Wage Subsidy Scheme Issues

Tow

Tomrota wrote: »

It cannot possibly be 85% of my average weekly wage in January/February, that’s absurd? That would be 2,76€ per hour.

There are no change in the minimum wage laws for Covid19. You employer might try to pay you using the Subsidy and hit off (or if incompetent exceed) your MWWS (Max Weekly Wage Subsidy) value, which is supplied by Revenue to they or they can choose to pay you normally.

Employers can pick and choose who and when they pay the Subsidy.

collsoft

You are indeed correct Kennthsmyth - I deal more in the payment of wages than the finer points of employment law!!!!

Under the normal rules if you are laid off or put on short-time hours, you can claim redundancy from your employer after 4 weeks or more, or 6 weeks in the last 13 weeks.

The broad point I was trying to make was that it was the only piece of employment law that had been changed as a result of COVID.

All other contractual arrangements between an employer and their employees remain as was, and employers may find it difficult to defend cases where it is demonstrated that they have not remunerated their employees as per their employment contracts.

The WRC have been making noises that they are the competent authority in this regard - not Revenue.

For any employers recommencing after shutdown it would be very advisable that they consult with their employees before putting them on the subsidy as they could be leaving themselves open to action at a later date.

Employers may very well be in a very tight situation with regard to turnover, but the employee can argue that is the employers problem and should not impact their employment contract if the employee is required to work full time.

Employers may in some cases be better advised to agree some form of deferral of pay, or putting them on part time hours, or lay some staff off and put them on social welfare, or even look at redundancies.

But putting an employee back to work on the wage subsidy scheme without prior consultation and expecting them to work full time hurs may prove problematic in the longer term.

kennethsmyth wrote: »

I thought the timeline was 4 weeks the employee could initiate redundancy from employer and then the employer has to show that they can provide full work for next 13 weeks to allow them to refuse redundancy?

gb19815

collsoft wrote: »

You are indeed correct Kennthsmyth - I deal more in the payment of wages than the finer points of employment law!!!!

Under the normal rules if you are laid off or put on short-time hours, you can claim redundancy from your employer after 4 weeks or more, or 6 weeks in the last 13 weeks.

The broad point I was trying to make was that it was the only piece of employment law that had been changed as a result of COVID.

All other contractual arrangements between an employer and their employees remain as was, and employers may find it difficult to defend cases where it is demonstrated that they have not remunerated their employees as per their employment contracts.

The WRC have been making noises that they are the competent authority in this regard - not Revenue.

For any employers recommencing after shutdown it would be very advisable that they consult with their employees before putting them on the subsidy as they could be leaving themselves open to action at a later date.

Employers may very well be in a very tight situation with regard to turnover, but the employee can argue that is the employers problem and should not impact their employment contract if the employee is required to work full time.

Employers may in some cases be better advised to agree some form of deferral of pay, or putting them on part time hours, or lay some staff off and put them on social welfare, or even look at redundancies.

But putting an employee back to work on the wage subsidy scheme without prior consultation and expecting them to work full time hurs may prove problematic in the longer term.

Hi in what way could it be problematic? I normally work 4 hours extra per week which continue to do so. Is it right they can top subsidy up what they like ?

Randomuser26

Im in the same boat too. And on top of that our employer has made us take a massive pay cut. Result is employer is paying us half nothing..........far less than minimum wage and we are working full-time.

Randomuser26

eh i dunno wrote: »

In the same boat myself.

Im in the same boat too. And on top of that our employer has made us take a massive pay cut. Result is employer is paying us half nothing..........far less than minimum wage and we are working full-time.

Pistachio19

Randomuser26 wrote: »

Im in the same boat too. And on top of that our employer has made us take a massive pay cut. Result is employer is paying us half nothing..........far less than minimum wage and we are working full-time.

Is your employer not topping you up to your average weekly wage?

Will23

Someone in work mentioned that the revenue made some comment recently on how they might treat the taxation of the covid payments at years end. Anyone hear what was said?

