Wage Subsidy Scheme Issues

Sono Topolino

I work in tax so my sister asked me to help her apply for the Wage Subsidy Scheme for her business. While reading through the terms and conditions, I smelled a rat and asked advice from a solicitor who told me in no uncertain terms that my sister was opening herself up to legal jeopardy.

Solicitor friend said that by self-declaring that her LTD was experiencing an "inability to claim emoluments", she was admitting to trading while insolvent, and becomes personally liable for the company's debts (basically gives up LTD status). Now the Government has said that this is not the case, and Niall Cody was on Morning Ireland yesterday also saying the same thing. So there's that.

But still I have serious concerns: if you apply for this scheme in good faith, and in 6 months time you find that your business is in fact unable to continue trading, you go into receivership, can your creditors come after your debts? Can they seek a court declaration to this effect? It's a concern. The business will have been published on the Revenue list so this will be publicly available information. Wouldn't a judge be the one interpreting the points of law, not the Revenue for the Minister for Finance?

My sister wants to apply for this scheme as a way to keep her staff paid and her business ticking over, but we're both worried. To be clear: I'm not looking for legal advice, to see how other businesses are approaching this.

eusap

don't forget the income tax problem it creates, the employer cannot charge PAYE on the subsidy but at the end of the year the employee will have to include the earnings in there tax settlement.

SEPT 23 1989

Revenue or the social won't question anything now just fire out the money but when this is finally over they will be going back over everything with a fine toothed comb

Sono Topolino

SEPT 23 1989 wrote: »

Revenue or the social won't question anything now just fire out the money but when this is finally over they will be going back over everything with a fine toothed comb

Not too worried about that - Niall Cody said so on the record.

It’s the implications of admitting publicly that you cannot afford to pay your staff their wages that is the issue.

Sono Topolino

Sono Topolino wrote: »

Not too worried about that - Niall Cody said so on the record.

It’s the implications of admitting publicly that you cannot afford to pay your staff their wages that is the issue.

Very Irish, not wanting to be seen publicly as not able to afford to pay you staff.

Sono Topolino

mariaalice wrote: »

Very Irish, not wanting to be seen publicly as not able to afford to pay you staff.

Cop on to yourself. If it makes getting credit from the banks harder, or exposes my little sister to liability for the company's existing debts if her business has to close as a result of this, then it's a legitimate worry.

Sono Topolino

Sono Topolino wrote: »

Cop on to yourself. If it makes getting credit from the banks harder, or exposes my little sister to liability for the company's existing debts if her business has to close as a result of this, then it's a legitimate worry.

The head of the revenue services said its not at issue, in a time when the government/powers of the state are trying to help.." you smell a rat"

Sono Topolino

mariaalice wrote: »

The head of the revenue services said its not at issue, in a time when the government/powers of the state are trying to help.." you smell a rat"

Imagine you’re a creditor and the limited liability business you’ve loaned money to goes bust. Previously they availed of this scheme. Do you accept not getting all of your money back, or do you take the shareholders to court and say “hey in March 2020 you knew you were in trouble and still you continued trading. This is in violation of Company Law and you have assumed liability for your company’s debts.”

I don’t think creditors give a damn what the head of Revenue services says... They want their money back.

settopbox

My employer has brought me into work as normal, but it now only paying me the 350 euro.
I see it as him being essentially getting a subsidy from the govt for my wages, its costing him nothing to employ me.

Is this right ?

he is saying that he doesnt have the means to pay me ..

Sono Topolino

If his turnover has fallen 25% and he is self-declaring that he doesn't have the means to pay you, then I wonder how you are adding value? He probably should let you go home.

Dravokivich

settopbox wrote: »

My employer has brought me into work as normal, but it now only paying me the 350 euro.
I see it as him being essentially getting a subsidy from the govt for my wages, its costing him nothing to employ me.

Is this right ?

he is saying that he doesnt have the means to pay me ..

