COVID-19 – How to manage special payments in Ireland
Because of the unfolding news from the local government, there’s a lot of information out there which can be challenging to ascertain. Therefore we have shown some examples below but, we suggest that you read the information in the link for clarity.
Employers should consult with Revenue.ie directly to confirm if they are qualified for this subsidy payment. If employers do qualify, please apply the following steps via your Revenue system and set up for the payment.
Here are some examples to help you navigate the tool quickly:
- An employee is temporarily laid off and is not receiving any regular gross payments from their employer. In this scenario, there are two options:
- The employee can apply directly to Welfare for the Pandemic Payment of €350.00 per week. In this case, please provide us with a leave date that we can enter on the payroll system. This will not affect their record of continuous employment.
- The employer can pay a net value to the employee through the Payroll, which cannot exceed 70% of their average weekly net pay. It is our understanding that if the employee applies directly to Welfare, they will receive the full €350.00. Welfare will not calculate 70% of their Net. If it is processed through Payroll, 70% of the Net will need to be calculated.
You can pay a subsidy payment to the employee through the Payroll. In this case, you will need to determine what their average weekly net pay is.
- If the employee net average wage is less than €586.00, then you can potentially process a Net Subsidy Payment (NSP) up to a maximum of €410 per week for the employee.
- If their average net pay is higher than €586.00 and less than €960.00 per week, you can process a potential value of up to €350.00 net subsidy per week.
AREAS OF CAUTION
When the value is higher or less than €586.00, it is your first benchmarking you should use to determine whether you are dealing with €350 or €410 flat rate for an employee. Then we must calculate 70% of their average net pay to learn what net subsidy payment Payroll should process.
EXAMPLE #1– WHAT IF A WEEKLY EMPLOYEE NET IS LESS THAN €586.00?
Weekly net €480.00
- In this case, the employee does not exceed €586.00, so the potential net value of €410.00 is what we are working to achieve.
- The employee is not automatically entitled to €410.00. First, you need to calculate the result of 70% of 480.00.
480.00 @ 70% = 336.00
- As a result, the net subsidy value to be processed cannot exceed 336.00 per week.
Example #2 – what if a weekly employee Net is higher than €586.00 and less than €960.00
Weekly Net €750.00
- In this case, the employee falls between €586.00 and €960.00, so the potential net value of €350.00 is what we are working to achieve.
- Again, we need to calculate 70% of the average weekly net pay of €750.00
750.00 @ 70% = 525.00
- As a result, the net subsidy value to be processed is €350.00, and this cannot be exceeded. €350.00 per week is the maximum value.
If the employee has not been laid off and is continuing to work some hours for the employer, then there will be Gross Payments still to go through for the employee. However, the value of Gross Payment to be processed, cannot exceed 30% of the employee’s average weekly net pay.
It will ensure that the employee does not get overpaid between the Net Payment/70% of the average Net and the Gross Payment top-up.
- If the employee is not working for you, but you are continuing to pay them gross pay of some sort, please do not exceed 30% of the employee’s average weekly net salary.
- If the employees average weekly net pay exceeds €960.00 per week, they are not entitled to receive the Net Subsidy payment.
Please contact your payroll team directly if you would like a salary report and help to calculate the average weekly net pay.
- I would like to bring to your attention that at present these subsidy payments are being processed as Net Payments, and they will be assessed for PAYE and USC at the end of the year.
- Additionally not for recent new hires– an employee will need to be in your employment since on or before the 29th February to be able to receive this payment. They must also have been included in a Payroll Submission.
For more information about our services, please visit our website at www.vpef.co.uk