2Mad2BeMad

Will23 wrote: »

Someone in work mentioned that the revenue made some comment recently on how they might treat the taxation of the covid payments at years end. Anyone hear what was said?

What im hearing is that the repayment you make will be spaced out over a year or 2.
Basically they just take it from your credits.

Will23

2Mad2BeMad wrote: »

What im hearing is that the repayment you make will be spaced out over a year or 2.
Basically they just take it from your credits.

Yeah, that’s what I had heard. Was given to believe there might be mention a write off but didn’t think that would be the case.

I don’t think the penny has dropped with many folks, particularly those who might fall into the higher bracket, how high the tax bill will be next Jan! Spreading it out over 2 years will help with pay back but it’s still another bill to be paid!

eh i dunno

Will23 wrote: »

Yeah, that’s what I had heard. Was given to believe there might be mention a write off but didn’t think that would be the case.

I don’t think the penny has dropped with many folks, particularly those who might fall into the higher bracket, how high the tax bill will be next Jan! Spreading it out over 2 years will help with pay back but it’s still another bill to be paid!

And employers aren't really mentioning it to staff either.

Randomuser26

Pistachio19 wrote: »

Is your employer not topping you up to your average weekly wage?

Employer is topping us up......kind of. They have implemented a massive pay cut so the amount of money they are contributing to our wages is only a couple of hundred Euro a week!

SAMTALK

Wonder how many companies who can afford it will take a leaf out of IKEA,s book. Doubt if it will be too many

I know the figures here are been jiggled to claim the payment and it's the workers who will suffer in the long run

collsoft

Well the current line still is that the subsidy is subject to PAYE and USC at the end of the year and as other have commented this will be clawed back by reducing your credits going forward for a year or two.

One interesting recent development is that Revenue are in the process of putting all employees who have been on the scheme onto a week 1 basis.

As far as I understand they are also doing this for employees who are returning to work after being on the PUP payment.

Until recently the Revenue line was "Issue Tax refunds" but I think that perhaps they now realize it might be better to stop refunding tax and building up a bigger problem at year end.

Will23 wrote: »

Someone in work mentioned that the revenue made some comment recently on how they might treat the taxation of the covid payments at years end. Anyone hear what was said?

Will23

collsoft wrote: »

Well the current line still is that the subsidy is subject to PAYE and USC at the end of the year and as other have commented this will be clawed back by reducing your credits going forward for a year or two.

One interesting recent development is that Revenue are in the process of putting all employees who have been on the scheme onto a week 1 basis.

As far as I understand they are also doing this for employees who are returning to work after being on the PUP payment.

Until recently the Revenue line was "Issue Tax refunds" but I think that perhaps they now realize it might be better to stop refunding tax and building up a bigger problem at year end.

Thanks Jason, very useful to know, what does ‘week 1’ mean in layman’s terms?

Will

head82

Struggling to find a definite answer to this one.

Since been put on the WSS from mid March.. still working normal hours and topped up by employer.. how is annual leave calculated during this period?

I understand that no annual leave is accrued for those temporarily laid off/receiving PUP but does an employee have to forego holiday entitlements despite working regular hours albeit subsidised?

Had a look at Citizens Information site and it's a bit vague. Doesn't address this particular issue.

galway1234

head82 wrote: »

Struggling to find a definite answer to this one.

Since been put on the WSS from mid March.. still working normal hours and topped up by employer.. how is annual leave calculated during this period?

I understand that no annual leave is accrued for those temporarily laid off/receiving PUP but does an employee have to forego holiday entitlements despite working regular hours albeit subsidised?

Had a look at Citizens Information site and it's a bit vague. Doesn't address this particular issue.

You are entitled to holidays for the period you work regardless of being on the covid subsidy scheme. However if you were on layoff for any period you do not accrue holidays for that. So in your situation you are entitled to your full holiday entitlement. (I got legal advice on this).

head82

galway1234 wrote: »

You are entitled to holidays for the period you work regardless of being on the covid subsidy scheme. However if you were on layoff for any period you do not accrue holidays for that. So in your situation you are entitled to your full holiday entitlement. (I got legal advice on this).

