Out-Law Guide 14 min. read

Coronavirus: income supports for employers and employees in Ireland

Building blocks healthcare concept

The Irish government is continuing to provide a number of income supports for workers and companies affected by the Covid-19 pandemic.

The following income supports are currently being provided to employees and employers affected by the pandemic:

  • a Temporary Covid-19 Wage Subsidy of between 70-85% of take home pay up to a maximum weekly tax-free amount of €350/€410 per week per employee, depending on the employee's Average Net Weekly Pay (ANWP);
  • a Covid-19 Pandemic Unemployment Payment of €203/€350 per week; and
  • a Covid-19 Illness Benefit of €350 per week.

Temporary Wage Subsidy Scheme

The Temporary Wage Subsidy Scheme (the Scheme) was implemented by the 2020 Emergency Measures in the Public Interest (Covid-19) Act (Covid-19 Act). The Scheme replaced the previous Covid-19 Refund Scheme and was initially to run for 12 weeks from 26 March 2020. It has since been extended until the end of August 2020. The Scheme is available to employers from all sectors, excluding the public service and non-commercial semi-state sector, whose business is being financially impacted by the Covid-19 pandemic.

The Scheme is being implemented in two phases.

Phase 1 of the scheme

Phase 1, the 'transitional phase' of the Scheme, has now concluded. Phase 1 relates to all Scheme submissions received on or before 3 May 2020. During Phase 1, Revenue refunded eligible employers €410 per week for each eligible employee that they made a PRSI Class J9 submission for, regardless of the amount of the subsidy actually paid to the employee. In some cases this amount exceeded the subsidy that the employee was entitled to receive for that week and, in those cases, Revenue has advised that the employer is obliged to hold onto any excess. Revenue may take this excess amount into account when making future subsidy payments to the employer, or may require it to be repaid directly to Revenue.

Jason McMenamin


It is hoped that the Temporary Wage Subsidy Scheme will encourage employers to keep employees on the payroll and as a result, avoid employers having to make roles redundant or put them on unpaid lay-off. 

Phase 2 of the scheme

Phase 2, the 'operational phase', applies to Scheme submissions received by Revenue on or after 4 May 2020.

During the operational phase, the subsidy amount paid to employers will be based on each individual employee's ANWP and any additional gross payment (top-up) paid by the employer. ANWP for the purposes of the Scheme is based on January and February payroll submissions made by the employer to Revenue. Bonuses, commissions and other payments will be taken into account in the calculation of the ANWP if these were included as part of gross pay in the January and February payroll submissions.

For submissions made during the operational phase, Revenue will calculate the employee's ANWP and maximum weekly wage subsidy (MWWS) and provide this to the employer in the employer CSV file, which is available for download from Revenue Online Service (ROS). A CSV file is a Comma Separated Values file that will assist employers in inputting data on their payroll software.

During the operational phase, the following subsidy amounts will apply.

Employees with ANWP less than €586 per week (approx. €38,000 per annum):

  • for employees with ANWP of up to €412 per week (approx. €24,400 per annum) - a subsidy refund of 85% of ANWP, to a maximum of €350, is applicable. If an employer wishes to 'top up' this payment by the remaining 15% to bring the employee's pay up to €350 per week, then 'tapering', or reduction, will not apply to the subsidy, provided that the combined wage subsidy plus the top-up does not exceed €350;
  • for employees with ANWP between €412 and €500 per week (approx. €24,400 - €31,000 per annum) - the subsidy refund amount will be up to €350 per week;
  • for employees with ANWP between €500 and €586 per week (approx. €31,000 - €38,000 per annum) - the subsidy refund amount will be up to 70% of ANWP, up to a cap of €410 per week.

Employees with ANWP over €586 per week (approx. €38,000 per annum):

The maximum subsidy refund for these employees is €350 per week. However, a tiered approach will also apply, taking into account the amount paid by the employer and the level of reduction in pay borne by the employee.

