Wage Subsidy Scheme Issues

gb19815

Heres Johnny wrote: »

Was your covid 350? If it was it looks OK to me.
Your employer cannot top up your covid payment by more than an amount which makes your pay exceed your take home pay pre covid

Covid + top up must be less than or equal to old take home pay or he loses subsidy.

Hi thanks for reply this week he told me I earned less due to tax deductions, what period is average wage based on as my wages have varied due to paying no tax as I started in feb so had some unused tax credits ! Then was on just covid for a period while we were closed so wages have varied from 650-400 thanks in advance

Heres Johnny

gb19815 wrote: »

Hi thanks for reply this week he told me I earned less due to tax deductions, what period is average wage based on as my wages have varied due to paying no tax as I started in feb so had some unused tax credits ! Then was on just covid for a period while we were closed so wages have varied from 650-400 thanks in advance

Average wage is from 1st Jan to 29th Feb 2020.
Your employer should have a csv file which will clearly show the average wage as worked out by revenue. This is the figure he can not exceed. It's there if he's willing to show you.

gb19815

Heres Johnny wrote: »

Average wage is from 1st Jan to 29th Feb 2020.
Your employer should have a csv file which will clearly show the average wage as worked out by revenue. This is the figure he can not exceed. It's there if he's willing to show you.

Hi again and thanks for your help. January I was unemployed and feb I started this job . Is unemployment pay calculated ?

Heres Johnny

gb19815 wrote: »

Hi again and thanks for your help. January I was unemployed and feb I started this job . Is unemployment pay calculated ?

I'm not sure. I'm running this scheme for 61 employees but apart from 1 returning from maternity leave its all very straightforward, I haven't had anyone in your position.
I suspect, but will let someone else confirm, it's just the average of your employed weeks.
The average can use a divisor of anywhere between 1 and 9

Renjit

gb19815 wrote: »

Hi again and thanks for your help. January I was unemployed and feb I started this job . Is unemployment pay calculated ?

Ask your employer about how they calculated your average revenue net weekly pay. The normal calculation is based on first 9 weeks of this year.

blackwhite

gb19815 wrote: »

Hi again and thanks for your help. January I was unemployed and feb I started this job . Is unemployment pay calculated ?

Its the average of the weeks in January and February that you were on payroll with your current employers.

Any weeks with a different employer, or unemployed, aren't included in the calculation.

PickYourName

Renjit wrote: »

Ask your employer about how they calculated your average revenue net weekly pay. The normal calculation is based on first 9 weeks of this year.

Just to be totally clear, the average is worked out over the weeks actually worked.

We had someone in this position: they were on unpaid leave during part of the period and only worked in 4 of the 9 weeks. Their average was over the 4 weeks worked, not 9.

This was confirmed to me by Revenue.

stupidskin

Does anyone know if companies that are availing of the Wage subsidy scheme are allowed to hire new employees at this time or is there just no mention of whether they can or cannot ? It would seem odd to me that a company would hire new staff which obv must be paid fully by the employer as they were not employees during the first 9 weeks of the year whilst paying the existing staff via the WSS ? Thanks

MoonUnit75

Article in the Irish Times drawing a lot of comments on social media, couldn’t it be argued that basically workers are involuntarily subsidising their employers? https://www.irishtimes.com/business/personal-finance/coronavirus-over-1m-workers-may-face-tax-bills-of-up-to-2-800-at-end-of-the-year-1.4288733

Anyone know what the outcome might be if a company has not really been affected and all workers are still working full hours but are on the TWSS, then Revenue work out that the business has been doing almost as well or as well as previous years? Are workers still left carrying the can?

PickYourName

MoonUnit75 wrote: »

Anyone know what the outcome might be if a company has not really been affected and all workers are still working full hours but are on the TWSS, then Revenue work out that the business has been doing almost as well or as well as previous years? Are workers still left carrying the can?

Why do you think workers would carry the can?

The subsidy is claimed by and paid to the employer.

I would imagine what would happen if an employer turned out to have incorrectly applied for the scheme they would have to refund all the payments back to Revenue.

The employees position would be unchanged, regardless of whether this happened: they would have to pay tax on the refund amount paid to them by their employer, but they have to do that anyway.

collsoft

There is a very subtle point to remember here though.

