Running Payroll in the midst of COVID-19 (Sponsored)

Mar 20, 2020

Employer COVID-19 Refund Scheme

On 15 March 2020, the government announced a new scheme known as the Employer COVID-19 Refund Scheme, administered through the Department of Employment Affairs and Social Protection (DEASP) and Revenue, enabling employers to make a special support payment of €203 per week to employees who have been temporarily laid off as a result of the COVID-19 outbreak.

This scheme aims to ensure that employees are able to access some form of benefit payment quickly without employment having to be ceased and that they will not have to immediately make claims for Jobseekers Benefit from DEASP.

Employers will make these payments on a tax free basis as part of their payroll run and will be refunded by Revenue based on the payroll submissions that are reported.

Eligible employers

All employers who are in a position to participate in the Covid Employer Refund Scheme are encouraged to do so, provided they:

  • Are registered on Revenue Online System (ROS)
  • Register for the new Employer Covid-19 Refund scheme
  • Are up to date with their payroll returns.

Eligible employees

Those employees who come within the scheme:

  • are employees who have a PPSN;
  • are employees who have been working with the employer;
  • are employees who have been temporarily laid off and who are, therefore, eligible for the Covid-19 Pandemic Unemployment Payment;
  • are etween 18-66 years old;
  • were included on a payroll submission made by the employers from 1 February 2020 to 15 March 2020;
  • have not ceased as an employee with Revenue; and
  • are receiving no other wage payment from their employers. This includes wage top-ups, overtime, shift allowances, on-call payments so that the only additional payment on the payroll should be wages of €0.01.

How the scheme will operate

Employers will run a very particular payroll for eligible employees such that the payroll entry includes:

  • a gross taxable payment of 1 cent;
  • a non taxable payment of €203; and
  • PRSI Class 'J9'.

When this payroll is submitted to Revenue, it will trigger a refund process which will see the employer refunded within a couple of working days. Revenue create their bank file at midday every week day. If you make a qualifying submission today, your refund will be included in the next day’s bank file. You should receive the refund one or two days after that.

Employees who are taxed on a cumulative basis are likely to see refunds of both PAYE and USC, and Revenue are keen that such refunds are paid to the employee. Such refunds of PAYE and USC will be reimbursed to the employer along with the €203 as part of the refund process.

If employers can manage to prepare their payroll submissions in a timely manner, it is likely that they will receive the refund before they actually pay their employees. If you were to submit to Revenue on Monday, you should receive the refund before you pay your employees on Friday. This could be very important to businesses that are struggling with cash flow.

Revenue will be calculating the amount of each refund based on the following:

  • Pay Frequency — €203 for weekly, €406 for fortnightly and €812 for monthly and four-weekly.
  • Amount of PAYE and USC refunded.

If employers are paying on a monthly basis and they have to lay off staff in the middle of a month, it is likely that they will have to switch to running a weekly pay frequency in order to split the payments between salary and benefits. The same would apply to fortnightly and four-weekly pay frequencies.

Possible issues

This refund scheme has been implemented at very short notice and, while DEASP, Revenue and Software Providers have worked hard to get it up and running, it must be remembered that it is not a perfect solution and there are likely to be some problems along the way.

While payroll software has been updated to cater for these procedures, the development occurred in a matter of days and it is not possible to develop for all scenarios.

Ultimately, it is up to individual employers to make decisions as to whether or not individual employees are entitled to these payments, and while the process is relatively easy at the moment, it is likely that there will be stricter report requirements at a later date. Eventually employers will have to make some kind of statutory declaration covering such payments, and where errors occur it is likely the employer who will be liable.

Working from home

More and more employers are taking the sensible approach and facilitating employees to work from home where possible. For tax practitioners and payroll bureaus, it is likely that some of their staff will be running client payrolls from home.

If payroll operators are running such payrolls on laptops or PCs provided by their employer then that is probabally secure enough. However, there could be significant GDPR issues if they have restored copies of client payrolls onto their own personal PCs. How secure are these PCs and who has access to them? Have you advised your clients that their payroll data is being processed offsite? These issues need to be given very serious consideration.

CollSoft Payroll Update

We have released updates to our Payroll Software to help employers easily process payments made under the Employer COVID-19 Refund Scheme. We would encourage all of our customers to download and install the latest update from our website https://www.collsoft.ie or to call our helpdesk at (046) 90 50 800 for more assistance.

(This article is sponsored by CollSoft Payroll.)