I thought the scheme was to pay you, through your employer, while you were out of work. Not to supplement your employers wage bill.

eh i dunno

settopbox wrote: »

My employer has brought me into work as normal, but it now only paying me the 350 euro.
I see it as him being essentially getting a subsidy from the govt for my wages, its costing him nothing to employ me.

Is this right ?

he is saying that he doesnt have the means to pay me ..

Same for me. Seems the employer now gets us to work at no cost to himself.

Heres Johnny

Open to abuse by employers alright. We are signed up for the subsidy but we are topping up employees wages to 100% even if some of them are only doing buts and pieces. Thats for 2 weeks, we think we will go to 75% of the wages after that. There may come a point in this 12 weeks where we are doing subsidy only, but we cant see that far ahead.

Mobile mad

Hi,
I have been placed on the above scheme for a 2 week period now work has contacted me about 2 days work next week . They are saying it is vital work where do I stand with getting payed for these 2 days along with the 350 wage subsidy. I am just afraid my company is abusing the payment and use it to pay some of our wages next week.

Heres Johnny

Mobile mad wrote: »

Hi,
I have been placed on the above scheme for a 2 week period now work has contacted me about 2 days work next week . They are saying it is vital work where do I stand with getting payed for these 2 days along with the 350 wage subsidy. I am just afraid my company is abusing the payment and use it to pay some of our wages next week.

Your company is probably suffering badly too. I'd take the 350 and do the 2 days. It will get you out of the house too, but make sure it's safe I suppose.
The economy is probably going to come back slowly, certainly slower than it stopped, that's for sure. Companies will remember who helped out at this time and who didn't.
Don't take a short term view on this, but you know your job better than me so make your own call on it

Your employer can top up the wage subsidy they receive and pay you for the 2 days. Any business who have suffered a 25% loss in income can do this. So your company is entitled to use the subsidy to pay wages, that is what it is for.

Mobile mad

Mobile mad wrote: »

............... the payment and use it to pay some of our wages next week.

A remarkable viewpoint.

Mobile mad

Augeo wrote: »

A remarkable viewpoint.

Sorry I dont understand

Mobile mad

Heres Johnny wrote: »

Your company is probably suffering badly too. I'd take the 350 and do the 2 days. It will get you out of the house too, but make sure it's safe I suppose.
The economy is probably going to come back slowly, certainly slower than it stopped, that's for sure. Companies will remember who helped out at this time and who didn't.
Don't take a short term view on this, but you know your job better than me so make your own call on it

The company I work for will get paid from the client which is the esb but I will only receive the 350 hardly fair

Mobile mad

Dav010 wrote: »

Your employer can top up the wage subsidy they receive and pay you for the 2 days. Any business who have suffered a 25% loss in income can do this. So your company is entitled to use the subsidy to pay wages, that is what it is for.

The company has topped up our wages I warn more than €586 so only get 350 after the pension and union comes out of this its 320.

Mobile mad

Mobile mad wrote: »

Sorry I dont understand

Your employer is actually helping you by registering you on the wage subsidy scheme rather than laying you off and telling you to register for unemployment benefit. You are likely to be paid more per week, you don’t have to register with welfare, you are still employed, the connection is still there with your company and you have a job to go back to straight away when this is over.

The wage subsidy scheme is precisely for what your employer is doing, it is a subsidy to help employers keep their staff and pay some part of their wages. That is why it is a little surprising that you would be suspicious of your employer.

Incidentally, you are still employed, if the work is essential and you refuse, nothing to stop your employer from laying you off and telling you to paddle your own boat.

gb19815

Is this payment not €410 and is there any entitlement for employer to top it up?
Also I read that tax and usc will re issue can anyone confirm this ?

gb19815

Is this payment not €410 and is there any entitlement for employer to top it up?
Also I read that tax and usc will re issue can anyone confirm this ?