Yes, the subsidy is claimed by employer, but the subsidy is paid to the employee, not the employer per se. In some sense the employer is a payment agent for Revenue.

The benefit to the employer is that it reduces their payroll costs indirectly, but in accounting terms the subsidy has net zero effect on the accounts as a whole (after it has been fully reconciled with Revenue).

Employers must pass the subsidy amount in full to the employees, and indeed with the compliance drive announced by Revenue, employers are going to be asked in many cases to forward copies of specific employee's payslips to Revenue to ensure that the employer is correctly identifying the subsidy on the payslip.

And you are correct to point out that on an overall annual basis the employee is not any worse off from a tax point of view, but I accept that getting a sizable tax bill at the end of the year was not the best way to handle it -

It should have been taxable all along, but the main problem there was that the PUP was not taxed at point of payment and thus it would have appeared to employees that they may have been better off on the PUP payment.

It will be interesting to see if the new government does anything to mitigate this, but employees who have been on PUP will also have an outstanding tax liability at the end of the year

PickYourName wrote: »

Why do you think workers would carry the can?

The subsidy is claimed by and paid to the employer.

I would imagine what would happen if an employer turned out to have incorrectly applied for the scheme they would have to refund all the payments back to Revenue.

The employees position would be unchanged, regardless of whether this happened: they would have to pay tax on the refund amount paid to them by their employer, but they have to do that anyway.

collsoft

If a company was not eligible for the scheme they would be required to repay in full all of the subsidy back to Revenue.

This would be paid by the employer and is not clawed back from the employees, however, the employees will still have a tax liability arising from the subsidy that they revived.

The employer eligibility is governed by the projected fall in turnover in Q2.

If an employer had made a projection that their turnover was going to fall by more than 25%, and they kept some kind of documentation to substantiate their claim then they would have met that particular criteria.

If it turned out that turnover did not actually drop then there would be an expectation by Revenue that the employer would stop using the scheme at some point. If they continued to operate the scheme regardless then they may have to explain why they did so.

But there is also the "ability to pay wages" aspect of the criteria, and it may be the case that turnover has recovered but the actual cash flow situation means that the employer may not be able to pay the wages.

The legal reference for the drop in trunover is actually on Q2 2020, so if an employer did see a drop in Q2 turnover by 25% or more, and turnover recovers in Q3 to normal levels and they continue to have cash flow difficulties, then this employer is likely to be considered as still eligible.


One thing employers should remember is that Revenue will be able to asses turnover based on the VAT returns so they will no doubt be profiling employers to see how they did in Q2

MoonUnit75 wrote: »

Article in the Irish Times drawing a lot of comments on social media, couldn’t it be argued that basically workers are involuntarily subsidising their employers? https://www.irishtimes.com/business/personal-finance/coronavirus-over-1m-workers-may-face-tax-bills-of-up-to-2-800-at-end-of-the-year-1.4288733

Anyone know what the outcome might be if a company has not really been affected and all workers are still working full hours but are on the TWSS, then Revenue work out that the business has been doing almost as well or as well as previous years? Are workers still left carrying the can?

MoonUnit75

PickYourName wrote: »

Why do you think workers would carry the can?

The subsidy is claimed by and paid to the employer.

I would imagine what would happen if an employer turned out to have incorrectly applied for the scheme they would have to refund all the payments back to Revenue.

The employees position would be unchanged, regardless of whether this happened: they would have to pay tax on the refund amount paid to them by their employer, but they have to do that anyway.

If I am getting the same or slightly lower net take home pay as I was getting before (now made up by subsidy and top-up but no tax rebate) and yet have a big tax bill at the end of the year then I'd consider myself to be carrying the can.

Are you saying people will only owe tax if they got a tax rebate along with their pay?

collsoft

Hi Moonunit75,

Most employees would still owe some tax at the end of the year, even if they were not getting a tax rebate while on the subsidy - but it will vary from person to person.

The subsidy is taxable, but it is not taxed by your employer at the point of payment, it will be taxed by Revenue at year end, and likely any tax owed will be collected by reducing next year's tax credits.

MoonUnit75 wrote: »

If I am getting the same or slightly lower net take home pay as I was getting before (now made up by subsidy and top-up but no tax rebate) and yet have a big tax bill at the end of the year then I'd consider myself to be carrying the can.

Are you saying people will only owe tax if they got a tax rebate along with their pay?