Gross pay paid by employer Subsidy
60% or less of employee's previous ANWP Up to €350 per week
Between 60% and 80% of employee's previous ANWP Up to €205 per week
Over 80% of employee's previous ANWP No subsidy payable

'Gross pay' means total remuneration which includes emoluments and notional emoluments but without reference to any deduction for pension contributions payable by the employee, or any salary sacrifice deduction.

For example, if an employee has an ANWP of €650 and the employer opts to provide additional gross pay of €300 the MWWS that can be paid by the employer before tapering is as follows:

Taxable pay: additional gross pay = €300

MWWS: €300 (gross pay)/€650 (ANWP) x 100 = 46.15%. Therefore using the table above a subsidy of €350 is payable.

Maximum Weekly Employer Payment Before Tapering (MWEPBT): ANWP of €650 – Wage Subsidy of €350 = €300 (the maximum gross pay an employer can pay before tapering).

In this case no tapering is required as the total of additional gross pay before tax plus subsidy does not exceed the ANWP.

If the additional gross pay was, for example, €350, the subsidy amount would be tapered to €300 as the additional gross pay exceeds the MWEPBT of €300.

Employees with ANWP more than €960 per week (approx. €76,000 per annum):

The wage subsidy is also available to support employees whose ANWP was greater than €960 pre-Covid but their current pay is below €960 per week, subject to the tiered arrangements above and tapering.

The maximum additional payment an employer can make while receiving the full subsidy is the difference between the employee's ANWP and their maximum weekly wage subsidy.

Topping up and tapering

Employers are encouraged by Revenue to make best efforts to maintain the employee's net income as close as possible to normal net income for the period of the Scheme. However, if the gross pay paid by the employer and the subsidy is greater than the employee's ANWP the subsidy amount may be tapered or may not apply.

Tapering, or a reduction, of the subsidy will apply to all cases (excluding those whose ANWP does not exceed €412) where the gross pay paid by the employer and the subsidy exceed the employee's ANWP. This is to ensure that no employee would be better off under the Scheme. Where the subsidy is tapered to €0, as the subsidy is not payable, PRSI Class J9 should not be applied and the normal PRSI class applicable to the employee should be applied.

Revenue has published useful guidance documents on how the Scheme will operate including a sample calculator to demonstrate the calculation of the wage subsidy, along with information on employer eligibility and supporting proofs.

Tax implications of subsidy payments

Income tax, Universal Social Charge (USC) and Local Property Tax will not be applied to the subsidy payment through the payroll. However, the subsidy will be liable to income tax and USC on review at the end of the year. Employee PRSI will not apply to the subsidy or any top up payment by the employer. Employers PRSI will not apply to the subsidy and will be reduced from 11.5% to 0.5% on any top up payment.

Top-up payments cannot be re-grossed and are subject to income tax and USC in the usual way.

Revenue has indicated that in many cases the payment of the subsidy and any additional income paid by the employer will result in the refund of income tax or USC already paid by the employee. Any income tax and USC refunds that arise as a result of the application of tax credits and rate bands can be repaid by the employer and Revenue will also refund this amount to the employer.

Employer eligibility criteria

An employer can register for the scheme by logging onto ROS myEnquiries. To qualify, the employers' business must have been adversely affected by Covid-19 to a significant extent with the result that the employer is unable to pay their employees their usual pay; the employer must intend to continue to employ the employee (and to pay them); and the employer must have registered for the scheme with Revenue on ROS.

The employer must be able to demonstrate to the satisfaction of Revenue that, by reason of Covid-19 and the disruption that is being caused, there will occur in the period of 14 March to 30 June 2020 at least a 25% reduction either in the turnover of the employer’s business or in customer orders being received by the employer. The 25% reduction in turnover or customer orders may be applied at the level of the company or, if a company is formally structured into individual 'business divisions', at the level of the individual business division. Each business division of the company may be eligible for the subsidy; however, each business division of the company must be capable of being separately identified, or otherwise the company as a whole will be looked at. Each business division in a company must have a clearly defined and separate management structure separate to the other business divisions in the company and those structures must have been formalised and established before the outbreak of the pandemic. Revenue will examine closely the basis for entering the Scheme of certain Scheme applications that are made in respect of one or more of a company’s business divisions rather than made in respect of the overall company. Revenue has also advised that an 'alternative basis' test be applied where application of the 'turnover' and 'customer orders' tests do not adequately demonstrate a negative economic disruption.