Heres Johnny

Mobile mad wrote: »

The company I work for will get paid from the client which is the esb but I will only receive the 350 hardly fair

For 2 days work. Don't worry where the money is coming from whether it's the govt or the employer.
If you want to say no, say no, but there will be other employees who will say yes and when it comes to the crunch I know which one I'd be keeping on.
We've had employees react like you and employees that will still go out and just happy they have work to go to.
It's not easy for employers either at the moment, I'm trying to keep 70 people in Ireland and 80 people in UK tipping over and I know not everyone will be happy but that's life.
We are topping up wages to 100% for 2 weeks and I had someone complain that his wages was 100% and he did a full weeks work where some colleagues got 100% and only did a partial week. But that's because there was plenty of work for his skills and not for the others, but that will come around the other way.
Short sightedness and squeezing your employer at the moment will come back to haunt you.
But don't be taken advantage of either, your call.

Beasty

Threads merged

gb19815

gb19815 wrote: »

Is this payment not €410 and is there any entitlement for employer to top it up?
Also I read that tax and usc will re issue can anyone confirm this ?

Up to. €410. The payment subsidy is 70% of net wage up to a max of €410.

For some reason, those who earn over €585 are only getting a max of €350.

Yes employers can top up, though I would imagine few would be in a position to do so right now.

gb19815

Dav010 wrote: »

Up to. €410. The payment subsidy is 70% of net wage up to a max of €410.

For some reason, those who earn over €585 are only getting a max of €350.

Yes employers can top up, though I would imagine few would be in a position to do so right now.

Can anyone confirm that tax paid this year reissues ?

Mobile mad

Dav010 wrote: »

Your employer is actually helping you by registering you on the wage subsidy scheme rather than laying you off and telling you to register for unemployment benefit. You are likely to be paid more per week, you don’t have to register with welfare, you are still employed, the connection is still there with your company and you have a job to go back to straight away when this is over.

The wage subsidy scheme is precibsely for what your employer is doing, it is a subsidy to help employers keep their staff and pay some part of their wages. That is why it is a little surprising that you would be suspicious of your employer.

Incidentally, you are still employed, if the work is essential and you refuse, nothing to stop your employer from laying you off and telling you to paddle your own boat.

So if they get paid by the client for the work in this line of work they will get the man hours plus work done and the 350 from the government surely they gaining even for them to bring it up to the 410 would be something

Mobile mad

Mobile mad wrote: »

So if they get paid by the client for the work in this line of work they will get the man hours plus work done and the 350 from the government surely they gaining even for them to bring it up to the 410 would be something

You are missing the point. If your business is down by 25%, you can apply for wage subsidy to pay your staff. The client might pay for this job, but business is likely to be down considerably.

I think that if you are not happy about staying on the books, I’m sure your employer would understand if you ask to be made unemployed.

Mobile mad

Mobile mad wrote: »

............surely they gaining even for them to bring it up to the 410 would be something

You think over the course of Covid19 they are gaining?
Are you serious?

Augeo

Augeo wrote: »

You think over the course of Covid19 they are gaining?
Are you serious?

I can’t think of a business that would not be down.

hmmm

Your business can be down 25%, and still be solvent, and still qualify for this. There's quite a few businesses who will get through this although less revenue is coming in, if they can get a dig-out from the government.

There's lots of companies applying for this where everyone is still working. I think a lot of companies will find something for their employees to do during this time (unless your e.g. a waiter, or working in a hotel).

Dav010

Dav010 wrote: »

I can’t think of a business that would not be down.

Even large food/grocery retailers are down as it's lots of the low or negative margin items that are being sold.

CiarraiAbu2

settopbox wrote: »

My employer has brought me into work as normal, but it now only paying me the 350 euro.
I see it as him being essentially getting a subsidy from the govt for my wages, its costing him nothing to employ me.

Is this right ?

he is saying that he doesnt have the means to pay me ..

You would get the same for sitting at home, sound like he taking advantage, this is a subsidy, you are still meant to get the same nett wage each week.

CiarraiAbu2

CiarraiAbu2 wrote: »

You would get the same for sitting at home, sound like he taking advantage, this is a subsidy, you are still meant to get the same nett wage each week.