PickYourName

MoonUnit75 wrote: »

If I am getting the same or slightly lower net take home pay as I was getting before (now made up by subsidy and top-up but no tax rebate) and yet have a big tax bill at the end of the year then I'd consider myself to be carrying the can.

Are you saying people will only owe tax if they got a tax rebate along with their pay?

Whether they owe tax or not at the end of the year can't be known until the end of the year and will be dependent on their particular circumstances.

The TWSS part of their wages is taxable, but tax is not taken at source. This is unlike normal PAYE income.

If your gross income has not changed you are no worse off financially if some of it is a TWSS refund. That's why I said you're not carrying the can.

I fully acknowledge that it is a complete pain to have to pay any tax due in one lump sum at the end of the year, rather than have it taxed at source, so yes you are carrying than can of having to manage your tax affairs much more than normal.

A few of other points:

- If there is tax owing at the end of the year, Revenue have indicated they won't come looking for it all at once; they will adjust your tax credits for next (and possibly more) year, so payment will be spread over an extended time

- Note what I said above: "if your gross wages have not been changed". If they have, you should have been asked if you agree to this, as otherwise it is a unilateral change to your pay and conditions.

Your net wages may contain all of some of the following:

- A TWSS refund amount: this is untaxed
- A top-up amount: this should be taxed at source
- A tax refund: this is a refund of tax already paid at the start of the year

Your gross amount is the sum of the TWSS amount plus the gross amount of the top-up. If this is less than your wages at the start of the year, your wages have been cut. You can only determine this by looking at the gross amounts.

PickYourName

collsoft wrote: »

There is a very subtle point to remember here though.

Yes, the subsidy is claimed by employer, but the subsidy is paid to the employee, not the employer per se. In some sense the employer is a payment agent for Revenue.

Understood and accepted. Whatever about how it's accounted for, I've been advised that from a legal standpoint it doesn't matter that part of the wages of someone on the scheme has come indirectly from Revenue. That is, if your gross pay is the same as what's in your contract, your terms and conditions remain unchanged, despite you receiving part of that pay as an untaxed amount indirectly from Revenue.

Anyone being paid less should have agreed to take a pay cut or reduced hours (of they are still working) or to a temporary lay-off (if they aren't).

Is that correct?

kennethsmyth

PickYourName wrote: »

Understood and accepted. Whatever about how it's accounted for, I've been advised that from a legal standpoint it doesn't matter that part of the wages of someone on the scheme has come indirectly from Revenue. That is, if your gross pay is the same as what's in your contract, your terms and conditions remain unchanged, despite you receiving part of that pay as an untaxed amount indirectly from Revenue.

Anyone being paid less should have agreed to take a pay cut or reduced hours (of they are still working) or to a temporary lay-off (if they aren't).

Is that correct?

Thing is its not possible to receive your full normal gross pay if your employer has you on TWSS. The reason for this is that it is based on your ARNP or simply net pay. You maybe receiving the same net but your gross is not the same - it will be less than your normal gross

TWSS is tapered as the employer adds more to your top up, as such when the additional topup and TWSS amount adds up to exactly the same as your normal gross there is the TWSS will not remain, only your normal gross being paid by your employer.

Therefore, if you are working full time and on TWSS you have had a wage decrease whether you agreed or not.

kennethsmyth

MoonUnit75 wrote: »

Article in the Irish Times drawing a lot of comments on social media, couldn’t it be argued that basically workers are involuntarily subsidising their employers? https://www.irishtimes.com/business/personal-finance/coronavirus-over-1m-workers-may-face-tax-bills-of-up-to-2-800-at-end-of-the-year-1.4288733

Anyone know what the outcome might be if a company has not really been affected and all workers are still working full hours but are on the TWSS, then Revenue work out that the business has been doing almost as well or as well as previous years? Are workers still left carrying the can?

Correct, anyone working full time and is on a TWSS has essentially agreed / or not agreed to a wage reduction.

TWSS is between employer and revenue, gross on contract is between employee and employer.

PickYourName

kennethsmyth wrote: »

Thing is its not possible to receive your full normal gross pay if your employer has you on TWSS. The reason for this is that it is based on your ARNP or simply net pay. You maybe receiving the same net but your gross is not the same - it will be less than your normal gross

TWSS is tapered as the employer adds more to your top up, as such when the additional topup and TWSS amount adds up to exactly the same as your normal gross there is the TWSS will not remain, only your normal gross being paid by your employer.