Cheers! Much appreciated. So many aspects of this scheme left unclarified.

collsoft

Hi Will,

Basically, when you are taxed on a "Week 1" basis it means that you are being taxed as if its the first week of the year - and that is why they call it "Week 1"

Now, most people are taxed on a "Cumulative" Basis.

In a "Cumulative" basis your tax credits build up on a week to week basis.

So in Week 1 you get 1 week's tax credits, in week 2 you get two weeks credits etc. So you accumulate tax credits as you go through the year until you reach the end of the year and you have 52 weeks of credits.

Using this method your tax calculations are based on the total amount of pay that you have earned to date in the year.

So in the situation where you were laid off in Week 12 (as many people weredue to COVID) and then you recommence work in Week 24 (last week), you have built up an additional 12 weeks of tax credits but you have not earned any pay.

This triggers a tax refund based on your accumulated credits.

In a "Week 1" basis you are always taxed as if its the first week of the year, and because its the first week you have only accumulated 1 week of credits, even though it was actually week 24 in the tax year, and therefore the calculation does not trigger any refunds.

Now I have glossed over a few details here, but that about sums up how a "Week 1" works.

I have to say that many Payroll Software companies suggested to Revenue at the start of the process back in March that perhaps employees should be put on a week one basis to prevent refunds and then taxing the subsidy at the end of the year - but Revenue decided against it.

I can understand why they did this - they wanted to ensure that people had as much money in their pockets as was possible as we walked into the unknown.

So their intentions were well placed and in the interest of the employee.

Now with things getting back to normal Revenue are likely trying to reduce the end of year bills by eliminating unnecessary refunds.

Also, with many people coming back to work after being on Social welfare the amounts of refunds are going to be very large.

And remember, at this stage the PUP payment from Social welfare will be deemed taxable and employees will be charged tax by reduced tax credits from Revenue - similar to how Illness Benefit is currently taxed when you go back to work.

Will23 wrote: »

Thanks Jason, very useful to know, what does ‘week 1’ mean in layman’s terms?

Will

c.p.w.g.w

As the subsidy scheme been definitely extended?

eh i dunno

c.p.w.g.w wrote: »

As the subsidy scheme been definitely extended?

Until August at least but will probably be extended further

Tow

eh i dunno wrote: »

Until August at least but will probably be extended further

There are already lobby groups looking for it to be extended well into next year.

The system as it stands is basically a mess, put in place in a rush and bodged into existing systems. Long term it needs to be revised and Revenue's (and DEASP's) system properly updated to support it. Technically TWSS/Wage Subsidy is a form of 'Universal Income', which has been discussed on and off over the years. However, the Greens seem to have decided UI is going to be one of their contributions to this government!

tina1040

All employees returning to their job having been on the PUP should put themselves on a week1/month1 basis so their tax credits don't get carried forward

collsoft

I think Revenue are already doing this now automatically so keep checking for updated RPNs

tina1040 wrote: »

All employees returning to their job having been on the PUP should put themselves on a week1/month1 basis so their tax credits don't get carried forward

MoonUnit75

Tow wrote: »

There are already lobby groups looking for it to be extended well into next year.

The system as it stands is basically a mess, put in place in a rush and bodged into existing systems. Long term it needs to be revised and Revenue's (and DEASP's) system properly updated to support it. Technically TWSS/Wage Subsidy is a form of 'Universal Income', which has been discussed on and off over the years. However, the Greens seem to have decided UI is going to be one of their contributions to this government!

It should have been done as a furlough scheme like the UK perhaps, would have prevented blatant abuse to get free labour.

bigboss1986

Hi all.Ive been on wage subsidy scheme since day 1 it was available.
Until today I worked 25h a week and my wages were not topped up and im getting 350 covid and 1cent wages plus 45€ tax and usc refund.

