Employer concerns on Temporary COVID-19 Wage Subsidy Scheme
Thu, Mar 26, 2020
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The Temporary COVID-19 Wage Subsidy Scheme is a welcome development. There have been some concerns from employers about some of the details of the scheme which we've tried to address below.
On Tuesday, 24 March the Government announced new measures to provide financial support to workers affected by the Covid-19 crisis. As part of these measures, Revenue will operate a Temporary Wage Subsidy Scheme. The scheme, enables employees, whose employers are affected by the pandemic, to receive significant supports directly from their employer through the payroll system. The scheme is expected to last 12 weeks from 26 March 2020.
There have been a number of concerns raised by employers:
It is a declaration of insolvency
To be eligible for the scheme employers must state that the company is “significantly impacted by the crisis. Key indicators are that the employer’s turnover is likely to decrease by 25% for quarter 2, 2020; that the business is unable to meet normal wages or normal outputs and any other indicators set out in our guidelines."
Some commentators have read “is unable to meet normal wages” as a declaration of insolvency. Revenue’s own guidance states clearly that it is not a declaration of insolvency.
"The declaration by the employer is not a declaration of insolvency. The declaration is simply a declaration which states that, based on reasonable projections, there will be, as a result of disruption to the business caused or to be caused by the Covid-19 pandemic, a decline of at least 25% in the future turnover of, or customer orders for, the business for the duration of the pandemic and that as a result the employer cannot pay normal wages and outgoings fully but nonetheless wants to retain its employees on the payroll."
Revenue will pursue companies that make mistakes
Revenue is setting up a short notice scheme to support business' wages. It needs to put controls in place to make sure the program is not abused. One of those controls is the right to audit in the future.
From the Revenue document (our emphasis)
“Should Revenue seek to validate employer eligibility for the scheme, it will adopt a reasonable, fair and pragmatic approach in considering whether the criteria have been met”
While companies need to have and keep records that support the basis for receiving the payment, Revenue doesn’t think companies “will require professional advice or assistance in being able to prove to the satisfaction of Revenue that these criteria are met”
Revenue will publish a list of companies in receipt of the support
Revenue has said “The names of all employers operating this scheme will be published on Revenue’s website.” Some employers have concerns that this may be viewed negatively by future creditors, clients, partners and employees.
Neasa has asked the Department of Finance to clarify the rationale for publication of this information, the manner in which it will be displayed, and the duration the information will be displayed.