Temporary COVID Wage Subsidy Scheme – treatment of employer top-up-payments

Apr 06, 2020

Under the terms of the scheme, an employer can make an additional payment or ‘top-up-payment’ to their employee to fully or partially make up the difference between the amount provided by the subsidy scheme and the employee’s Average Net Weekly Pay.   According to updates to Revenue’s FAQs (section 1.6) published yesterday, such additional payment cannot be regrossed, the payment is treated as gross pay and liable to Income Tax and USC according to the employee’s tax credits and rate bands.  

The legislation (Part 7) is silent on the calculation of the ‘top-up-payment’ and the treatment of such payment, so much depends on Revenue’s operation of the scheme and their guidance.   Such guidance is updated regularly, the FAQs are at version 5 since their first publication two weeks back.  We therefore recommend that members review the current Revenue guidance and keep a watch out for our timely updates which we are publishing to our COVID hub.  We will continue our regular engagement with Revenue and other government agencies to clarify operation of the scheme and other related tax measures. 

Revenue has also added examples to the FAQ document (sections 4.4.1, 4.4.2, 4.4.3) showing how to calculate the Average Net Weekly Pay, the impact of the ‘top-up-payment on the amount of the subsidy the employer will receive and the PRSI class.  It is worth reviewing the examples to better understand how Revenue are operating the scheme.   Please also bear in mind that the Temporary Wage Subsidy Scheme is a government measure to provide financial assistance to employers and support their efforts to retain employees.  Any payments or repayments to Revenue under the scheme are to/from employers, not too and from employees.   

Some details on the Revenue reconciliation of refunds received and amounts due to employers under the scheme are included.  Revenue say that further details on how they will administer the reconciliation and recover any amounts owing to them will be published in due course.