Wage Subsidy Scheme

[Sunny]

Does anyone know how this scheme works? My wife works for a large company directly impacted by this crisis. Before this scheme was announced, her company reduced the hours worked and pay by 50% for the months of April and May. So basically the company agreed to pay 50% of the salary for everyone.

We then had a position where this scheme was announced where the State will basically pay 70% of the average net weekly salary up to €410 a week and the company can top up if they are in a position to do so. My wife and all other employees took this to mean that they won't be down to 50% of the salary as the State has stepped in and the Company had already agreed to pay 50% and so most have been in a position to pay. Now the company has turned around and said that employees pay will basically be the €410 and the company will top this up if necessary to ensure that employees get 50% of their average Salary. My wife works part time so social welfare is now basically paying her entire wage and the company who was in position to pay before this scheme was announced is paying nothing or a nominal amount. There is also no incentive to work for those months either. She is going to work knowing that it the taxpayer that is paying her salary. I thought the idea of the scheme was an alternative for company's rather than letting off staff and to ensure that employees would keep as much income as possible. I didn't know large companies with large cash reserves and thousands of employees who said they were in a position to pay 50% salary for two months are basically using the scheme to have a zero payroll for those months.

The taxpayer is getting screwed on this.

 

[Purple]

That's not in the least bit surprising. "If it's there then why not take it" has been the mantra for generations of people on welfare and not it seems that businesses are doing the same.

 

[seamus m]

Naming and shaming these companies might get them to change their ways Liverpool have reversed decision to furlough

 

[Towger]

Hi Sunny,

TWSS is not what you think it is, or what her employer thinks! It is far more complex than handing out €410 to people. Don't worry about the tax payer, they are not getting screwed by TWSS. PUP is another story! BTW your wife may be better off on PUP and if her employers thinks they can hand out €410 they are in for a hard shock.

Revenue TWSS FAQ: https://www.revenue.ie/en/employing...on-of-temporary-covid-wage-subsidy-scheme.pdf

 

[Sunny]

Hi Sunny,

TWSS is not what you think it is, or what her employer thinks! It is far more complex than handing out €410 to people. Don't worry about the tax payer, they are not getting screwed by TWSS. PUP is another story! BTW your wife may be better off on PUP and if her employers thinks they can hand out €410 they are in for a hard shock.

Revenue TWSS FAQ: https://www.revenue.ie/en/employing...on-of-temporary-covid-wage-subsidy-scheme.pdf

But it's not. She has got her first play slip. She previously worked 10 days a month. This has been reduced to 5 days a month that the employer said they would pay before this scheme was announced. She is now 100% paid by the taxpayer through the wage subsidy scheme with no contribution from the employer. This isn't a mickey mouse company. This is one of the largest employers in the country. So her company expects her to work on the frontline in a certain industry for 5 days a month but expects the taxpayer to pay the bill...

 

[Towger]

Hi Sunny,

Being one of the the largest employers in the country does not make them correct. Last week at least two of the largest accountancy firms in the country were giving out 'lacking' advice to their customers. Revenue have since updated their FAQ to point out this 'miss communication'. See the underlined words in FAQ 5 Section 1.6. It would be a good bet her employer uses one of these large firms.

Very simple version (condensing 22 pages of rules):

The Wage Subsidy the employer is allowed to pay is based on Revenue's 'Average Net Weekly Pay' for January and February. See section 4.4 of Revenue FAQ.

Wage Subsidy
70% of the 'Revenue Average Net Weekly Pay'
Capped at Zero if > 960 = Employee does not qualify for TWSS.
Capped at 350 if > 586

Max Top-Up:
'Revenue Average Net Weekly Pay' less 'Wage Subsidy'

Wage Subsidy is payed to Employee as Net Pay. Note: It is treated by Revenue as reconcilable Earnings, they will collect Tax/USC on it later.
Top-Up = All Gross Pay.

For each euro Gross Pay exceeds Max Top-Up a euro will be deducted from Wage Subsidy.


The net result is for many employees (but not all etc etc) is, it is not possible to pay their full Subsidy and normal take home Net Pay. You can even get into a spiral with the Subsidy reduced down to zero. At which point Revenue want their PRSI Class to revert from J9 to their normal class, which changes the calculation yet again!

 

[Sunny]

You are missing my point. The company is not wrong in how they applied the scheme. I know how the scheme works. My point is the employer was in a position to pay 50% of employee wages before the Government announced this scheme. Despite the fact that the company was in a position financially to pay 50% of my wifes wages, when the Government announced this scheme, her company decided that the State should pay 70% of her average net pay and they should contribute 0%. So my wife ends up working for 5 days a month with no basic pay from her employer in the form of any top up and receives the €410 per week whether she works or not. The €410 is less than her average weekly wage so the company could top up her pay to the average weekly wage as one of the main points of the scheme is that employees get as much as their normal weekly net pay as possible. She would have been nearly as well off being temporarily let go. The taxpayer is also losing out because the company who stated they would pay 50% is now paying zero with the full burden falling on the taxpayer.

The scheme is great but taxpayer shouldn't be subsidizing large publically quoted companies for a penny more than they need to.

 

[Baby boomer]

The taxpayer is also losing out because the company who stated they would pay 50% is now paying zero with the full burden falling on the taxpayer.

The scheme is great but taxpayer shouldn't be subsidizing large publically quoted companies for a penny more than they need to.

Would this "large publicly quoted company" be Ryanair by any chance?

 

[seamus m]

You are missing my point. The company is not wrong in how they applied the scheme. I know how the scheme works. My point is the employer was in a position to pay 50% of employee wages before the Government announced this scheme. Despite the fact that the company was in a position financially to pay 50% of my wifes wages, when the Government announced this scheme, her company decided that the State should pay 70% of her average net pay and they should contribute 0%. So my wife ends up working for 5 days a month with no basic pay from her employer in the form of any top up and receives the €410 per week whether she works or not. The €410 is less than her average weekly wage so the company could top up her pay to the average weekly wage as one of the main points of the scheme is that employees get as much as their normal weekly net pay as possible. She would have been nearly as well off being temporarily let go. The taxpayer is also losing out because the company who stated they would pay 50% is now paying zero with the full burden falling on the taxpayer.

The scheme is great but taxpayer shouldn't be subsidizing large publically quoted companies for a penny more than they need to.

Your wife should be claiming covid payment of 350 and company still paying her for 5 days work with her being up and not company .It is also a problem with covid payment .

 

[Wahaay]

I have laid off my eight staff from the end of this month.
I had hoped to use this scheme to keep them on but Revenue guidelines say companies with substantial cash reserves are expected to pay a significant proportion of their staff wages even while availing of the scheme.
My problem is there is no legal definition of " substantial " or " significant proportion " which lays me open to a future Revenue audit with possible repayment of funds plus interest and even penalties.
Quite apart from that I'm being expected to drain cash reserves built up over many years to continue paying my staff for an indefinite period whilst also funding my usual monthly outgoings and costs with zero income.
Whilst also paying myself a wage to be able to meet my own personal monthly costs.
For many SMEs our cash reserves are the insurance the keeps us in business and allows us to plan and expand for the future.
When those are gone and my company goes bust unable to pay its bills what future is there for my employees then ?
At least at the moment I will have enough to re-start my business and re-employ my staff when this nightmare is over.