Therefore, if you are working full time and on TWSS you have had a wage decrease whether you agreed or not.

Understood, but until there was additional information provided by Revenue in the past few weeks, I hadn’t really appreciated it. It was only when we started bringing people back and looking into how tapering worked that it started to be clearer.

In our case, we only re-opened a couple of weeks ago. I say re-opened, but it’s only partial, with enough work for about a half of all staff. Some didn’t want to return (or more correctly, couldn’t for reasons of childcare etc.), and of those that did we said we could either return some full-time or all part-time. Everyone agreed to part-time, which is what we’re doing. We’re topping everyone to their full rate for the hours worked and have made it clear that they are in effect getting paid a reduced amount overall, and also that they will have to pay tax on the subsidy amount at the end of the year ore beyond.

As it happens most are getting around their previous net pay, especially with tax refunds, so I can understand why someone in this position would feel aggrieved if they get a tax demand at the end of the year if they weren’t expecting it. In other words, they are probably completely unaware they have in fact agreed to a reduction in pay, even if they are aware they’re working fewer hours.

collsoft

Just to add to that, as I mentioned before Revenue had a big comms drop this week and in the following document

https://www.revenue.ie/en/corporate/press-office/press-releases/2020/pr-230620-revenue-provide-important-information-on-extension-of-twss.aspx

In here they have clarified that tapering must always be operated by the employer, and specifically they say that

In the circumstance where an employer pays normal pre-COVID wages, no subsidy is due

So, I would read that to state that the only way in which you can be on the subsidy is if your pay has been cut.

If an employee's pay is cut it must be agreed by the employee beforehand, and I would strongly suggest that a revised contract of employment should be issued to clearly set out the new working conditions and rates of pay.

I have mentioned before that many employers are operating the scheme in such a way that they are not applying tapering and paying the full subsidy to the employee regardless of how much they are topping up by - it is clear now that Revenue would not approve of such an approach

collsoft

There is one potential anomaly that I dont think was mentioned in the Irish Times article where there is a potential difference between PUP and TWSS.

The wage subsidy is said to be subject to PAYE and USC at the end of the year.

However, social welfare payments are usually subject to PAYE, but not to USC. (Im not aware of any clarification regarding USC and PUP)

If that turns out to be the case then it does add weight to the argument that a person is better of on PUP than TWSS because there is no USC liability - but that kind of goes against what TWSS was all about.

MoonUnit75 wrote: »

Article in the Irish Times drawing a lot of comments on social media, couldn’t it be argued that basically workers are involuntarily subsidising their employers? https://www.irishtimes.com/business/personal-finance/coronavirus-over-1m-workers-may-face-tax-bills-of-up-to-2-800-at-end-of-the-year-1.4288733

Anyone know what the outcome might be if a company has not really been affected and all workers are still working full hours but are on the TWSS, then Revenue work out that the business has been doing almost as well or as well as previous years? Are workers still left carrying the can?

PickYourName

collsoft wrote: »

So, I would read that to state that the only way in which you can be on the subsidy is if your pay has been cut.

It would seem that way, though maybe there is a counter example?

Also, to be pedantic, for hourly-paid employees, is it true to say that they've had a pay cut if their hours rather than rate/hour has been changed? There are plenty of (low-paid) employees on contracts that specify an hourly rate rather than guaratee a particular weekly total.

kennethsmyth

PickYourName wrote: »

It would seem that way, though maybe there is a counter example?

Also, to be pedantic, for hourly-paid employees, is it true to say that they've had a pay cut if their hours rather than rate/hour has been changed? There are plenty of (low-paid) employees on contracts that specify an hourly rate rather than guaratee a particular weekly total.

I would agree with collsoft’s take on this that if you are on twss your pay has been reduced, and all that comes with that. It could only be correct pay if your employer also reduced your hrs and the reduction of hours is allowed under the contract and also it’s above 50% of hrs as below that is short time.

blackwhite

kennethsmyth wrote: »

I would agree with collsoft’s take on this that if you are on twss your pay has been reduced, and all that comes with that. It could only be correct pay if your employer also reduced your hrs and the reduction of hours is allowed under the contract and also it’s above 50% of hrs as below that is short time.

There's three exceptions that we've come across so far to that.

