COVID-19: Employer Alert
Revenue’s most recent FAQ: Guidance on the Operational Phase of the Temporary Wage Subsidy Scheme is available here. We have outlined below two key recent additions to the Guidance.
Availing of the Scheme for Rehired Employees
As COVID-19 restrictions are eased on a phased basis over the coming weeks in line with the Government Roadmap for Reopening Business and Society, it is expected that employers who laid off employees as a result of the COVID-19 pandemic, will want to put employees back on their payroll and avail of subsidy payments under the Scheme for eligible employees. Details of the level of subsidy payment employees are entitled to under the Operational Phase of the Scheme are set out in our briefing here and Revenue’s FAQ linked above.
Recent Revenue Guidance details the step by step process that employers should undertake to ensure efficient processing of reemploying employees. In addition, Revenue advises that where rehired employees are paid other than on a weekly basis, employers should consider placing these employees on a weekly pay frequency in order to align with payments under the Scheme and to prevent overlaps with payments under the COVID-19 Pandemic Unemployment Payment. Employers should consult with employees in advance of any change to their pay cycle and obtain their consent to any changes. Employees returning to work will be required to cancel their PUP and data will be shared between Revenue and the Department of Employment Affairs and Social Protection to avoid any duplication in payments.
From 25 May, Revenue will provide to employers the employee information required for operating the Scheme for rehired employees notified to it. This information was previously not available for employees rehired after 1 May.
Treatment of BIK for eligible employees
The subsidy paid to an employer under the Scheme cannot be used to discharge the statutory deductions owing on a Benefit in Kind (BIK) provided to an employee by his/her employer. There are two options available to employers whose employees continue to benefit from an asset giving rise to BIK while in receipt of a subsidy under the Scheme.
Additional Gross Payment
An employee in receipt of a subsidy may also be in receipt of an additional gross payment from his/her employer. Where the additional gross payment is sufficient to discharge the statutory deductions on the BIK, the continued operation of BIK can work alongside the Scheme.
No Additional Gross Payment or Insufficient Gross Payment
Where no additional gross payment is paid by the employer or an additional gross payment is insufficient to cover the statutory deductions on the BIK, the employer can suspend the operation of PAYE on BIK for employees in receipt of the subsidy. However tax, PRSI and USC will still be payable on the BIK for this period.
When the employee is no longer in receipt of the subsidy, the employer should then resume operating PAYE on BIK and, where possible the suspended BIK should be divided over the remaining payrolls for 2020. Where an employee ceases employment before 31 December 2020, the balance of the untaxed BIK should be included in the employee’s final payroll.
It is advisable that employers communicate clearly with employees in relation to treatment of BIK while in receipt of a subsidy under the Scheme.