The Emergency Measures In The Public Interest (COVID -19) Act 2020

In response to the Covid -19 epidemic, the houses of the Oireachtas have enacted the Emergency Measures in the Public Interest (Covid -19) Act 2020, (“the Act”). For the purpose of this article we will focus on the measures introduced in order to help employers navigate their way through the emergency. The measures introduced are aimed at minimising job losses and the overall impact of the virus on the economy.

Part 7 of the Act

Part 7 of the Act provides for a “temporary wage subsidy” provision for employees who were on payroll in the business of an employer as of the 29^th of February 2020. The temporary wage subsidy provides for a subsidy in wages at the rates set out below for a period of 12 weeks.

In order to be able to avail of this subsidy, the business or employer of an employee must make a declaration to the Revenue Commissioners confirming that by reason of the Covid-19 epidemic, there is at least a 25% reduction in either the employer’s turnover or orders being received by the employer which prevents the employer maintaining
normal wages and that regardless, the employer intends to continue to employ the employee.

Subject to compliance by the employer of all provisions within the Act, the following provisions shall apply:-

i. Where an employee’s weekly pay is less than or equal to €586.00, 70% of the employees take home pay to a maximum of €410.00 will be paid;

ii. Where the employee’s weekly pay is greater than €586.00 and equal to or less than €960.00 a maximum of €350.00 will be paid;

iii. No subsidy is payable in respect of employees whose average net weekly pay exceeds €960.00.

In order to apply for the scheme employers are required to submit an application via ROS.

Revenue has clarified in recently issued guidance notes on the subject (reply to FAQ 3.11. on page 10) that whilst the subsidy is not subject to PAYE, it will be taxable on the employee at a year-end review. If the tax assessed as owing by the employee in 2020 is more than his/her unused tax credits at the end of that year, Revenue has clarified that the outstanding tax will be clawed back by reduction of personal tax credits.

It is worth noting that the Revenue requires (see reply to FAQ 4.12. of the guidance notes) an employer to reimburse an employee for any overpayment of PAYE or USC deducted from an employee to date by operation of the Temporary Subsidy Scheme. Whilst Revenue has stated in its guidance notes that it will then reimburse the employer by the amount paid in this regard, the relevant legislation classifies this payment differently to the refund of the subsidy and they may both be paid on different dates (ie one later than the other). In light of this unknown we would advise consulting your auditor or financial adviser before engaging in the scheme. Further Revenue guidance notes on the reimbursement arrangements are expected to issue on the Revenue website soon. Revenue has also clarified in further guidance notes that the declaration required to support an employer’s application is not a declaration of insolvency.

Part 8 of the Act

Part 8 of the Act has altered an employee’s right to call on an employer to make them redundant during the emergency period in circumstances where they have been placed on short term lay off or have been laid off as a result of the Covid-19 pandemic. The “emergency period” runs from the 13th of March 2020 to the 31st of May 2020. This period of course may be extended at a later date if deemed necessary.

The practical benefit to an employer of this restriction is that they do not have to retain funds for the purpose of making statutory redundancy payments throughout the emergency period. Ordinarily, an employee would be entitled to call on their employer to make them redundant in circumstances where they have been laid off for 4 weeks or more or where they have been put on short term for at least 6 weeks in the last 13 weeks.

Clearly the foregoing measures have been introduced as a means of trying to preserve employment throughout the pandemic. The measures provide employers with some comfort in that they cannot be called on to make redundancy payments throughout the emergency period, whilst also with the assistance of the State, employers may be able to maintain payment to their employees.