Dear God. If that is the case, unemployment payment is better suited to you than wage subsidy. The subsidy scheme you are still employed, so if the work is necessary, you do your job. While some might be afraid to leave home, the “why bother” attitude, or suspicion that the employer is in some way taking advantage of an employee is appalling. I wonder is this just an Irish thing?

Mobile mad

Dav010 wrote: »

You are missing the point. If your business is down by 25%, you can apply for wage subsidy to pay your staff. The client might pay for this job, but business is likely to be down considerably.

I think that if you are not happy about staying on the books, I’m sure your employer would understand if you ask to be made unemployed.

But isnt there a partial payment my company that they can apply for like the 3 days I'm off get 3/5 of the covid payment and then my 2 days pay I dont know maybe I'm the one being unreasonable

gb19815

Mobile mad wrote: »

But isnt there a partial payment my company that they can apply for like the 3 days I'm off get 3/5 of the covid payment and then my 2 days pay I dont know maybe I'm the one being unreasonable

Ask them questions to your employer

Mobile mad

gb19815 wrote: »

Ask them questions to your employer

Easy tiger

gb19815

Has anyone been paid through this service ? Had any tax been re issued ?

Mobile mad

Mobile mad wrote: »

But isnt there a partial payment my company that they can apply for like the 3 days I'm off get 3/5 of the covid payment and then my 2 days pay I dont know maybe I'm the one being unreasonable

Technically, you are still working. They do not have to top up at all, it is voluntary. If you were still at work 5 days per week and the company was 25% down on business, they would not have to pay you a top up.

You are being unreasonable. The wage subsidy is there to help your company survive, and help you keep your job.

Stratvs

gb19815 wrote: »

Has anyone been paid through this service ? Had any tax been re issued ?

I've done payroll for an employer who is closed where they are paying the employee their normal net. ie they have topped up the 70% subsidy to 100% normal net. Lets say it was €550 net. The employer gets €385 back from Revenue. So it costs the employer €165 net. The €165 net grosses up to say €200. The €200 is taxable but the €385 is not. So the person's tax credits more than cover the €200. That is resulting in a tax/usc refund to the employee of around €30. So the employee gets €550+€30=€580.

The €30 tax/usc refund is a problem as ultimately the €385 subsidy is taxable but can't be taxed in payroll under the scheme. So at the year end Revenue will be looking for that back by adjusting credits going forward. I'd have thought putting employees on W1/M1 basis would stop that happening and still leave employee with normal pay.

Heres Johnny

Dav010 wrote: »

Dear God. If that is the case, unemployment payment is better suited to you than wage subsidy. The subsidy scheme you are still employed, so if the work is necessary, you do your job. While some might be afraid to leave home, the “why bother” attitude, or suspicion that the employer is in some way taking advantage of an employee is appalling. I wonder is this just an Irish thing?

I thought that was a good post until you brought up the "just an Irish thing".
Of course it isn't

gb19815

Stratvs wrote: »

I've done payroll for an employer who is closed where they are paying the employee their normal net. ie they have topped up the 70% subsidy to 100% normal net. Lets say it was €550 net. The employer gets €385 back from Revenue. So it costs the employer €165 net. The €165 net grosses up to say €200. The €200 is taxable but the €385 is not. So the person's tax credits more than cover the €200. That is resulting in a tax/usc refund to the employee of around €30. So the employee gets €550+€30=€580.

The €30 tax/usc refund is a problem as ultimately the €385 subsidy is taxable but can't be taxed in payroll under the scheme. So at the year end Revenue will be looking for that back by adjusting credits going forward. I'd have thought putting employees on W1/M1 basis would stop that happening and still leave employee with normal pay.

Thanks for that

maestroamado

Sono Topolino wrote: »

If his turnover has fallen 25% and he is self-declaring that he doesn't have the means to pay you, then I wonder how you are adding value? He probably should let you go home.

I found your initial post interesting and curious as to whether your legal advise was correct.

I just be interested as it raised an interesting question...