Application for the Scheme is based on self-assessment principles and a qualifying employer will need to declare that it is significantly impacted by the crisis when applying - although Revenue has advised that this will not be considered a declaration of solvency. Revenue has advised that an employer is best placed to determine whether it meets the reduction threshold and that it may base its determination on the decline in orders in March 2020 in comparison to February 2020, or the likely turnover for the quarter compared to Q1 or, if appropriate, Q2 of 2019, or on any other basis that is reasonable.

Revenue has also advised that an employer that has been hit by a significant decline in business but that has strong cash reserves, which are not required to fund debt, will still qualify for the Scheme. However, the government would expect the employer to continue to pay a significant proportion of the employees’ wages.

While Revenue does not currently require proof of financial difficulty, it may do so in future. Consequently, employers should retain copies of all records and documents which provide evidence of the negative impact of Covid-19 on their business and their eligibility for the Scheme.

The Scheme requires the employer to retain the eligible employees on payroll. Some of the employees may be temporarily not working - for example, if they are non-essential employees and cannot work at home - or some may be on reduced hours or reduced pay. Provided the employer meets the conditions set out by Revenue and subject to the levels of pay to the employees, the employer may be eligible for the scheme for some or all of the employees.

Revenue has recently noted that employees who were laid off after 29 February can be taken back onto the payroll for the purposes of the Scheme. From 18 May 2020, Revenue will include in the employer CSV file information on employees who were on the employer's payroll on 29 February, were laid off and then subsequently rehired after 1 May. Revenue has updated the employer CSV files to include rehired employees notified to Revenue between 2 May and 17 May 2020. From 21 May, Revenue will refresh the employer CSV file daily to include the employee values for rehired employees notified to Revenue, and update the date on the CSV file to reflect when it was refreshed. To be included in this refresh, employers must ensure that the rehired employees are on their payroll and a Revenue Payroll Notification has been received the day before the employer calculates and submits to Revenue the first payroll payment for the rehired employee. Revenue will reprocess all the J9 submissions for rehired employees received between 2 May and 18 May 2020, and refunds will be made as appropriate.

Interestingly, the names of all employers operating the scheme will be published on Revenue's website after the Scheme has expired.

Penalties will also apply to any abuse of the Scheme such as self-declaring incorrectly, not providing funds to employee, non-adherence to Revenue, or any other relevant guidelines.

Employee eligibility criteria

Employers must not operate this scheme for any employee who is making a claim for duplicate support from the Department - for example, Pandemic Unemployment Payment.

The Scheme is also confined to employees who were on the employer’s payroll as at 29 February 2020, and for whom a payroll submission has already been made to Revenue in the period from 1 February 2020 to 15 March 2020. If an employer made a February submission within this period and after 15 March 2020 amended or deleted that submission, the original submission and any subsequent amendments are not valid submissions for the purposes of employee eligibility for the Scheme.

For submissions made from 24 April 2020 with pay dates on or after 24 April 2020, 'Qualifying Payroll Submissions' are submissions that meet all of the following criteria:

  • the employer must, for any pay dates during the month of February 2020, have made payroll submissions for payments to the employee to Revenue before 1 April 2020;
  • the employee must be reported in a valid payroll submission with a pay date in the month of February 2020. The employer made a submission, with a pay date in February 2020, before 1 April 2020 and, on or after 1 April 2020 has not amended or deleted the submission. If amended or deleted on or after the 1 April 2020, the original submission and any subsequent amendments are not valid submissions for the purposes of employee eligibility for the Scheme; and
  • payroll submissions for all previous months must be submitted to Revenue before 15 March 2020.

