Yesterday’s announcement by the Government was another boost to the self- employed, Employers and thus to employees.
When you have read this, please then send an email to your contact here in Guardian to discuss your particular needs – they will work out the numbers for you. You will go on a list, and we will get to you, so please be patient – we cannot answer everyone immediately, but you won’t lose out, we will have all queries answered by close of business on Friday, so in time to implement for this week’s payroll run.
REMEMBER THESE NEW RULES ONLY COME INTO OPERATION FROM TOMORROW 26TH MARCH SO IT CAN’T BE DONE TODAY ANYWAY!
THE WAGE SUBSIDY – Applicable to employees and directors of Limited Companies
So they have said there is a subsidy available of up to €410. Where did this figure come from? It is based on a single person with normal tax credits earning €38,000, whose normal take-home pay is €586.28.
70% of this is €410.40 – that’s where the figure comes from. Whether you earn more than this doesn’t matter.
However, if your employee earns less than this i.e. €410 – they cannot get more than their average net pay.
In the case where an employee is paid more than €38,000, “The Government encourages you to top-up your employee’s wages to maintain them at their current level of employment”.
The scheme will provide support for income sup to €76,000 BUT it will be capped at €350 for salaries between €38,000 and €76,000. We are awaiting further clarification on this – we will circulate it when we know the details.
The employer is expected to make their best efforts to maintain as close to 100% of normal income (IE NET WAGES) as possible for the subsidised period. This wage subsidy replaces the REFUND SCHEME announced on 15th March.
The scheme will run for 12 weeks from 26th March – I imagine it will be reviewed then, and extended if we are not out of this crisis.
A key condition in order to avail of this subsidy for anyone is that the person must have appeared on a payroll run, that was submitted to the Revenue.
The employee may be on part-time or a shortened week – e,g. if an employee was on a 5 day week earning €80,000, but you put them on a 20 hour week and reduced their pay to €40,000, you can still avail of the subsidy – the subsidy effectively pays them €38,000, and it now only costs you €2,000 – a great deal if you ask me.
The employer must keep the employee on the payroll – if you lay them off, you cannot avail of the scheme and the employee will just apply for social welfare payment in the normal fashion.
No Income tax, USC or PRSI shall apply to the subsidy payments received.
No employers PRSI will be payable on the subsidy. AND IF THE EMPLOYER DECIDES TO TOP UP THE EMPLOYEES WAGES EMPLOYERS PRSI WILL BE REDUCED FROM 10.5% TO 0.5%. This is a significant saving to the employer.
Summary – IF YOU KEEP AN EMPLOYEE ON YOUR PAYROLL FOR THE NEXT 12 WEEKS, YOU CAN PAY THEM €410 NET PAY, AND CLAIM THIS ENTIRE AMOUNT BACK FROM THE WAGE SUBSIDY SCHEME. Therefore it won’t cost you a penny, and hopefully, you have work for the employee to do during these 12 weeks. Your decision really then is do you pay them more than this €38,000 gross?
After you pay the €410 to the employee, we apply on your behalf through ROS for a refund of this €410. The Government have said this will be refunded within 48 hours. So far we have seen this to be the case.
CRITERIA TO QUALIFY FOR THE SCHEME
- The employer must show that they have lost at least 25% of their trade – i.e. sales down a minimum 25% would be a simple measure – that’s clear, simple and easily measurable.
- “Be experiencing significant negative economic disruption due to COVID-19” – this is the wording – how will this be defined we don’t know, but for our clients who are Restaurants, Pubs, Creche’s Gyms, Retail shops (non-food), who have totally closed – that qualifies in my opinion as “significant negative economic disruption”
- Be unable to pay normal wages and normal outgoings fully. In many clients cases, where they have already had to stop rent, leases, loans, their own pension, their own salaries (or reduced them) this should support these criteria. A difficulty will arise in my opinion, where a client has large profit and cash reserves built up, and technically could pay these costs – I do not know yet how this will be viewed – we await further clarification by Friday. Indeed I think this is unfair – why should the successful business who has worked hard to become successful, be treated differently than the start-up competitor?
- Lastly, you must continue to keep the employees employed – if you let all the employees go, you cannot avail of the scheme.
REGISTERING FOR THE SCHEME?
We’ll look after this for you, just mail your contact here in Guardian to start the ball rolling – please don’t call yet – we will get back to you.
For the self employed
If you are a sole trader/self- employed you should continue to apply for the COVID-19 Pandemic Unemployment Payment which has now increased for €203.70 to €350 – seems inequitable when compared to an employee.
For those already laid off or will be laid off?
The support/benefit is increased from €203.70 to €350 – this applies to both self- employed and employees.