CiarraiAbu2

Dav010 wrote: »

Dear God. If that is the case, unemployment payment is better suited to you than wage subsidy. The subsidy scheme you are still employed, so if the work is necessary, you do your job. While some might be afraid to leave home, the “why bother” attitude, or suspicion that the employer is in some way taking advantage of an employee is appalling. I wonder is this just an Irish thing?

I'm self employed, but that's not the point, it's a subsidy scheme, the employee is meant to get the same nett payment.
Are you trying to say that it's ok for an employer to pay just the 350 and receive it back from the government?
What happens when it becomes a 70% refund, will be ok to pay them 70% of 350.
Why should an employee work for 350 when he spend time at home safely with his family for the same amount.
And as for it been an Irish thing, well that says more about you than anything else.

CiarraiAbu2

CiarraiAbu2 wrote: »

I'm self employed, but that's not the point, it's a subsidy scheme, the employee is meant to get the same nett payment.
Are you trying to say that it's ok for an employer to pay just the 350 and receive it back from the government?
What happens when it becomes a 70% refund, will be ok to pay them 70% of 350.
Why should an employee work for 350 when he spend time at home safely with his family for the same amount.
And as for it been an Irish thing, well that says more about you than anything else.

What?

It’s 70% of your net wage payment up to a max of €410, not 70% of the €350 the Government pays.

Why should an employee work? To help keep their employer open and safeguard their job. It is actually easier for an employer to lay the employee off and tell them apply for unemployment payment.


https://www.revenue.ie/en/employing-people/documents/pmod-topics/guidance-on-operation-of-temporary-covid-wage-subsidy-scheme.pdf

CiarraiAbu2

Dav010 wrote: »

What?

It’s 70% of your net wage payment up to a max of €410, not 70% of the €350 the Government pays.

Why should an employee work? To help keep their employer open and safeguard their job. It is actually easier for an employer to lay the employee off and tell them apply for unemployment payment.


https://www.revenue.ie/en/employing-people/documents/pmod-topics/guidance-on-operation-of-temporary-covid-wage-subsidy-scheme.pdf

I'm well aware of how it works, however the employer is meant to pay as close as he can to the nett pay. Anyway I can't really argue with you as we have no idea of the business or it's financial position.

CiarraiAbu2

CiarraiAbu2 wrote: »

I'm well aware of how it works, however the employer is meant to pay as close as he can to the nett pay. Anyway I can't really argue with you as we have no idea of the business or it's financial position.

No they aren’t.

Revenue calculate the subsidy payment based on 70% of net wage up to a max subsidy of €410, the employer is not “meant” to top up, it is completely optional.

CiarraiAbu2

Dav010 wrote: »

No they aren’t.

Revenue calculate the subsidy payment based on 70% of net wage up to a max subsidy of €410, the employer is not “meant” to top up, it is completely optional.

The employer is expected to make best efforts to maintain the employee net income as close as possible to normal net income for the duration of the subsidy scheme.

ZeroThreat

CiarraiAbu2 wrote: »

The employer is expected to make best efforts to maintain the employee net income as close as possible to normal net income for the duration of the subsidy scheme.

Well, I'd guess that the total wage bill as a % of an organisations weekly/monthly outgoings will vary widely depending on the industry or sector it operates in. But if a company needs zero wage cost to itself in order to continue operations it's already pretty far up $*%t creek (which I'd imagine that many already are) and won't be staying open for much longer in any case.

Anyway all that matters at the end of the day is the letter of the law, stuff like 'expected to make best efforts....' is meaningless from any legal standpoint.

And bear in mind that for the foreseeable future, it's going to be an employer's market.

CiarraiAbu2

CiarraiAbu2 wrote: »

The employer is expected to make best efforts to maintain the employee net income as close as possible to normal net income for the duration of the subsidy scheme.

It is optional, if the employee is off, as most are at the moment, and employers were meant/expected to top up to usual net wage under the subsidy scheme, would it not make more sense to lay the employee off? Think about it, then you will understand why it is optional.