Just received call that from next monday we will be back to 40h but our wages still wont be topped up and no extra money for working sundays.
Can they force me to work 40h for 350 and giving me excuse that im also getting 40€ tak refund?
Company also didnt include my commison when calculating my income for scheme

Will23

collsoft wrote: »

Hi Will,

Basically, when you are taxed on a "Week 1" basis it means that you are being taxed as if its the first week of the year - and that is why they call it "Week 1"

Now, most people are taxed on a "Cumulative" Basis.

In a "Cumulative" basis your tax credits build up on a week to week basis.

So in Week 1 you get 1 week's tax credits, in week 2 you get two weeks credits etc. So you accumulate tax credits as you go through the year until you reach the end of the year and you have 52 weeks of credits.

Using this method your tax calculations are based on the total amount of pay that you have earned to date in the year.

So in the situation where you were laid off in Week 12 (as many people weredue to COVID) and then you recommence work in Week 24 (last week), you have built up an additional 12 weeks of tax credits but you have not earned any pay.

This triggers a tax refund based on your accumulated credits.

In a "Week 1" basis you are always taxed as if its the first week of the year, and because its the first week you have only accumulated 1 week of credits, even though it was actually week 24 in the tax year, and therefore the calculation does not trigger any refunds.

Now I have glossed over a few details here, but that about sums up how a "Week 1" works.

I have to say that many Payroll Software companies suggested to Revenue at the start of the process back in March that perhaps employees should be put on a week one basis to prevent refunds and then taxing the subsidy at the end of the year - but Revenue decided against it.

I can understand why they did this - they wanted to ensure that people had as much money in their pockets as was possible as we walked into the unknown.

So their intentions were well placed and in the interest of the employee.

Now with things getting back to normal Revenue are likely trying to reduce the end of year bills by eliminating unnecessary refunds.

Also, with many people coming back to work after being on Social welfare the amounts of refunds are going to be very large.

And remember, at this stage the PUP payment from Social welfare will be deemed taxable and employees will be charged tax by reduced tax credits from Revenue - similar to how Illness Benefit is currently taxed when you go back to work.

Great explanation, thanks!

Tomrota

Lundstram wrote: »

Hour rate x 42 x .85 = your wage

Well I only got 5 hours salary along with a tax refund, if I get the same next week it’s going to be ridiculous.
Doing nothing = 350€
42 hour week = 40€

Like what is happening.

PickYourName

bigboss1986 wrote: »

Hi all.Ive been on wage subsidy scheme since day 1 it was available.
Until today I worked 25h a week and my wages were not topped up and im getting 350 covid and 1cent wages plus 45€ tax and usc refund.

Just received call that from next monday we will be back to 40h but our wages still wont be topped up and no extra money for working sundays.
Can they force me to work 40h for 350 and giving me excuse that im also getting 40€ tak refund?
Company also didnt include my commison when calculating my income for scheme

Short answer is no, they've changed your terms and conditions of employment without your agreement.



For more information, see:


https://www.citizensinformation.ie/en/employment/employment_rights_and_conditions/contracts_of_employment/change_job_contract.html

head82

PickYourName wrote: »

Short answer is no, they've changed your terms and conditions of employment without your agreement.

I may be misunderstanding the OPs question but I don't think there has been a change to terms of employment.

He/she mentions a 'return' to 40 hour week. Therefore, that was the original contract of employment.
The 25 hour week they've been currently doing is most likely due to a fall-off in trade.

If business has picked up, the employer can request a return to normal hours without any obligation to top-up the wage subsidy.

Even though the OP will be working a 40 hour week for essentially less than minimum wage.

It's grossly unfair but that has been my understanding.
I hope I'm wrong.

Triceratops Ballet

bigboss1986 wrote: »

Company also didnt include my commison when calculating my income for scheme

That's a major omission, comission and bonuses (we pay ours in January) were the main reason so many in our place were excluded in the first place. They artificially increased the avg net weekly pay so most of the team didn't qualify.