Wage Subsidy Scheme – Revenue Guidance on Additional Pay

We wish to highlight that the Revenue Commissioners have published new guidance on the Wage Subsidy Scheme which now advises employers that the sum of:
(a) the wage subsidy payment; and
(b) the gross amount of any additional pay

should not exceed an employee’s previous Average Net Weekly Pay (‘ANWP’). If such an excess arises then the wage subsidy scheme refund due to employers will be reduced by an equivalent amount. This is surprising because in cases where tax / USC is deducted from the additional payment it results in employees receiving less net pay than before and is inconsistent with Revenue’s other guidance that the employer is expected to make best efforts to maintain the employee’s net income as close as possible to the normal net income for the duration of the subsidy period.

Since the additional pay is subject to tax / USC, if an employer wishes to increase an employee’s additional pay to ensure that they receive the same net pay as before, then the subsidy scheme payment will be reduced by that same amount. As a result, in cases where tax / USC arises on the additional payment (which is in most cases), it is impossible to continue to give employees the same net pay as before without losing the subsidy scheme refund altogether.

Despite the inconsistency of this new guidance, the impact on net pay should normally be relatively low. This is because the subsidy payment is made without deducting tax / USC and as a result, in most cases, any tax / USC deducted from additional pay should also be relatively low.

Further details are available in the Wage Subsidy Scheme – Frequently Asked Questions guidelines which can be accessed on our dedicated web page by clicking << HERE >>