Following an announcement on 29 May by the minister for finance, Revenue has changed the operation of the Scheme to accommodate employees returning to work following maternity, paternity, parental or adoptive leave or directly related unpaid leave; or who were in receipt of health and safety parent's or illness benefit for February 2020 and have now returned to employment. Revenue has put in place the necessary processes to enable employers to receive appropriate subsidy payments in respect of affected employees. The subsidy will be backdated to the date of commencement of employment or from 26 March 2020, whichever is the latest date.

Employers can claim the subsidy in respect of employees where the employee is exercising an Irish contract of employment in the State, and where the employer satisfies the conditions of the Scheme.

The Covid-19 Pandemic Unemployment Payment

The Covid-19 Pandemic Unemployment Payment (PUP) has also been extended and will remain in operation until 10 August 2020. From 29 June, the structure of the payment will change to a two-level payment structure, linked to the wages that the recipient was paid prior to losing their employment due to Covid-19.
Payments under the new structure will be:

  • for those whose employment earnings were €200 per week or higher, the PUP rate will remain at €350 per week;
  • for those whose prior employment earnings were up to €199.99 per week, the PUP rate will reduce to €203 per week - the same level as the Jobseeker's Benefit scheme generally.

PUP is available to all employees and the self-employed who have lost their job due to the Covid-19 pandemic. Those who are self-employed will be paid through the Department rather than through the Revenue scheme. The governmetn has issued guidelines on those who can apply for the payment.

If an employee has one adult and one or more dependent children they have been advised to claim a Jobseeker's Payment instead of PUP. This is because the employee may claim an additional allowance for their adult dependent and child dependents, which may increase their weekly payment above the maximum due under PUP.

How do workers apply for the Covid-19 Pandemic Unemployment Payment?

The Department has asked people to be mindful of social distancing recommendations and to avoid their local Intreo office where possible.

There are three ways workers can apply for this payment remotely:

  • downloading an application form (1-page / 234KB PDF) and returning it by post; or
  • applying for another income support from the Department through its online portal, provided the worker has a Public Services Card; or
  • calling the Department on 1890 800 024 or 01 2481398, the Department will then send the worker the relevant application form by post.

The government has also extended the Covid-19 Illness Benefit, which we discussed in further detail in our coronavirus employment advice guide.


The 1967 Redundancy Payments Act permits an employer to lay an employee off if the employer:

  • is unable to provide work;
  • reasonably believes that it will not be permanent; and
  • gives prior notice of the lay off using the RP9 form.

Generally, where employees are laid off or placed on short time working, they can rely on the Redundancy Acts to convert lay-off or short-time working to a redundancy situation. Employees who have been laid off or placed on short-time working for four or more consecutive weeks or six weeks in any 13-week period can notify their employer of their intention to claim redundancy. Further to this, an employer can prevent this if within four weeks of this notice, the employer can guarantee the employee 13 consecutive weeks of work without lay-off or short-time working.

However, the Covid-19 Act has amended the Redundancy Acts by providing that persons who have been laid off or kept on short-time due to the effects of measures taken by their employer in order to comply with, or as a consequence of, Government policy to prevent, limit, minimise or slow the spread of infection of Covid-19 cannot trigger a redundancy situation during the ‘emergency period’. This emergency period is currently the period beginning on 13 March and ending on 10 August. This is to prevent a situation where if a redundancy was triggered an employer may not be in a position to afford to pay redundancy due to cash-flow issues and in some cases would propel businesses into insolvency.

Specific legal advice should be sought where necessary in relation to Covid-19 and benefit entitlements, as the situation is changing daily.

Research by Jason McMenamin of Pinsent Masons, the law firm behind Out-Law.

We are processing your request. \n Thank you for your patience. An error occurred. This could be due to inactivity on the page - please try again.