1) Low-paid staff (for us, all part-timers) who were on less than €350 PW Gross prior to COVID. Since May they can be getting €350 PW.

2) Staff who took a drop in pay between February and end of March. We've two people who moved to a 3-day week in March. Rules don't adjust for this - so if we top up to the max allowed they're better off on the scheme than off it.

3) Staff who received one-off payments in January/Feb. This could be commissions, overtime or bonuses. We pay OT a month in arrears, so staff who had done large volumes of OT over Christmas are currently doing better on the TWSS with full top-up than if they were on their regular gross (we've a stop on all OT whilst the crisis is ongoing).

collsoft

That is a very good question.

Im not a lawyer, so I am well out of my area of expertise and am most likely talking complete nonsense.

If there are no hours specified in your contract would that not make it a "Zero Hours Contract"?

I thought that such contracts were actually banned except for some small number of exceptions.

But that said, if the employment contract was allowed under the relevant legislation then I would think that the existing contract would be good enough and the employer sets the hours as required.

PickYourName wrote: »

It would seem that way, though maybe there is a counter example?

Also, to be pedantic, for hourly-paid employees, is it true to say that they've had a pay cut if their hours rather than rate/hour has been changed? There are plenty of (low-paid) employees on contracts that specify an hourly rate rather than guaratee a particular weekly total.

gb19815

collsoft wrote: »

That is a very good question.

Im not a lawyer, so I am well out of my area of expertise and am most likely talking complete nonsense.

If there are no hours specified in your contract would that not make it a "Zero Hours Contract"?

I thought that such contracts were actually banned except for some small number of exceptions.

But that said, if the employment contract was allowed under the relevant legislation then I would think that the existing contract would be good enough and the employer sets the hours as required.

Hi not sure what my employer is upto tax been deducted but not showing on payslip , surely this is wrong ? There saying this is what revenue have told them make any sense ?

collsoft

I think that your employer is telling you the truth in this case.

Last weekend Revenue updated the tax details for 830,000 employees to put them on what is called a "Week 1 Basis"

What this does is stop your employer from giving you any more tax refunds.

Most people on the scheme would have recieved some amount of tax refunds up until now which increased your Net Pay (takehome pay)

With a Week 1 tax basis tax refunds will stop and you will either be paying zero tax, or paying some amount of tax.

But either way your Net pay will be lower this week than it was before, and your payslip may very well be showing zero tax.

Hope this helps explain it

Jason

gb19815 wrote: »

Hi not sure what my employer is upto tax been deducted but not showing on payslip , surely this is wrong ? There saying this is what revenue have told them make any sense ?

collsoft

I think that your employer is telling you the truth in this case.

Last weekend Revenue updated the tax details for 830,000 employees to put them on what is called a "Week 1 Basis"

What this does is stop your employer from giving you any more tax refunds.

Most people on the scheme would have recieved some amount of tax refunds up until now which increased your Net Pay (takehome pay)

With a Week 1 tax basis tax refunds will stop and you will either be paying zero tax, or paying some amount of tax.

But either way your Net pay will be lower this week than it was before, and your payslip may very well be showing zero tax.

Hope this helps explain it

Jason

gb19815 wrote: »

Hi not sure what my employer is upto tax been deducted but not showing on payslip , surely this is wrong ? There saying this is what revenue have told them make any sense ?

jammiedodgers

I have several part timers returning to work next week who will be working far more hours than their average from Jan/Feb. Am I ok to claim the subsidy once the amount has been tapered correctly?

Collsoft, using the calculator on your website if I have an employee whose AWNP was €100, I top up by €300, I then reduce the subsidy by €35 (€85 down to €50).

snowgal

collsoft wrote: »

I think that your employer is telling you the truth in this case.

Last weekend Revenue updated the tax details for 830,000 employees to put them on what is called a "Week 1 Basis"

What this does is stop your employer from giving you any more tax refunds.

Most people on the scheme would have recieved some amount of tax refunds up until now which increased your Net Pay (takehome pay)

With a Week 1 tax basis tax refunds will stop and you will either be paying zero tax, or paying some amount of tax.

But either way your Net pay will be lower this week than it was before, and your payslip may very well be showing zero tax.

Hope this helps explain it

Jason

Hi there, was this done to help employees so that they owe less tax at the end of the year? I’ve had a few queries from colleagues