On 15 April 2020 the Minister for Finance issued a press release on the TWSS. The press release is summarised as follows:
- The TWSS was introduced on 26 March 2020 to provide income support to eligible employees where the employer’s business activities have been negatively impacted by the COVID-19 (Coronavirus) pandemic, where certain conditions are met.
- The aim of TWSS is to maximise staff retention and firm viability by maintaining the link between the employer and employee.
- By 15 April 2020, over 43,000 employers have registered for TWSS and over 26,000 of these have already received a refund. Over 255,000 employees have already received at least one payment under TWSS and approximately 84% of employees have 00000received a top-up payment from their employer.
- The TWSS legislation enables the Minister for Finance to determine the amount of the temporary wage subsidy, including in relation to those earning in excess of €586 per week (€38,000 pa).
- The Minister for Finance acknowledges that “as the scheme has been developed at speed there are imperfections and anomalies arising, including for lower-paid employees”.
- Therefore, on 15 April 2020 the Minister for Finance announced further changes to TWSS which will apply to those earning less than €500 per week (approx. €31,000) as well as those earning in excess of €586 per week (€38,000).
- Employees with net pay less than €586 per week (€38,000)
- For employees with previous average net pay up to €412 per week (equivalent to almost €24,400) the subsidy will be increased from 70% to 85% of their previous net weekly pay.
- For employees with previous average net pay between €412 and €500 per week (equivalent to €24,400 - €31,000), the subsidy will be up to €350 per week.
- Where an employer wishes to pay a greater level of top-up - beyond the outstanding 15% of previous pay - (in respect of employees with net pay less than €412 per week) in order to bring the employee’s pay to €350 per week then tapering would not be applied to the subsidy.
- There are no changes in respect of those whose previous average net pay was between €500 and €586 per week (equivalent to €31,000-€38,000), who will continue to receive a subsidy of up to 70% of previous net income, up to a maximum of €410 per week.
- The above changes mean that more employees will now receive a subsidy of €350 per week, and those with previous net pay below €412 per week will now receive a greater level of subsidy.
- Employees with net pay in excess of €586 per week (€38,000)
- For employees with previous net pay in excess of €586 per week (equivalent to €38,000), a tiered approach will apply.
- The maximum subsidy payable for these remains €350 per week.
- The tiered approach takes into account both the amount paid by the employer and the level of reduction in pay borne by that employee as follows:
Gross Amount paid by Employer Subsidy Up to 60% of employee’s previous average net weekly pay Up to €350 per week Between 60% and 80% of employee’s previous average net weekly pay Up to €205 per week Over 80% of employee’s previous average net weekly pay No subsidy payable
o Minister Donohoe has also determined that the wage subsidy is now available to support employees where the average net pre-COVID-19 salary was greater than €76,000, and their gross post-Covid salary has fallen below €76,000. The tiered arrangement applicable to gross incomes in excess of €38,000 will apply in such circumstances.
o Therefore, if an employee was earning over €76,000 gross and has now been reduced to below €960 net pay a week, and their reduction is more than 20% then a subsidy of up to €205 would be payable and if the reduction was more than 40% a subsidy of up to €350 would be payable. To calculate the level of subsidy payable, current gross pay will be compared with previous average net weekly pay for January/February. This subsidy will be tapered so as to ensure that the total net income (employer contribution + wage subsidy) does not exceed €960 net per week.
- The above changes will apply for payroll with a pay date on or after the 4 May and received by the Revenue Commissioners on or after that date (no back-dating of increased subsidy will apply).
- Revenue are currently making the necessary changes to their systems to implement these changes and move to phase two of the scheme. This phase will see a personal subsidy amount paid in respect of each employee and recoupment of any amounts overpaid to employers during the introductory interim phase.
If we can be of assistance in relation to any aspect of the above, or if you have any other tax related queries, please don’t hesitate to contact me, or your usual Smith & Williamson tax contact.
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of publication.
Government and Tax legislation, sourced from Revenue, is that prevailing at the time, is subject to change without notice and depends on individual circumstances. Clients should always seek appropriate tax advice from their financial adviser before making financial decisions.