As businesses begin to re-open following the lifting of Covid-19 restrictions, the Temporary Wage Subsidy Scheme provides valuable support for eligible employers. Nikki Johns shares some tips how to operate this scheme through your payroll.
The Covid-19 lockdown restrictions forced many businesses to lay off staff. Now, as businesses begin to re-open, it is important to correctly manage the payroll aspects of returning to work and avail of any relevant supports.
Temporary Wage Subsidy Scheme
One of the most valuable supports for employers is the Covid-19 Temporary Wage Subsidy Scheme (TWSS). This scheme, which was introduced in March 2020 to encourage employers to keep employees on their books during the Covid-19 lockdown, is operated by Revenue. It provides a subsidy for employees who are temporarily laid off or whose hours are reduced due to the impact of the pandemic. The subsidy is paid through the employer’s payroll system. When originally announced, the TWSS was due to operate for 12 weeks from 26 March however it was recently extended and, at the time of writing, is now due to run until 31 August 2020.
TWSS FREQUENTLY ASKED QUESTIONS
- How can I find out if my business is eligible? Businesses other than those in the public service and non-commercial semi-state sector can register for the TWSS provided they have experienced a significant downturn in turnover due to the COVID-19 pandemic.
- What is a ‘significant downturn’? Your turnover must be down by at least 25% in Quarter 2, 2020.
- What support is available through the TWSS? If your business is eligible, you may be entitled to a refund of up to 85% of eligible employees’ normal net pay. Eligible employees are those who were on your payroll in February 2020.
- How will I know what level of subsidy applies to each employee? Revenue will calculate the relevant subsidy amounts for you based on each employee’s average net earnings in January and February 2020. Revenue will make these calculations available through a CSV file that is downloaded from ROS and uploaded into your payroll software.
- Where can I find more information about the TWSS and how do I register for the scheme? Further information on the qualification criteria for the TWSS and guidance on how to operate the scheme are available on the Revenue website. To register for the scheme, you must make a self-declaration through the MyEnquiries section of the website.
How to ensure the TWSS operates smoothly for you and your employees
To receive the TWSS refund from Revenue, you must ensure that all relevant employees are on the J9 PRSI code.
Employees who have been receiving the Pandemic Unemployment Payment (PUP) and will now be moving on to the TWSS scheme, will need to end their PUP on the day they rejoin your payroll. Otherwise, if they continue to receive the PUP at the same time as the TWSS, they may have to repay money.
Former employees whose payroll status is ‘ceased’ will need to be re-hired if they are returning to work. This means they will need a new employment ID number. You will need to request an updated Revenue Payroll Notification (RPN) at least 24 hours before you run your payroll to ensure that these employees are included in Revenue’s TWSS calculations.
The subsidy amount and maximum top-up payment for each employee are calculated by Revenue based on their average net pay in January and February. Note that you cannot pay an employee less than the subsidy amount that Revenue provides. If you want to pay less, then you should process the relevant employee’s pay outside of the TWSS. Likewise, you cannot top-up an employee’s pay to higher than their average net pay as calculated by Revenue. If you want to pay more than the maximum top-up, you should process the employee’s pay outside of the TWSS. Obviously, where payments are processed outside the TWSS, you will not receive a subsidy for these employees.
Many businesses outsource their payroll. In this situation, it is vital to inform your payroll provider of any changes as early as possible so that your payroll can be processed correctly and on time.
On the 23rd of July 2020, the Government announced a new scheme to replace the TWSS. This scheme is called the Employment Wage Subsidy Scheme (EWSS) and will run alongside the TWSS until 31 August. From 1 September 2020, the EWSS will replace the TWSS and will run until 31 March 2021. Businesses must be able to demonstrate a 30% reduction in turnover to qualify for the scheme, and the scheme will provide a flat-rate subsidy to qualifying employers based on the numbers of paid and eligible employees on the employer’s payroll. Further guidance on the operation of the EWSS is expected in the coming days.