Administration of a company in the event of no-deal Brexit - Crowe Ireland

COVID-19 government supports for employers and employees

Administration of a company in the event of no-deal Brexit - Crowe Ireland
As of 25 March 2020

NOTE: there have been a range of new measures and supports announced by the government since this article was published. For the latest updates and insights visit our COVID-19 Resource Hub.

The Government has introduced a number of exceptional measures in response to COVID-19 which will be administered through the Department of Employment Affairs and Social Protection (DEASP) and Irish Revenue. The measures are designed to provide assistance to employers and employees whose income streams have been affected by COVID-19.

COVID-19 unemployment payment

If an individual has been temporarily laid-off, has lost work, or has had their hours reduced due to the financial strain on businesses as a result of COVID-19, they may apply for the new COVID-19 Pandemic Unemployment Payment. The payment is designed to provide income security for the period during which they can apply for a full Jobseekers payment.  

A person can apply for this payment if they aged between 18 and 66 years and have lost employment due to the COVID-19 pandemic. This includes people who have been put on part-time or casual work and students who have lost employment. To apply for the payment, individuals must complete a simple one-page application form available from the website.

The COVID-19 Pandemic Unemployment Payment is paid at a flat rate of €350 per week for the duration of the pandemic emergency. It was originally set at a rate of €203 but it was increased by government on March 24.

If you were working and were also in receipt of any social welfare payment such as a Carers Payment, Working Family Payment (WFP) or One-Parent Family Payment, you can, provided you have lost your job due to COVID-19, also claim the COVID-19 emergency payment, in addition to retaining your existing welfare payment. The COVID-19 Payment Unemployment Payment will replace your employment income and will be regarded by the Department as equivalent to employment income.

If you have one adult and one or more dependant children you should claim a Jobseeker's Payment instead of the COVID-19 Pandemic Payment as any additional allowance will bring your weekly payment to in excess of the €350 weekly payment due under the emergency COVID-19 Pandemic Unemployment Payment.

Short-time support

Employees who are put onto short-time working by their employer due to COVID-19 may apply for a Short-Time Work Support payment. For example, if an employee’s working week has been reduced from a 5-day work pattern to a 3-day work pattern, the employee may be entitled to receive support under the Short-Time Work Support under the Jobseeker’s Benefit scheme for the other 2 days. 

Employees must work 3 days per week or less to qualify, having previously been employed on a full time basis. Short-time Work Support is paid for a maximum of 234 days. Further information on the payments available and eligibility requirements is available here.

A version of this scheme is also available where an employee's working hours or salary are reduced by 50% or more. 

Employer COVID-19 refund scheme

The DEASP has also introduced a refund scheme for employers who have experienced significant negative economic disruption due to COVID-19, with a minimum of 25% decline in turnover, and an inability to pay normal wages. A temporary wage subsidy of 70% of take home pay up to a maximum weekly tax free amount of €410 per week to help affected companies keep paying their employees. The scheme will run for 12 weeks from 26 March 2020. The employer is expected to make best efforts to maintain as close to 100% of normal income as possible for the subsidised period.

When the payroll returns have been submitted on or before each payment date, Revenue will be notified of the amounts paid and will refund up to €410 per employee per week into the employer’s bank account. The credit will include the reference ‘COVID Employer Refund’. Revenue will credit the employer bank account for payroll submissions received before 2pm each day. Depending on the individual bank, the refund should be with the employer on the next banking day.

Refunds of income tax or USC that an employee may be entitled to because of being laid off as a result of the application of tax credits and rate bands will also be administered by the employer, and will be repaid (to the employer) through the scheme. The weekly amount received by employees will not be subject to PAYE, USC, or PRSI.

The scheme can be operated for all employees who were on the payroll on 29 February 2020 and for whom a payroll submission has already been made in the period from 1 February 2020 to 15 March 2020. Where employees have already been laid off and their employer has ceased their employment, they can apply directly to DEASP for the COVID-PUP payment of €350 per week by completing the application form mentioned above. Employers should also be able to re-engage anyone temporarily laid off at the start of the COVID-19 crisis and apply for this scheme as the period may be so short as to not trigger a break in service.

Employers, or their agents, can apply to Revenue to operate the scheme by submitting a request via ROS myEnquiries under the ‘COVID-19 Temporary Wage Subsidy’ category.

An employer will run the payroll as normal entering the following for each employee:

  • PRSI Class set to J9
  • If the employer is not making any payment to the employee they should include a pay amount of €0.01 in Gross Pay
  • A non-taxable amount equal to the employee's net take home pay or €410 whichever is the lesser
  • The payroll submission must include pay frequency and period number

The employee must confirm to the employer that they have not, and will not, claim a payment from DEASP whilst the employer makes this payment through the payroll.

If the employee resumes employment with the employer, or obtains other supports from DEASP, or secures employment elsewhere, the employer will not include the employee concerned in future submissions.

For any issues relating to the scheme, employers should contact Revenue’s National Employer Helpdesk via the ROS myEnquiries system, providing details of the query and a direct dial contact number. Employers should make sure to select ‘Employer’s PAYE’ and then ‘Employer’s PAYE General Enquiry’ when submitting the query through ROS myEnquiries.

COVID-19 illness benefit

The Government has also introduced an enhanced Illness Benefit scheme for absences due to COVID-19. If an individual has been diagnosed with COVID-19 or has been medically certified to self-isolate as a result of COVID-19, they can apply for Illness Benefit for COVID-19 absences which will be paid at a rate of €350 per week (up from a previous €305 pw). This payment is available to both employees and the self-employed. To be eligible for this payment a person must be confined to their home or a medical facility. 

To receive the enhanced payment, you must be self-isolating on the instruction of a doctor or diagnosed with COVID-19, be absent from work and not getting paid by your employer.It will be paid for a maximum of 2 weeks where a person is self-isolating and for a maximum of 10 weeks if a person has been diagnosed with COVID-19. It will be paid from day 1 of a person's absence from work – waiving the normal 6-day waiting period before payments start.

If an individual has been diagnosed with COVID-19 or a doctor advises that they self-isolate, the doctor will complete a medical certificate on their behalf and send this directly to the DEASP. The individual must then complete an application form for Illness Benefit (Form IB 1). This application may be requested over the phone, or can be collected by someone else from a doctor’s surgery or at a local Intreo office. An online application process will be available by the end of March. Once both the application form and the medical certificate are received payment will be processed.

PAYE payments by direct debits

Employers may have variable or fixed direct debits set up to facilitate PAYE/PRSI/USC payments to Revenue. There is currently no method of suspending or ceasing a variable direct debit that an employer may have set up. Variable direct debits will need to be cancelled and may be set up again at a later date. However, a fixed direct debit may be ceased for a period of time or the amount reduced. This can be done via ROS under the ‘SEPA Direct Debit Instruction’ section. Any February payments that employers wish to cease or cancel must have been done so by the 24 March 2020.

For additional information on any tax matters, please contact a member of our tax team. We are here to help.

Contact us:

Grayson Buckley, Partner, Tax - Crowe Ireland
Grayson Buckley
Partner, Tax
John Byrne, Partner, Tax - Crowe Ireland
John Byrne
Partner, Tax
Lisa Kinsella, Partner, Tax - Crowe Ireland
Lisa Kinsella
Partner, Tax
Andrew Whitty, Partner, Tax - Crowe Ireland
Andrew Whitty
Consultant, Tax