added.
Application of Revenue’s Recommended €0.01 Pay Amount
Revenue have stated that a pay amount of €0.01 should be included in Gross Pay if no Top-up amount is captured, this is not the case when using SimplePay. No amount is needed under Basic Salary for you to run your payroll, meaning the payslips’ basic salary will read zero. Revenue has communicated directly with SimplePay to confirm that the €0.01 is not required and employers will still receive a refund when submitting €0.00.
How to Apply to the Scheme:
Employers, and their agents, will need to apply to Revenue to operate the Temporary COVID-19 Wage Subsidy Scheme. To do this, please follow the steps outlined by Revenue in the “Registering for the Temporary Wage Subsidy Scheme” section. Employers, already registered with Revenue for the purposes of the Employer COVID-19 Refund Scheme, are not required to take any further action.
Employees on the Scheme for a Partial Period
Employees that are paid monthly or fortnightly, and are covered under this scheme for a partial period, will need to have their pay frequency changed to weekly. This will allow employers to correctly pay their employees for the period they worked whilst not under the scheme, with the correct Income Tax, USC and PRSI being calculated and submitted to Revenue. You can add the Temporary COVID-19 Wage Subsidy Scheme item for those weeks worked.
Subsidy Amount (Transitional Phase – Pre 4 May 2020)
The Subsidy amount entered should be equal to 70% of the employee’s net weekly pay, with:
- a maximum of €410 per week where the Average Net Weekly Pay is less than or equal to €586; or
- a maximum of €350 per week where the Average Net Weekly Pay is greater than €586 and less than or equal to €960
The subsidy is available for employees whose ARNWP was greater than €960, and their current gross pay is below €960 per week, subject to the tiered arrangements and tapering.
Where the current gross pay, as reported in the payroll submission, represents a reduction from the ARNWP by:
- less than 20%, no subsidy is payable
- between 20% and 39%, a subsidy of up to €205 is payable
- 40% or more, a subsidy of up to €350 is payable.
The Subsidy amount will not be subject to Income Tax, USC or PRSI.
Please note: the subsidy amount is reckonable income, which may be taxed at a later stage by Revenue. Revenue will be providing information on this on their website.
Top-Up Amount (Transitional Phase – Pre 4 May 2020)
If an employer wants to make a taxable payment to their employee, they can capture an amount less than or equal to 30% of the employee’s Average Net Weekly Pay in the Top-up amount field. This amount will be included in Gross Pay and will be subject to Income Tax, USC and PRSI as calculated by the RPN. However, there will be no employee PRSI applied and the employer PRSI will be reduced to 0.5% of the top-up payment.
Note that if the employer captures more than 30% in the Top-up amount field (i.e. the employee receives more than their Average Net Weekly Pay), Revenue may reduce the Subsidy amount refunded to the employer.
For situations where the Average Net Weekly Pay is between €586 and €960, the maximum of €350 per week may be less than 70% of the employee’s Average Net Weekly Pay. In such cases, employers may pay a top-up of more than 30% to cater for this difference.
The maximum top-up payment an employer can make, to receive the full subsidy, is the difference between the employee’s Average Revenue Net Weekly Pay and their maximum weekly wage subsidy.
Calculating the Average Net Weekly Pay (Transitional Phase – Pre 4 May 2020)
For Payroll Submissions made before the 4th May or with a pay date before the 4th May, employers were required to calculate the employee’s Average Net Weekly Pay in order to calculate the Subsidy and Top-Up amounts. To calculate the Average Net Weekly Pay, employers must use the values in the payroll submission for each pay date in Jan and Feb 2020:
- Take the employee’s “Gross pay” and from it subtract the “Income Tax Paid”, the “USC Paid” and the “Employee PRSI Paid“.
- Total this figure for each pay date in Jan and Feb 2020 and divide this by the number of insurable weeks (capped at 9) for the period.
- This gives you the employee’s average pay that is to be used for the Subsidy amount field.
Revenue has published guidance in the form of Frequently Asked Questions, which provide a worked example for the calculation of the employee’s Average Net Weekly Pay. This can be found here.